Setting up business in Singapore by Paul Hype Page

www.businessatsingapore.com

By

Paul Hype Page & Co. Certified Public Accountants


The user acknowledges and agrees that

Paul Hype Page & Co.

shall not be held responsible and liable in any way for any/or

all consequences (including, without limitation, damages for

loss of profits, business interruption, or loss of information)

that may be incurred by the user directly or indirectly.


2nd most popular city Worldwide for International

business Some 67.5% of international companies

surveyed set their offices in Singapore

The World Bank also ranks the Republic as the world’s

easiest place to do business

Singapore’s network of Agreement

Double Taxation Avoidance Agreements.

Free trade agreements and

Investment Guarantee Agreements


� Singapore Local company or a Foreign branch of my

India holding company?

� Do we need a local partner to set up the business in

Singapore?

� What types of taxes and the rates?

� Do I have to lease an office and employ staffs to

incorporate a business?

� What the legal form of business available in

Singapore?


FORMS OF BUSINESS ORGANISATIONS:

� Companies

� Business Trusts

� Foreign Branch

� Foreign Subsidiary

� Foreign Representative Office

� Sole Proprietorships

� Partnerships

� Limited Liability Partnerships


CharacteristicsSole

Propertorship

General

Partnership

Limited Liability

PartnershipCompany Business Trust Registered Business Trust

Owner(s) of the businessSole

ProprietorsPartners

Partners have a share in

the capital and profits of

the LLP)

Company

members/shareholder

own shares

Trustee (on trust

for beneficiaries)

Trustee-manager (on trust for

unit holders)

Legal statusNot a separate

legal entity

Not a separate

legal entitySeparate Legal entity Separate Legal entity

Not a separate

legal entityNot a separate legal entity

Party that is liable for debts of

the business

Sole

ProprietorsPartners

Limited Liability

PartnershipCompany

Trustee

Beneficiary (may

draw from assets

under the trust)

Trustee manager (may draw

from assets under the trust)

Responsibility for management

of businessSole proprietor Partners Partners Board of Directors

Trustee or

manager

appointed by

trustee

Trustee manager

Comparative Regulatory /

administrative compliance

requirements

Minimal Minimal Low

Low to high

depending on size

and whether it is

listed

Low to medium

depending on

requirements in

trust deed

Medium to High depending on

profile of unit holders(eg

whether retail or institutional)

Access to finance

Only from

proprietors

personal

investment and

borrowings

Only from

partners

personal

investments

and

borrowings (

maximum 20)

Only from proprietors

personal investment and

borrowings

Can access capital

market

Limited to amount

placed in the trust.

No access to retail

investors in capital

Can access capital market


� A sole-proprietorship is a business owned by one person or

company, there are no partners.

� A foreign company also cannot register a sole-

proprietorship or partnership unless it has registered itself

under the Companies Act, Cap. 50.

� Taxation is based on personal tax rates, see next slides

� No tax advantage of $100k for the first three YAs


Scenario Appointment of Local Manager

a) Sole-Proprietorship

The sole-proprietor is a foreigner. Compulsory

The sole proprietor is a Singapore Citizen or Singapore

Permanent Resident and resides in Singapore.

Optional

b) Partnership

All partners are foreigners. Compulsory

At least one of the partners is a Singapore Citizen or

Singapore Permanent Resident and resides in Singapore.

Optional

c) Where the sole-proprietorship/partnership is owned

by a foreign or local company and

• All of the directors are foreigners. Compulsory

• At least one of the directors is a Singapore Citizen or

Singapore v

Optional


Chargeable

Income

Rate

(%)

Gross Tax

Payable ($)

First $40,000 - 550

Next $40,000 7 2 800

First $80,000 - 3 350

Next $40,000 11.5 4 600

First $120,000 - 7 950

Next $ 40,000 15 6 000

First $160,000 - 13 950

Next $ 40,000 17 6 800

First $200,000 - 20 750

Next $120,000 18 21 600

First $320,000 -

Above $320,000 2042 350



Methods:

� A sole-proprietorship or partnership can be registered by submitting

an application online via BizFile.

� Log into BizFile using his/her identification number and SingPass to

submit an online transaction. Or

� Engage the services of a professional firm (e.g. lawyers, accountants,

chartered secretaries) or a service bureau

Processing time:

� It's usually registered within 15 minutes after the registration fee is

paid. However, it may take between 14 days to 2 months if the

application needs to be referred to other authorities for approval or

review.


Foreigner can register business forms as below:

� Branch of their foreign company

� Local registered Company

� Fully owned subsidiary

Standard Two Steps Procedures for Registration

� Name application

� Incorporation

� Return of Allotment of Shares

� Cessation of GST Rebate on 31 December 2010


Appointment of director

� A minimum of one resident director (a Singapore Citizen, a Singaporean Permanent

Resident, a person who has been issued an EntrePass, Employment Pass, or Dependent

Pass) is mandatory.

Appointment of Company Secretary

� Section 171 of the Companies Act requires every company to appoint a company

secretary within six months of incorporation. A company secretary must be a natural

person and an ordinarily resident of Singapore.

Documents for Incorporation

� Memorandum and Articles of Association

� Statutory Declaration of Compliance

� Certificate of Identity

� Consent to Act as Director & Statement of Non Disqualification to act as Director

� Notice of situation of registered office


All locally incorporated companies are required to hold their

� Annual General Meeting (AGM) and file their annual returns under

S175, S197 and S201 of the Companies Act.

� At the AGM, directors shall present a true and fair view of the

company's accounts to their shareholders.

� It will be the responsibility of the directors to appoint individuals with

the required level of expertise for preparation of such accounts.

� A company has to furnish Estimated Chargeable Income (ECI) within

three months after the end of its financial year end. Actual Tax filing

should be done before 30 Nov of each year.


Preparation of minutes for post-incorporation matters

Preparation of resolution to open bank account

Maintain of statutory registers and minutes books

Advise on holding AGM

Prepare notices and agenda for AGM


� Employment Pass

� Enterpreneur Pass (Entrepass)

� 1 -2 Years Multi Entries Travel Business Visa with a

Representative Office

� 1 -2 Years Multi Entries Travel Business Visa with Singapore

Company

� Dependent Pass

� S Pass

� Personalised Employment Pass (PEP)

� Singapore Permanent Residence


Nature

The EntrePass is Singapore version of Employment Pass for

foreign entrepreneurs who would like to start businesses and

stay in Singapore.

Factors to issue for Visa

Origin of their country

Type of business (and business Plan)

Amount of capital investment

Local job creation

Your past work experience

Education level.


Benefits:

EntrePass holders of P1, P2 and Q status are eligible to apply for Permanent

Residence (PR) after 6 months

EntrePass holders can apply for Dependant's Passes for their spouses and

children (under the age of 21).

Dependant’s pass holder can apply directly to government schools or tertiary

education

Procedures:

� Step 1: Submission of application

� Step 2: Approval In-Principle

� Step 3: Submission of additional documents

� Step 4: Assessment and Approval

� Step 5: Collection of EntrePass


Nature

Employment Pass (EP) is the main type of Singapore work visa

issued to foreign professional employees, managers, and

owners/directors of Singapore companies

Factors to issue for Visa

Salary & Age of applicant

Roles & responsibility applicant

Company paid up capital

Applicant current citizenship

Generally, a recognized Diploma/Degree qualification

Specialist skills

Work related experience


Benefits:

Dependant Pass

Both P and Q1 Pass holders can apply for Dependant's Pass for their:

� Spouse

� Unmarried children under 21 years of age

Long-Term Visit Pass

P Pass holders can also apply for Long-Term Visit Pass for their:

� Common law spouse

� Unmarried daughters above 21 years of age

� Handicapped children

� Step-children

� Parents/parents-in-law


Procedures:

�Step 1: Registered Company with Nominee Local

Director

�Step 2: Submission of Application

�Step 3: Assessment and Approval

�Step 4: Medical Check-up

�Step 5: Collection of EntrePass


India CompanySingapore Local

Company

Indian Rupee Indian Rupee

YA 2011

Profit before Tax 3,670,000 3,670,000

Tax rates 30% First $100K tax exempted

Tax Expense 1,101,000 -

Tax Saving 1,101,000

SGD 100,000 equal to Ind Rupee 3,670,000


Second YearIndia Company

Singapore Local

Company

YA 2012 Indian Rupee Indian Rupee

Profit before Tax 7,340,000 7,340,000

Tax rates 30% First $100K tax exempted

Next $100K @ 50% CI

Tax Expense 2,202,000 311,950

Tax Saving 1,890,050


Ship Direct Sell to customer

Profit = $95%

India

Trading/Supplier

Singapore

Subsidiary/Company

Profit = $5%

Billing, Taxation and Accounting

Shipping Route

Europe/USA/Asian

Customer

Ship indirectly

Sell to S'pore Co


DTA is an agreement entered between two countries seeking to

avoid double taxation. Methods are exemption or tax credit.

� Business Profit Articles 7

Profits of an enterprise of a contracting state shall be taxable only in that state

unless the enterprise carries on business in the other contracting state through

s permanent establishment situated therein.

� Dividends Article 10

Dividend paid by a company which is a resident of a contracting state to a

resident of the other contracting state may be taxed in that other state.

� Capital Gain Article 13

Gains derived by a resident of a contacting state from the alienation of

immovable property, and situated in the other contracting state may be taxed

in that other state.


Carrying business loss and capital allowances forward

If your other income is not sufficient to offset your business loss,

you can carry forward the unabsorbed business losses and

capital allowances to the next year to offset against the income

derived from the same business & pass shareholder test in

subsequent Years of Assessment (YA).


�A Free Trade Agreement (FTA) is a legally binding

agreement between two or more countries to reduce

or eliminate barriers to trade, and facilitate the cross

border movement of goods and services between the

territories of the Parties.

�Singapore's network of FTAs has expanded to cover 18

regional and bilateral FTAs with 24 trading partners.



Who will benefit from FTAs ?

Manufacturers and exporters whose products qualify forpreferential tariffs will benefit. Their products can be morecompetitive due to lower tariffs. Can every product exportedfrom Singapore qualify for preferential tariffs?

Can every product exported from Singapore qualify for preferential tariffs?

No. Preferential tariffs are only awarded to goods that meetthe Rules of Origin (ROO) stated in the FTAs.


What are “Rules of Origin” ?

Only goods originating from Parties of a Free Trade Agreement (FTA) canbenefit under the FTA. To ensure this, Rules of Origin (ROO) are put inplace to determine the nationality of the goods.

To qualify as originating, goods must either be wholly obtained or produced,orFor manufactured products, the main principle behind the concept of ROO is thatthe country of origin is the last country where substantial transformationtook place.

Criteria Of “Substantial Transformation”

- Change in Tariff Classification (CTC) Rule

- Value Add (VA) Rule, i.e. Local Content Rule

- Process Rule


Verification of Origin and Documentation Requirements

- To qualify goods meet the relevant Rules of Origin. -Self declaration by manufacturer or -Authorised Certificate of Origin by Singapore customer Documents







Option A with employment pass

� If you are a Foreign Entrepreneurs, Professionals,

Managing Directors and Shareholders who possess an

acceptable diploma/degree, professional qualifications

or specialist skills. Oftentimes, relevant work experience

also plays a significant role in determining your

eligibility.

�Employment pass is the preferred choice for most

foreigners who want to set up a company in Singapore.


Option 2 with EntrePass

� If you are a Foreign Entrepreneur who lacks the

appropriate educational qualification or does not

qualify under the Employment Pass scheme, but has

proven track records of successful entrepreneurial

experience. The application process for Entrepass is

more complex than that of Employment Pass. It

requires an addition of a 10-page business plan and a

minimum paid-up capital of S$50,000.


Please feel free to contact

Eric Eio

+65 8484 [email protected]

This presentation is bought to you by

www.paulhypepage.com