Singapore Incorporation: Why or Why not?
At flag theory, we help you locate the best places to structure your business and your life. We choose strategic jurisdictions from a holistic perspective that takes into account variables such as incorporation, business markets, taxation, intangible assets, residency and citizenship, which we refer to as flag theory; so that you can protect your business, and grow your wealth. This article details the pros and cons of setting up a Singapore company, something the author has first hand experience with.
Singapore has enormous potential for start ups and Internet entrepreneurs from ALL over the world. Singapore is the very best place to start and grow a business. The country fosters entrepreneurship, and the government supports the free market. The government, and indeed most of the people in Singapore are intelligent, and the place is truly a utopia – about as close to perfect as you can get.
Singapore is the hub of South East Asia. Home to the busiest port in the world, Singapore is a developed country in one of the fastest growing economies in the world. South East Asia, China and India have more people than the rest of the world combined.
Singapore values Entrepreneurs. It’s very possible to immigrate to Singapore and start a new life as an entrepreneur. I’ve done this, and I wrote about my experience with entrepass here. I have immense respect for the support the SG government gives to local SME’s and startups. Singapore may not be perfect – but it’s a near perfect place to start a company.
Clear tax scheme
One of the most advantageous parts of doing business in Singapore is the clear and transparent tax scheme. Singapore has a territorial tax regime, which means that (in general) you’ll only be taxed on business that takes place in Singapore. This makes Singapore a great flag for personal residency.
However, if you have a bank account for your Pte. Ltd. company you will most likely be liable for local taxation. This is one reason why entrepreneurs seek out Singapore banking with a BVI or Nevis entity. This is a highly useful set up as there are very few reporting requirements, the banking is very secure, and you can use merchant accounts like PayPal.
Business Entities and Asset Protection The most common business entity in Singapore is “Private Limited Company“, often shortened as Pte. Ltd. Singapore may just be the best place in the world to incorporate if you are an internet entrepreneur seeking venture capital (outside of Silicon Valley).
One difference between Singapore and other jurisdictions is that a local address and resident director are required. They do not need to own a percentage of the company equity, so they can function solely as a nominee if needed. Many companies charge S$3000 per annum for this service.
Venture Capital and Players with Money. There is obviously no shortage of people with cash to invest in Singapore. There are many different government grants, incubators, accelerators, private equity funds and banks who can provide financing for your business at every stage of development. Financing is a core component in any business, and Singapore provides the best alternative investment market in the entire world. However, for all the talent and money that is oftentimes supplied by fund managers, there is a distinct lack of entrepreneurial talent for early stage startups. It has been said that Singapore lacks “true entrepreneurs”. This may or may not be true, but the government and private enterprise is brilliantly attempting to revise this sector and make Singapore the leading country in the world when startups look to expand with equity financing.
Courts in Singapore are under common law jurisdiction, with courts that are known for being speedy. Compare this to another major sourcing country in the region, the Philippines, which has painfully slow processes on court proceedings, or other countries such as China, Thailand, Malaysia, etc. which are not common law, and documents are not written in English and foreigners may experience difficult dealing with local authorities or court proceedings For entrepreneurs who want boots on the ground sourcing from the vast resources in south east Asia, the Singapore court system can give you a confident backing for hiring, clear laws, and a good government with low corruption levels. For many high tech start ups, proprietary software and employee non-competes are a relevant objective.
There is a wealth of venture capital in Singapore. Many say that there is more money than talent (meaning there is more venture dollars than high growth companies led by experienced entrepreneurs).
Here is some more information about setting up in Singapore, opening a bank account in Singapore as an American, and what it’s like to live in Singapore city. We can assist you with establishing your Singapore company. Join our mailing list below and we’ll send you more information.
Why you wouldn’t want to set up in Singapore?
- Relatively expensive – local director is required and this largest contribution to the cost of set up.
- If you want to be 100% offshore. There is some taxation of Singapore Pte. Ltd. companies. It is not a high tax jurisdiction, but it is also not a 0% tax jurisdiction.
- If you don’t plan on immigration. A Singapore base is not as useful if don’t plan on spending time there. You can basically forget about venture capital if you aren’t willing to at minimum establish a local headquarters.
- High compliance People follow the laws of Singapore. Any type of pornography and other higher risk business models are not acceptable. Yearly tax returns must be filed with IRAS.