Singaporean companies have certain advantages in terms of investment and financing. By establishing a company in Singapore, one can fully leverage its status and advantages as a financial center to access abundant investment and financing resources. Singapore’s financial market is relatively stable, with a mature financial system and international financial institutions, which is conducive to a company’s business development and capital operations.
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Why Start a Business in Singapore
Is Singapore a good place to work or start a business?
Every place has its own advantages and disadvantages. While it’s not guaranteed that starting a business in Singapore will yield the desired returns, entrepreneurs can enjoy the following unique advantages that Singapore offers.
1. Ease of Doing Business in Singapore
Recognized as one of the easiest countries in the world to do business, Singapore boasts excellent infrastructure. At the same time, Singapore is an international business hub spanning multiple industries, an independent and vibrant economy. The Singapore government has also formulated a series of incentives to attract foreign investors to integrate into Singapore’s business community and local society.
2. Singapore Offers a Range of Tax Incentive Policies
Singapore has one of the lowest corporate income tax rates among developed countries in the world. Both local and foreign companies in Singapore are only taxed on income sourced within Singapore and foreign income brought into Singapore. The standard corporate tax rate is 17%, and there are numerous tax incentives available. For example:
- Double taxation can be avoided by utilizing bilateral agreements signed between Singapore and certain countries.
- Tax exemptions are available for foreign dividends, profits of foreign branches, and foreign service income.
- Start-up companies can enjoy tax exemptions for up to three years.
3. Singapore Has a Stable Political and Economic Environment
Despite current global economic headwinds, Singapore remains one of the most resilient and stable economies in the world. Supported by political stability, Singapore earns the trust of businesses through its clean and transparent governance.
Sound monetary and fiscal policies, coupled with a robust judicial system, are the pillars of Singapore’s low-risk economy.
At the same time, Singapore is home to many world-leading industries, resulting in an increasingly diversified economy, while a growing service sector provides strong support for its manufacturing-based economy.
How to Start a Business in Singapore
You can establish various types of companies in Singapore, such as a sole proprietorship, partnership, company, limited liability partnership, or limited partnership.
After selecting the business entity type that best suits your business model, the first thing you need to do is apply for and reserve a name for your business entity. If the applied name is not in use and does not require approval or review from other government agencies, your application will be approved immediately for a fee of S$15. Once approved, the company name will be reserved for 120 days from the date of approval.
Once the business name is approved, you can register your business with the Accounting and Corporate Regulatory Authority (ACRA) of Singapore.
The following are the respective fees for registering different types of businesses:
| Business Type | Registration Fee |
| Sole Proprietorship | S$100 for a one-year registration, S$160 for a three-year registration |
| Partnership | S$100 for a one-year registration, S$160 for a three-year registration |
| Company | Business registration fee is S$300 |
| Limited Liability Partnership | Registration fee is S$100 |
| Limited Partnership | S$100 for a one-year registration, S$160 for a three-year registration |
| Foreign Company | Business registration fee is S$300 |
Upon successful registration, ACRA will provide a Unique Entity Number (UEN), which is generally the tax identification number used for tax filing and other related government transactions.
Tax Incentive Policies for Singapore Companies
Singapore’s corporate income tax rate does not exceed 17%, which has attracted a large number of foreign investors. Specifically, the corporate income tax rates implemented in Singapore are as follows:
| Income | Tax Rate |
| Company profits below S$300,000 | Effective tax rate of 8.5% |
| Company profits over S$300,000 | 17% |
| Accrued capital gains of the company | 0% |
| Shareholder dividends | 0% |
| Foreign income not remitted to Singapore | 0% |
| Foreign income remitted to Singapore | 0 – 17% depending on the situation |
Singapore operates on a territorial tax system. In simple terms, the Singapore government taxes income sourced within Singapore, while foreign income not remitted to Singapore is not taxed. Dividends from foreign sources, profits of foreign branches, and service fee income are exempt from tax when remitted to Singapore if they have already been taxed in a jurisdiction with a total tax rate of at least 15%.
In addition, Singapore offers a series of tax incentives for newly established companies. Since 2019, all companies incorporated in Singapore can enjoy a 75% tax exemption on the first S$100,000 of their chargeable income and a 50% tax exemption on the next S$100,000 for the first three consecutive years after incorporation. Specifically, the calculation for this policy is as follows:
| Chargeable Income | S$ | Exemption Rate | Exempted Amount | Taxable Amount |
| First | 100,000 | 75% | 75,000 | 25,000 |
| Next | 100,000 | 50% | 50,000 | 50,000 |
| 200,000 | 125,000 | 75,000 |
Furthermore, Singapore provides various incentives for emerging industries, corporate headquarters activities, the financial sector, asset securitization, fund managers, international maritime activities, international trade, and R&D activities.
Anti-Avoidance Rules
All actions aimed at reducing, avoiding, or altering tax liabilities in Singapore are highly scrutinized by the Inland Revenue Authority of Singapore (IRAS). A proposal in the Income Tax (Amendment) Bill 2020 is to impose a 50% income tax surcharge on such actions to combat tax avoidance.
Additionally, if a resident company acts as an agent for a non-resident company, and the transaction price between them is higher than the market price due to their related relationship, IRAS may tax the resident company on the profits of the non-resident company.
Singapore Goods and Services Tax (GST)
Few people like consumption tax, but it is difficult to avoid when setting up a company in Singapore, as most goods and services transactions in Singapore are subject to GST. The standard GST rate in Singapore remained at 7% for a long time, but it was increased to 8% from January 1, 2023, and was raised again by one percentage point to 9% from January 1, 2024. This is mainly because the government needs to increase fiscal revenue by raising GST to cope with the increasing expenses of a continuously aging society, especially medical expenses.
However, there are some GST tax incentives. A zero-rate exemption applies to the export of goods and cross-border services, including but not limited to cross-border transportation services and related insurance services, overseas advertising, and construction services related to land located outside Singapore.
Residency Status in Singapore
Entrepreneurs or investors can obtain temporary residency status by starting a business in Singapore, namely the EntrePass. After meeting certain investment requirements, they also have the opportunity to obtain permanent residency status, and can even apply to become a Singapore citizen later on.
As long as you plan to establish a new company in Singapore, you are eligible to apply for an EntrePass. Although applicants are required to have extensive business or work experience, there are no special academic requirements. In addition, the company’s operations must meet certain specific requirements, such as receiving investment from a venture capital firm or possessing innovative technology, but entrepreneurs can choose to operate the company after the EntrePass is approved.
After the company has been operating normally for one year, you can apply for Singapore Permanent Resident status. Alternatively, entrepreneurs can directly obtain Singapore Permanent Resident status through the Global Investor Programme (GIP). Under one of the schemes of this program, entrepreneurs can apply for Singapore Permanent Resident status after investing at least S$10 million in a new business entity or an existing business.
Singapore Permanent Residents who are at least 21 years old and have resided in Singapore for at least two years can apply for Singapore citizenship.
Conclusion: Should You Start a Business in Singapore?
There is no single answer to this question, as personal needs and business models must be considered before reaching a conclusion.
The Singapore government has long been working to attract foreign investment and startups, offering many preferential policies in terms of taxation, financing, and talent attraction. Additionally, Singapore’s business environment is very friendly, with efficient government departments and rapid processing times.
In the Southeast Asian region, Singapore is an important business and financial center. Registering a company in Singapore provides better access to the Southeast Asian market and helps expand business scope.
The quality of life in Singapore is also a huge attraction. Singapore has a stable and progressive political environment, allowing residents to live and work in peace, and has an ample workforce. Singapore is also known for its multicultural society, emphasizing cultural diversity and inclusivity.
Furthermore, Singapore boasts a world-class education system, which is a significant advantage for families planning to move or send their children to study here. If you want your children to receive a comprehensive and high-standard overseas education, consider having them study in Singapore. Singapore is one of the most popular study destinations globally, with Nanyang Technological University (NTU) and the National University of Singapore (NUS) being among the world’s top universities.
However, it should not be overlooked that Singapore’s business environment is highly competitive, with numerous companies across all industries. Therefore, starting a company in Singapore requires facing intense market competition and possessing strong competitiveness.
At the same time, human resource costs in Singapore are relatively high, so registering a company in Singapore means bearing higher labor costs. In addition, Singapore’s legal system is quite strict, and it may be necessary to hire professionals for legal consultation and services.
Considering all the factors above, if you decide to register a company in Singapore, with a well-prepared business plan, Singapore will surely be an ideal choice.
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