The most common type of companies incorporated in Singapore is Limited Liability Company (Pte. Ltd. / Ltd.). There is no special requirement for the minimum share capital, but usually it is not less than 1 Singapore dollar for each issued and outstanding share. The authorized capital may be increased at any time after a company’s registration. For registered address it is a must to provide a local address.
Company may issue preferred or ordinary registered shares. Bearer shares are not allowed.
The company name must contain abbreviation “Pte. Ltd.” or “Ltd”. The content of words such as “Trust”, “Bank”, and “Insurance” requires a specific license.
At least one director (always a natural person) usually controls Singapore company. There should be at least one owner, who can be either natural or legal person resident of any country. Director and shareholder may be one person, but in this case he/she must be a resident of Singapore.
Director (resident) carries criminal and administrative responsibility for the actions of the shareholders and the second director (non-resident). It is necessary to appoint a Secretary – a natural person with a residency in Singapore.
Information on directors is publicly available and stored in the State Register of Companies. Details about the real beneficiary are confidential and stored only in the office of the registered agent.
Accounting and auditing of companies in Singapore
In accordance with the Singapore companies act (Art. 197), a Singapore company is required to submit an annual report together with the audited financial statements to the Accounting and Corporate Regulatory Authority (ACRA) within one month after the annual general meeting of shareholders.
Small businesses and start-ups are exempt from a conducting annual audit i.e.:
• Companies do not operate during the reporting period
• Private companies with an annual turnover less than 5 million Singapore dollars.
Taxation of Singapore companies
Singapore has a single-tier territorial based flat-rate corporate income tax system, which means there is no double-taxation for stakeholders. Tax paid by a company on its chargeable income is the final tax and all dividends paid by a company to its shareholders are exempt from the further taxation.
There is no tax on capital gains in Singapore. Examples of capitals gains include gains on sale of fixed assets, gains on foreign exchange on capital transactions, etc.
Singapore’s headline corporate tax rate is a flat 17%. In order to make Singapore as an attractive investment destination, income tax rates in Singapore have been going down consistently. All Singapore resident companies are eligible for partial tax exemption, which effectively translates to about 8,5% tax rate on taxable income of up to 300 000 Singapore dollars per annum. The taxable income above 300 000 Singapore dollars will be charged at the normal headline corporate tax rate of 17%.
The withholding tax does not apply to Singapore resident companies or individuals. Under the law, when a payment of a specified nature is made to a non-resident company or individual, a percentage of the payment has to be withheld and paid to Income Tax Authorities.
Tax on royalties is 10%.
Singaporean companies are obliged to file a tax return for income tax with enclosed documents until 30 November of each year following the reporting period.
In Singaporean company it is allowed to appoint nominee directors, shareholders and a secretary.
Opening a bank account for a Singaporean company
For a Singaporean company it is possible to open a bank account in any of our partner banks, but it is advisable to open the account in a local bank.
It is important to keep in mind that every bank account opening procedure is individual and depends on the accuracy and timeliness of information and documents provided by the client.