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The Benefits of Incorporating a Company in Singapore?

The Benefits of Incorporating a Company in Singapore?

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Why you should register a company in Singapore? [ Benefits]

There are several facets to consider when establishing a business, and one of them is knowing the right location to operate it. Choosing the right business destination improves a company’s performance and exposure to the right audience. When it comes to the best location in Asia to do their business, both local and foreign business owners only have one thing in mind: Singapore.

For these business owners, incorporating their companies in Singapore has provided them with many benefits. Read on.

The Benefits of Incorporating a Company in Singapore: Low Corporate Tax Rate

The corporate tax rate on a company net profit in Singapore is 17%. This means that after you acquire the company profit and deduct relevant expenses, the remaining profit on that17% tax will be charged by the government. In the Asia-Pacific region, the typical tax rate for most countries is around 25% to 40%. In some Asian countries, the tax rate can go as high as 45%.

Singapore also offers tax exemption for newly incorporated companies to allow them to acquire some incentives and enough money to reinvest in their businesses. For example, a newly established company with a profit of around $300,000 will have a tax payable of around $29,000 (9.9% tax rate). This tax exemption is granted to companies for the first three years of their incorporation. Similarly there are exemption schemes for all other existing companies also.

The Benefits of Incorporating a Company in Singapore: Tax-Free Dividends

Incorporate Your Company - Tax free dividends

Once you start running your company, you will calculate the net profit. After you pay the taxes, you can distribute the remaining amount to your shareholders as a dividend. This dividend is not taxed on Singapore residents as dividends are tax-free in the country. In many Asian countries, these dividends are taxed on the personal income tax returns of the citizens. In this way, dividend taxation results in double taxation, which is not a case in Singapore.

The Benefits of Incorporating a Company in Singapore: Tax-Free Gains

Incorporate Your Company - Tax free gains

Gains acquired from the sale of property shares and financial instruments are considered as capital gains, which are also 100% tax-free. Thus, if you incorporate a company in Singapore, grow it to a sizable level, and sell it or sell some of its shares, then you will acquire a tax-free profit.

The Benefits of Incorporating a Company in Singapore: Strategic Location

Incorporate Your Company - Strategic location

Singapore is strategically located at the center of major population centers in the world. Singapore’s location is in Asia and at approximately 4,000 miles range. Noticeably, Singapore is in close proximity to the biggest countries in the world, namely China, India, Pakistan, Bangladesh, Indonesia, Philippines, and Japan. Apparently, 60% of the overall world population is in the Asia-Pacific region.

The Benefits of Incorporating a Company in Singapore: Numerous Grants and Assistance Programs

Incorporate Your Company - Numerous grants

The Singapore government offers numerous incentives and assistance programs to newly established companies. One can easily find these grants in the website of enterprise Singapore.

In the website’s Financial Assistance page, subpages on Grants, Loans and Insurance, Tax Incentives, and Investments can be found. In the Grants subpage, there are available grants for: new entrepreneurs looking for sponsorship, trainings, and business networks (Startup SG founder); new businesses seeking prompt sponsorship to expedite the commercialization of their innovative services (Startup SG Tech); companies aiming to improve their IT equipment and services (Productivity Solutions Grant); companies planning to take their businesses abroad (Market Readiness Assistance Grant); and companies striving to upgrade, innovate, and internationalize their businesses (Enterprise Development Grant), among others.

Many of these grants and assistance programs are readily available for company use, in which at least 30% of the capital belongs to Singapore citizens. However, if you have suitable partners in Singapore, you can definitely take advantage of these grants. Finding business partners in Singapore is easy as the country is known for having a highly competitive manpower.

The Benefits of Incorporating a Company in Singapore: Open Immigration Policies

Incorporate Your Company - Immigration policies

Singapore has open immigration policies and a population of 5.5 million. Slightly less than half of the Singapore population consists of permanent residents and foreigners, who are citizens of other countries but made Singapore their new home. The 1.68 million Singapore nonresidents consist of Employment Pass (EP) holders, Dependent Pass holders, Work Pass holders, and other work permit holders.

While Singapore imposes policies on the number of individuals to accept per year, the point is that if you love Singapore as it is and plan to make it your new home, then you can absolutely look forward to pursuing it.

The Benefits of Incorporating a Company in Singapore: Excellent Overall Performance

Incorporate Your Company - Excellent perfomance

Ease of Doing Business

Singapore has consistently ranked at a high position in terms of ease of doing business. From 2010 to 2016, Singapore was at the top spot in the category, and from 2017 to 2020, Singapore has been at the second spot.

Incorporate Your Company - Logistics Performance Index

Logistics Performance Index

When it comes to global ranking, Singapore lands in the 7th spot on logistics performance index, which includes customs infrastructure, international shipment, logistics competence, tracking and tracing, and timeliness.

Incorporate Your Company - Recognition

Other Recognitions

International organizations have awarded Singapore with various accolades for its pro-business climate, some of which are:

  • Economic Competitiveness, 1st Place (IMD World Competitiveness Ranking, 2019)
  • Ease of Doing Business, 2nd Place (World Bank, 2019)
  • Talent Competitiveness – 1st Place in Asia-Pacific and 2nd Place Worldwide (INSEAD’s Global Talent Competitiveness Index, 2019)
    • This ranking means that Singapore has a top-notch manpower, and they are readily available for hiring.
  • Integration Into the World Economy, 2nd Place (DHL Global Connectedness Index, 2019)
  • Financial Competitiveness, 4th Place (Global Financial Centre Index, 2019)
  • Digital Competitiveness – #1 in Asia-Pacific and #2 Worldwide (IMD Digital Competitiveness Ranking, 2019)

More Reasons to Incorporate Your Company in Singapore

Aside from the facets mentioned above, Singapore guarantees the following:

Incorporate Your Company - Reasons to incoroporate
  • A prosperous economy
  • A strict compliance to state laws
  • Quick company incorporation processes
  • No capital gains tax
  • A low personal income tax rate
  • Lower withholding tax for foreign-sourced profits
  • Highly developed capital markets and financial laws
  • 75 double taxation agreements
  • 41 investment guarantee agreements
  • 26 free trade agreements
  • 8 treaties dealing with profits from shipping and air transport activities
  • No regulated foreign company policies
  • No regulated profit repatriation or capital import
  • Strong IP protection
  • World-class infrastructures
  • Great banking experiences
  • Pleasant political and economic environment
  • A functional and corruption-free government
  • No unnecessary bureaucracy
  • A good professional reputation
  • An exceptional quality of life

On top of that, Singapore is continuously striving to become Asia’s prime destination for company incorporation.

Singapore: The Land of Many Business Opportunities

Incorporate Your Company - Opportunities

Low corporate tax rate, tax-free dividends, tax-free capital gains, strategic location, a huge selection of grants and assistance programs, open immigration policies, worldwide recognition—all these facets have been making Singapore a reputable finance and commerce center in Asia over the years. Incorporate your company in Singapore now!

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