Singapore’s strategic location and robust global economy make it a prime business hub for companies that are looking to expand into Southeast Asia and the Asia-Pacific region. Singapore has long been the base for international businesses operating in Asia as a competitive and resilient first-world economy with a high standard of living. Singapore continues to rank among the world’s most competitive economies, with GDP growth projected to range from 1-3% in 2024 despite global uncertainties.
Singapore provides great opportunities for foreign investors, thanks to its status as a financial hub, a wide range of trade agreements, more than 80 double taxation avoidance treaties and attractive tax incentives. These advantages make Singapore an attractive gateway for businesses looking to expand across Asia.
What factors contribute to Singapore’s ease of doing business?
Singapore is a highly developed and successful free-market economy. The country is known for its open, transparent and corruption-free environment. The country offers a pro-business atmosphere supported by strong infrastructure, which fosters growth across various industries as a globally connected nation. Singapore has also shifted towards promoting knowledge-based and research-intensive industries while traditional sectors like manufacturing and financial services continue to thrive. There has been significant growth in biomedical sciences, clean technologies and interactive digital media as well.
Singapore is a popular destination for foreigners. The country offers a high quality of life, safety and cleanliness. It also has excellent shopping, recreational facilities, and world-class healthcare. The country ranks second globally in medical tourism and provides top-tier education through numerous international schools.
Singapore consistently ranks highly in the World Bank’s Ease of Doing Business reports and is known for being one of the easiest places to start a business. Singapore remains an appealing hub for entrepreneurs and multinational companies combined with its strong regulatory framework, strategic location and outstanding infrastructure.
Steps to Starting a Business in Singapore
Starting a business in Singapore is a straightforward process. One just has to:-
- Register with ACRA: All companies must be registered with the Accounting and Corporate Regulatory Authority (ACRA), which oversees the Companies Act.
- Choose a business entity: Decide on the type of business structure that best suits your needs. Entrepreneurs can choose from four main business structures: sole proprietorship, partnership, limited partnership, or limited liability partnership (LLP).
- Pick a company name: Select and register a company name with ACRA.
- Comply with KYC: Complete the Know Your Customer (KYC) requirements.
- Open a bank account: Set up a business bank account for transactions with customers, partners and the government.
- Obtain licenses: Secure any necessary business licenses for your industry.
- Receive incorporation results: Wait for confirmation of your company’s incorporation.
- Local Director: A local resident director must be appointed to comply with regulations. The director must be at least 18 years old and legally capable.
- Company Secretary: A company secretary, who must be a permanent resident of Singapore, must be appointed to liaise with authorities.
- Paid-up Capital: The minimum paid-up capital for a company is S$1 (in any currency).
- Competition Act: All businesses must adhere to market-based competition laws, also known as antitrust or anti-monopoly laws.
- MAS: The Monetary Authority of Singapore (MAS) regulates the financial services industry in the country.
If a foreigner plans to work in Singapore, they need to apply for an Employment Pass (EP) or Entre Pass, which also allows them to act as the local director of your company. The entire registration process is quick and can usually be completed within a day or two.
Facts to consider before starting a business in Singapore
Before starting a business in Singapore, companies must register themselves. The choice of the business structure depends on the specific needs and tax implications of Singapore. It’s recommended to consult a professional to understand the tax implications of various business structures as it affects tax responsibilities. Additionally, some businesses such as financial institutions or businesses which deal with restricted goods need special licenses from regulatory bodies like the Monetary Authority of Singapore (MAS).
Singapore offers exceptional opportunities for foreign investors. The country provides a strategic location as a financial hub, over 80 double taxation avoidance agreements and generous tax incentives. Singapore’s global financial standing, combined with a network of free trade agreements, allows businesses to maximize profitability and expand their reach. Despite global challenges, Singapore’s manufacturing and wholesale trade sectors remain strong and the government is focused on key areas such as workforce upskilling, attracting skilled talent, fostering innovation and advancing emerging technologies.
Taxation and Government Support
Singapore follows a modified territorial taxation system which means individuals and companies are taxed on income sourced in Singapore. Companies are also taxed on foreign income received in Singapore, unless specific exemptions apply.
The tax year in Singapore runs from January 1 to December 31. The income from the previous year (the basis year) is taxed in the following year of assessment. Companies are taxed on income earned within Singapore, as well as foreign income that is received or deemed to be received in Singapore.
Withholding tax is a final tax applied to certain types of income. It usually applies to payments made to non-residents. The Tax rates range from 15% to 24%, depending on the income type and some rates may be reduced through tax incentives or treaties.
Transfer pricing rules require companies with gross revenue exceeding S$10 million or those who prepared transfer pricing documentation in the previous year to maintain up-to-date transfer pricing records.
Goods and Services Tax (GST) is the main indirect tax in Singapore. It is similar to VAT in other countries. Property tax is levied on property ownership which is based on the property’s annual value. Stamp duty applies to asset transfers based on the purchase price or market value.
Conclusion
Singapore stands out as an ideal destination for businesses and investors. The country provides a strategic location, robust economy and business-friendly environment. Singapore offers an attractive investment climate with a world-class infrastructure, transparent legal system and political stability. The country’s highly skilled workforce, emphasis on innovation and leading financial sector further enhance its appeal to investors.
Additionally, Singapore provides a vibrant startup ecosystem, access to capital and excellent quality of life which makes it a top choice for entrepreneurs, multinational companies and professionals alike. Singapore remains a global leader in ease of doing business, as the country offers diverse opportunities for growth and success with a transparent tax regime and efficient regulations.
