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Company formation Singapore
The island state of Singapore is one of the members of the Asean states and is therefore also known as the “Gateway to Asia”. As the world’s most important financial and trading center, Singapore is attracting more and more international investors and companies. One of the main reasons for this is that Singapore meets the highest standard claims and banking secrecy is constitutionally protected.
“Singapore is one of the countries with the strongest bank secrecy and one of the most liberal tax systems in the world.”
The Singaporean tax system is very interesting for both individuals and companies. International companies are also benefiting, since profits from abroad do not have to be taxed.
Income tax is calculated on the basis of the net profit, which, however, is only applied to income generated in Singapore or income that is transferred to Singapore.
Singapore does not have a double burden on profit distributions (eg dividends). Because these are generally tax-exempt in the country, which is regarded as gate to Asia. There is no capital gains tax in Singapore either.
Further tax cuts were decided by the government in February 2007. The max. uniform income tax rate was therefore reduced to 17% (previously 20%). However, this tax rate is only applied from a yield of SGD 300,000, -. Lower yields are taxed at a lower tax rate. This is shown in the table on the progressive tax burden.
Progressive tax burden
For income up to SGD 10,000, – a tax rate of 4.5% is applied, for income up to SGD 300,000- the tax rate is 9% and from SGD 300,001, – the maximum tax rate of 17% applies.
The first 3 years of the company
The first 3 years a company is not taxed. It is tax exempt at this time.
In each case the first SGD 100.00 of profit are also tax-exempt.
Taxation of foreign income
Foreign income is taxed by the country of service provision.
The companies must be “non-resident” so that the income is tax-exempt. A company is considered non-resident if it has no business in Singapore. The income is neither earned nor transferred to Singapore. (Interesting opportunity for holding and trading companies.
Constitutionally protected banking secrecy
As well as in Lichtenstein and Switzerland, bank secrecy also applies in Singapore. Thus, no customer information may be disclosed without his consent except a criminal act – focus on suspected drug trafficking. Singapore also does not provide assistance in cases of suspected tax evasion.
Singapore Private Limited Company
The private limited company is a limited liability company. However, there is no capital deposit requirement on the liability capital. The minimum capital is SGD 1, -. An exception is, however, if the company wishes to apply for work and residence permits, then a capital of SGD 100.00- must be paid.
To establish a private limited company, the director and the company secretary must be resident in Singapore and have a residence permit. As far as other directors are used, they can also be foreigners.
A registered shareholder and a share certificate, which shares may not have a face value because only registered shares are allowed, must be issued.
Special feature of the company name
The company name must be approved by the Accounting & Corporate Regulatory Authority (ACRA).
Accounting and Auditing
In Singapore, there is a book keeping obligation as well as the annual external auditing obligation. It should be noted that the auditor must be resident in Singapore and capable of carrying out his duties. Companies with fewer than 20 shareholders and no legal entities as shareholders, with less than SGD 5,000,000 per annum, are exempt from the annual audit requirement.
Legally prescribed are the annual general meetings. This may be waived if all shareholders agree.
The key advantages of Singapore are
- Constitutionally protected banking secrecy
- Liberal tax system
The biggest mistakes when starting a business abroad
Many agencies and law firms do not advise comprehensively or wrongly. Learn what to look for.
Gravity of the situation
Often, these law firms think foreign companies are half-silk, tax evasion is favored and mailbox companies are the leaders rather than the exception. This is true, however, only in some start-up agencies that do not have the necessary expertise. Self-proclaimed law firms that do not employ tax accountants or lawyers usually set up companies that are unlikely to operate legally. We set up and look after companies that can withstand tax audits and that are legally operated.
Do you have to live in the country where you start a company?
You can set up a company worldwide, as long as the respective country allows you as a foreigner to acquire shares in local companies or to act as a managing director. If this is not the case trustees can be used. For example, Cyprus allows every EU citizen to own and run a business. Nevertheless, trustees can be used for the purpose of identity protection. However, it is important that the management takes place locally, in the country in which the company is to be taxable. In addition, a permanent establishment must be set up. Without these, a major tax offices around the world do not recognize the company and in the worst case would require additional payment of corporate and business taxes plus late payment surcharges. We rent you a real office and set up a permanent establishment that meets all requirements beyond doubt.
Problematic Law firms: Secrecy is not regarded.
Some law firms bind customers with toggle contracts and exert pressure when the customer wants to close his company. If you are a client of a law firm that has established a legally flawed company, they can be blackmailed. Because in the case of a fiscal problem, law firms without a license are not bound by a duty of secrecy.
Migrating to a different law firm
We receive many inquiries from customers who already own a foreign company and are looking for a new law firm. The process of changing law firm is made often difficult on purpose. Therefore, we have developed a principle of trust. If you are not satisfied with us and want to change, you can do that at any time. The necessary documents (resignation letter), you receive from us standardized after founding. You are therefore protected against unexpected costs and you are free at any time to visit another law firm. So far we have not lost any customer to another law firm.
Privacy / Firm Location
Your accounting documents are kept safe with us. In addition, all electronic data is stored encrypted and accessible only by us, which are bound to a professional secrecy. All accounting records are also stored locally only. Neither authorities nor hackers are able to access this data.
There are quite a few locations in the world that do not charge taxes on companies or individuals, or only estimate a very low flat rate tax. But this can rarely be used without corresponding change of residence. If you are a resident of any major country, the relevant double taxation agreement is decisive. Providers who promise otherwise lead them to tax evasion, which in the case of discovery usually punishes severely. We advise against setting up companies in countries that have already been blacklisted by the OECD. The foundation is usually very cheap, but the tax consequences in your origin country can be devastating. Since the introduction of the automatic exchange of information between almost all major countries, an anonymous private account no longer exists.
We comply with the following code:
- Legally secure foundations
- No unexpected(hidden) costs
- No false promises
- Finding the right solution by focusing on your requirements
With this strategy, we have been on the market since 2013 and have not disappointed any customer so far. And we prioritize it in keeping that way. We strive to ensure that every client is satisfied and does not take risks with the solutions we provide for them, but only exploits legal opportunities. Starting a company that involves doing real business is more costly than a letterbox company, but it is the only way to save on taxes without risking legal action.
The company headquarters and the tax domicile must be in Singapore. Furthermore, max. 20 shareholders are allowed, none of which may be a legal entity.
Why start a company in Singapore?
- Singapore is one of the wealthiest countries in the world
- High standard of living
- Low tax rates
- No dividend tax
- No capital gains tax
- Keine Erbschaftssteuer
- No real estate tax
- Corporation tax of 9% with a profit Amount of SGD 10,000.- up to SGD 300,000.-, above SGD 300,000.- the corporate tax rate is 17%
Tax structure in comparison
|German GmbH||Resident company in Singapore||Non-Resident Companies (No Business in Singapore)|
|Corporation tax||15,825% including solidarity surcharge||- Complete tax exemption in the first 3 years
- tax exemption on each of the first SGD 100,000.
- after a Progressive tax between 4.5 and 17%
|Tax exemption if income is neither generated in Singapore nor transferred to Singapore|
|Business tax||(Central rate of assessment in Germany 435% in 2010)||N/A||N/A|
Company formation Singapore - That's how it works
Establishing a company in Singapore is easy and it does not require physical presence in Singapore. For the foundation only a certified ID or passport copy and a utility bill is needed. Depending on the choice of bank also a short CV or bank reference.