Doing Business In Singapore 2008. Introduction Geography Singapores strategic location at the southern tip of the Malaysian peninsula has ensured its

Doing Business In Singapore

2008

IntroductionGeographyGeography Singapore’s strategic location at the southern tip of the Malaysian peninsula has ensured its importance, which

is greater than its size might seems to justify. Singapore consists of Singapore island and 63 islets

within its territorial water. The Central Business District spreads from the central

and southern parts of Singapore.

PopulationPopulation Resident population of 3.58 million in June 2007, of Singapore citizens and permanent residents Total population : 4.59 Million

Political SystemPolitical System Singapore is a republic with a parliamentary system of government, with a written constitution to provide for the organs of the state, namely the executive, the legislature and the judiciary.

LanguagesLanguages Official languages are Malay, Chinese, Tamil and

English.

Currency The monetary unit used in the Singapore dollar (S$) The monetary unit used in the Singapore dollar (S$)

which is divided into 100 cents. which is divided into 100 cents.

Introduction

Reasons for doing business in Singapore

Strategic Location Access to unlimited markets Pro – business environment Nucleus for talents Educated workforce Opportunities to innovate

Different types of business entities

Sole Proprietorship Partnership Private Limited Companies Exempted Private Companies Public Companies Branches of Foreign companies

Sole Proprietorship

An individual carrying on business on hisAn individual carrying on business on his

own behalf.own behalf. Simplest and most flexible business structure. It is not a separate legal entity. Sole proprietor is liable for the debts of the business.

Partnership

Defined under the Partnership Act(Cap.391) Defined under the Partnership Act(Cap.391)

as a relationship that subsists between as a relationship that subsists between

person carrying on business in common person carrying on business in common

with a view of profit.with a view of profit. Minimum of 2 partners and maximum of 20

partners

Private Limited Companies

A private company is one which has a small A private company is one which has a small

group of no more than 50 shareholders.group of no more than 50 shareholders.

Exempted Private Companies

This is a private companyThis is a private company Has not more than 20 shareholder and none of the

shareholders is a corporation or that is wholly owned by the Government and which the Minister, in the national interest, declares by notification in the Gazette to be an exempt private company.

Public Companies

Public Company limited by shares

A local incorporated company in which the A local incorporated company in which the

number of shareholders can be more than 50.number of shareholders can be more than 50.

The company may raise capital by offering shares and debentures to the public.

Must register a prospectus with the Monetary Authority of Singapore before making any public offer of shares and debentures.

Branches of Foreign Companies

Instead of incorporating a local company to conduct

business, some foreign companies may choose to register

Singapore branch under the Companies Act(Cap.50).

A Singapore branch of foreign company is part of the same

legal entity as the foreign company at its head office and

branches of the foreign company in other parts of the

world.

Representative OfficeA temporary establishment for foreignA temporary establishment for foreign

companies to assess the business companies to assess the business

environment in Singapore before making environment in Singapore before making

business decision.business decision. To undertake promotional and liaison activities on behalf

of head office or overseas branches. May not be engage in any trading or business. Usually manufacturing, trade logistics and trade-related

services sectors.

Operational Headquarter

Companies using Singapore as a base toCompanies using Singapore as a base to

conduct HQ management activities.conduct HQ management activities.

Regional Headquarters

International Headquarters

Operational Headquarters

Business Headquarters

Manufacturing Headquarters

Register a Business

ACRAAccounting and Corporate Regulatory Authority To register business entities and public

accountant. To ensure compliance with legal requirements. To enforce and prosecute offenders. To provide information on registered entities.

Any on person who wants to carry on business for

the purpose of gain (profit) must register a

business, company or a limited liability partnership

in Singapore before carrying out such business

ACRAACRA

BUSINESSBUSINESS

COMPANYCOMPANY

LIMITED LIMITED LIABILITY LIABILITY

PARTNERSHIPPARTNERSHIP

For Local Sole Proprietor or PartnershipFor Local Sole Proprietor or Partnership Log into www.bizfile.gov.sg to submit an online

transaction to apply for a new business. Engage the services of a professional firm (lawyers,

accountants or chartered secretaries) or service bureau (DP Bureau) for assistance in submitting the online application to register a new business.

Call at ACRA in person to submit the online transaction at the BizFile Kiosks.

Register a Business

For ForeignersFor ForeignersForeigner who wishes to engage in any business,

profession, occupation or form of paid employment

in Singapore must apply for an Employment PassEmployment Pass.

Register a Business

A successful applicant will be issued with an Approval-In-Principle letter to enable him/her to register the business with ACRA.

Upon receipt of the Certificate of Registration from ACRA, the applicant needs to send/fax a copy of the certificate and the Approval-In-Principle letter to the Employment Pass Department for the processing of his/her Employment Pass.

Register a Business

Incorporating a local company

Any person who wants to incorporate a local company may engage a professional firm or service bureau to assist him in the filing of the application for incorporation via Bizfile.

A company can also be incorporated by the directors themselves. (For convenience, we call this process “self-incorporation”.) For self-incorporation cases, the proposed directors, secretary and subscribers must all be Singapore NRIC holders.

Requirements: Any person above the age of 21 years can incorporate a

local company.A company may have only one director who must be “ordinarily resident in Singapore” i.e. a Singaporean Citizen, a Singaporean Permanent Resident, a person who has been issued an EntrePass/Approval-In-Principle letter or a Dependant Pass.

A foreigner who wishes to act as a local director of a company can apply for an EntrePass or Approval-In-Principle letter from the Work Pass Division of the Ministry of Manpower (MOM) under the EntrePass Scheme.

Incorporating a local company

Any person who wishes to register a branch of a foreign company is advised to engage a professional, e.g. a lawyer or an accountant to assist him in the preparation and filing of the application for registration via Bizfile.

Register a Foreign Company

Register a Foreign Company

The Companies Act requires a foreign company to appoint two local agents in Singapore to act on behalf of the company. The agents must be ordinarily resident in Singapore i.e. a Singaporean Citizen, a Singaporean Permanent Resident, or a person who has been issued an EntrePass/Approval-In-Principleletter/Dependant Pass. A foreigner who wishes to act as a local agent of a foreign company can apply for an EntrePass or Approval-In-Principle letter from the Work Pass Division of the Ministry of Manpower (MOM).

Approvals, Licenses and Permits

Certain business in Singapore are subjected to

further regulatory control by other government

agencies in Singapore.

Certain licenses and approvals need to be obtain

before the relevant business activities can commence.

Finance Companies

Insurance Companies

Travel Agents

Private Schools

More information, www.traderegister.gov.sg

Audit and Accounting Requirements

All businesses are required to maintain a proper

books of account for audit and taxation purposes. For Companies, directors are required under the

Companies Act to appoint a firm of auditors within

3 months of incorporation. For Representative Offices, partnerships, sole

proprietorships, LLPs, there are no requirements

to have accounts audited.

Promoting Foreign Investment

Economic Development BoardEconomic Development Board

The leading agency responsible for planning and executing strategies to sustain Singapore’s attractiveness as a global hub for business and investment. Work closely with other agencies to promote innovation and develop humans, intellectual, financial and cultural capital in Singapore.I

International Enterprise SingaporeInternational Enterprise Singapore

Promotes Singapore as a hub for Small and

Medium-sized companies by attracting enterprises from

other countries to be based in Singapore, so that they

can collaborate with international Singapore companies

to venture into the region.



Jurong Town CorporationJurong Town CorporationLeading provider of industrial spare solutions and

specialized parks for various industries.

Monetary Authority of SingaporeMonetary Authority of SingaporeRegulates all elements of monetary, banking and

financial aspects of Singapore and oversees a

wide range of tax incentives specifically for

financial sector.

Taxation

Taxes are used to develop Singapore into a

stronger community, a better environment and

a more vibrant economy.Main objectives of tax policy

Revenue Rising A substantial source of funding for government operations.

Promotion of Economic & Social Goals Influence behavior towards desirable social and economic goals. To

encourage mechanization and automation, the government allows accelerated capital allowance for most assets used for business purposes.

Corporate Tax

Taxed based on Income accruing in or derived from Singapore Income received in Singapore from outside

Singapore

Assessed Period On a preceding year basis, generally refers to the

financial year ending in the year preceding the YAExample: Company A accounts are prepared up to 31 December each.

The basis period for each YA is the preceding calendar year ended 31 December. Thus a company’s basis period for YA 2008 is from 1 January 2007 to 31 December 2007

Corporate Tax

A company is taxed on a flat rate on its chargeable

income regardless of whether it is a local or foreign

company.

Tax Rate Tax exemption

18% Effective 2008, partial tax exemption is given to companies on a normal chargeable income (excl. Singapore franked dividends) of up to $300,000 as follows

Exempted amount

First $10,000 @ 75%

Next $290,000 @ 50%

Tax rates and tax exemption for 2008

Corporate TaxTax exemption scheme for new start-up companies

was introduced in YA 2005 to support

entrepreneurship and to help our local enterprises

grow.

Exempt amount

First $100,000 @100% = $100,000

Next $200,000 @50% =$100,000

Total $300,000 $200,000

Tax exemption for new start-up companies on chargeable income up to $300,000

Partnership

Partnership does not pay income tax on the income

earned by the partnership. Each partner will be

taxed on his share of the income from the partnership. If the partner is an individual, his share of income from

the partnership will be taxed based on his personal

income tax. If the partner is a company, its share of income will be

taxed based on the tax rate for the companies

Limited Liability Partnership (LLP)

LLP will not be chargeable to tax at the entity

level instead, each partner will be taxed on his

share of income from LLP. If the partner is an individual, his share of income from

LLP will be taxed based on his personal income taxes. If the partner is a company, its share of income from the

LLP will be taxed based on the tax rate for companies.

Tax Treaties

An avoidance of Double Taxation Agreement

between Singapore and another country serves to

prevent double taxation of income earned in one

country by a resident of another country. Makes clear the taxing rights between Singapore and

her treaty partner on different types of incomes arising from cross-border economic activities between the two countries.

Provides for reduction or exemption of tax on certain types of incomes.

Tax Treaties

Comprehensive Avoidance of Double Taxation Comprehensive Avoidance of Double Taxation

AgreementsAgreements generally cover all types of income.

Limited treatiesLimited treaties cover only income from shipping

and/or air transport.

Treaties which are signed but not ratifiedTreaties which are signed but not ratified are

either comprehensive agreements or limited

treaties which are not ratified and therefore do not

have force of law.Refer to appendix 1 for countries that Singapore has tax treaties with

Individual All individual who earned an income in Singapore are

subjected to taxation and need to declare all sources of income.

The amount of income tax need to pay depends on how much is being earned and whether the individual is a tax resident or non resident.

Tax Resident – Singaporeans, Singapore Permanent Resident or who stayed or worked in Singapore for more than 183 days or more in the year preceding the YA.

Non – Resident – Foreigner who stayed or worked in Singapore for less than 183 days in the previous year or who is the director of a company.

Non – Resident, employment income is taxed at 15% or the resident rate, whichever gives rise to a higher tax amount. Director fees, consultant fees and all other income are taxed at 20%.

Individual

Other sources of taxable Incomes

Taxable Other IncomesRent and Net Annual Value from property

Rent received from letting of a property in Singapore.

Example : Rental income includes rent of premises, maintenance, furniture and fittings

Gross rent - Total allowance expenses = Net Taxable Rent

Royalty is the income received from the right to use.

Example : Copyrights, patents, trademarks and etc.

Withdrawal from Supplementary Retirement Scheme is taxable and the amount being taxed will depend on the time of withdrawal.

Taxable Other IncomesCharge refers to income received under a deed or court order in Singapore

Example : Alimony/maintenance payments

Income from separation deed or order

Dividends are distribution by a company to its shareholders

Example : Returns on shareholder’s capital that maybe pay in cash or company’s shares

Employment income are gains or profit earned from employment

Example : Salary, bonus, director fees, commission and other employment income, gains from exercise of stock options and retirement or retrenchment benefits

Estate/ Trust Income received in Singapore from an estate under administrative or a trust

Income received from outside Singapore is taxable

Example :If it is received in Singapore through partnerships in Singapore.

Overseas employment is incidental to Singapore employment, as part of work in Singapore, there is a need to travel overseas

Employed outside Singapore on behalf of Singapore Government

Other sources of taxable Incomes

Other Taxes

Goods and Services Tax (GST)Goods and Services Tax (GST)A consumption tax levied on the import of goods and nearly all supplies of goods and services in Singapore. Business must register for GST when their turnover

exceeds $1mil per year and after the registration, must charge and account for the GST at prevailing rate. This is known as output tax.

The business can also claim the GST incurred on their goods and services purchased if conditions are met. This

is known as input tax.

Other Taxes

Stamp DutyStamp DutyIt is a tax on documents relating to properties and shares and payable only on documents described in the First Schedule to the Stamp Duties Act (Cap 312). Once the document is signed, the stamp duty must be paid 14 days from the date of execution if document is signed in Singapore and 30 days of its receipt in Singapore if the document is signed overseas.

Other TaxesEstate DutyEstate DutyIt is a tax on the total market value of a person’s

assets (cash and non-cash) at the date of his

death. . Common assets subjected to estate duty Immovable Property

Market value of the immovable property in Singapore as at the date of death i

Example : Joint Tenancy, tenancy in common or in the deceased’s sole name.

Bank Accounts

Balances as at the date of death in the bank accounts are subjected to estate duty

Example : in deceased name or in joint name or by other persons in trust for the deceased

Public listed shares

Market values of the shares as at the date of the death

Items in Safe Deposit Box

Market value of the contents in the Safe Deposit Box as at date of death

Other Taxes

Estate / Trust IncomeEstate / Trust IncomeThe assets left behind by a deceased may continue to The assets left behind by a deceased may continue to

produce income after his death.produce income after his death.

Rental income from property

Share of profit from a partnership OR profit from a

sole-proprietorship

Dividends from shares declared

after death

Interest income from bank/finance

company

Who can buy property in Singapore?

Buying HDB flat in SingaporeCitizenship Must be a Singapore Citizen. The family nucleus must

comprise at least another Singapore Citizen or Singapore Permanent Resident.

Age Must be at least 21 years old at the time of application.Family Nucleus Must form a proper family nucleus under one of the

following schemes:

Family Nucleus Public You, the applicant and; - your spouse, and children (if any) - your parents, and siblings (if any) - your children under your legal custody (for widowed/ divorced)Fiance/Fiancee

Orphan


Household Status First-Timer ApplicantsYou and the essential family members listed in the application for purchase of the flat must not: be the owners of a flat bought direct from HDB, a DBSS flat

or an Executive Condominium bought from the developer have sold a flat bought direct from HDB, a DBSS flat or an

Executive Condominium bought from the developer have received the CPF Housing Grant for the purchase of

an HDB resale flat; have enjoyed other forms of housing subsidy (for example,

enjoyed benefits under the Selective En bloc Redevelopment Scheme, privatisation of HUDC estate etc).


Second-Timer applicants You or the essential family members listed in your applicationhave owned/sold or are currently owners of any HDB flat that was bought from HDB any resale flat that was bought under the CPF Housing

Grant Scheme; or any apartment under Design, Build and Sell Scheme or Executive Condominum from the developer

have enjoyed other forms of housing subsidy (for example, enjoyed benefits under the Selective En bloc Redevelopment Scheme, privatisation of HUDC estate etc).


Income Ceiling Buying a 3-room Premium, 4-room or bigger flat Your gross monthly household income must not be more

than $8,000. If you are buying a flat with your extended family, your

gross monthly household income must not be more than $12,000.

Buying a 3-room Your gross monthly household income must not be more

than $3,000. Buying a 2-room Your gross monthly household income must not be

more than $2,000.


Ownership / Interest in Property You, your spouse, any occupiers listed in the Application

Form or their spouses must not own or dispose any other flat, house, building or land* or have an estate or interest at any time within 30 months before the date of application, or between the date of the application and the date of taking possession of the new flat.


Stamp Duty / FeeStamp Duty / Fee Stamp duty is a government tax payable by a buyer who

buys a property in Singapore.

Stamp duty payable is calculated on a scale :

1% on the first $180,000

2% on the next $180,000 and

3% thereafter

CPF savings may be used to pay the stamp duty.


Banking in Singapore

Singapore is a leading financial centre in the Singapore is a leading financial centre in the

Asia Pacific region with more than 800 Asia Pacific region with more than 800

financial institutes offering a wide range of financial institutes offering a wide range of

products and services.products and services.

Listing of local and foreign banks in Sinagapore Appendic 2

Commercial banks in Singapore are licensed under and

governed by the Banking Act.

Besides commercial banking, the banks may carry on any

other business which is regulated or authorized by MAS,

including financial advisory services, insurance broking and

capital market services.



FULL BANKS

WHOLESALE BANKS

OFFSHORE BANKS

MERCHANT BANKS

FINANCE COMPANIES

Full banksFull banks May provide the whole range of banking business approved under the Banking Act.There are currently 29 full banks in Singapore. Five of them are locally- incorporated entities under the three local banking groups, and one is a locally incorporated subsidiary of a foreign bank.The remaining 23 banks are branches of foreign-incorporated banks. Six of the foreign banks operating in Singapore have been awarded Qualifying Full Bank (QFB) privileges.


Full BanksFull BanksForeign full banks with QFB privileges may operate a total of 25 locations. They may also share ATMs among themselves, and relocate their sub-branches freely. QFB are allowed to negotiate with the local banks on a commercial basis to let their credit card holders obtain cash advances through the local bank's ATM networks.


Full BanksFull BanksQFBs may provide debit services through an EFTPOS network, offer Supplementary Retirement Scheme and CPF Investment Scheme accounts, and accept fixed deposits under the CPF Investment Scheme andMinimum Sum Scheme.


Offshore banksOffshore banks

Engage in the same activities as full and wholesale banks for businesses transacted through their Asian Currency Units (ACUs). The ACU is an accounting unit, which the banks use to book all their foreign currency transactions conducted in the Asian Dollar Market (ADM). The banks' Singapore dollar transactions are separately booked in the Domestic Banking Unit(DBU).


Offshore BanksOffshore BanksThe scope of business transacted in offshore banks' DBU has slightly more restrictions on dealings with residents as compared with wholesale banks. Offshore banks operate within the Guidelines for Offshore Banks issued by MAS. Under the banking liberalisation programme, offshore banks were given greater flexibility in Singapore dollar wholesale


Offshore BanksOffshore BanksOffshore banks had their Singapore dollar lending limit raised to S$500 million. They are now allowed to engage in Singapore dollar swaps in respect of proceeds arising from the issue of Singapore dollar bonds managed or arranged by them. All offshore banks in Singapore, operate as branches of foreign banks.


Merchants BanksThe typical activities of merchant banks include corporate finance, underwriting of share and bond issues, mergers and acquisitions,portfolio investment management, Management consultancy and other fee-based activities. Most merchant banks have, with MAS' approval, established ACUs , through which they compete with commercial banks in the Asian Dollar Market.


Merchants BanksIn their DBU, merchant banks may not accept sight or deposits or borrow from the public. However they may accept deposits or borrow from banks, finance companies, shareholders and companies controlled by their shareholders.


Finance CompaniesFinance CompaniesFinance companies focus on providing small-scale

financing, including instalment credit for motor vehicles and

consumer durables, and mortgage loans for housing.

Finance companies may not offer deposit accounts which

is repayable on demand by cheque, draft or order. They

are licensed under and governed by the Finance

Companies Act.


Wholesale BanksWholesale BanksWholesale banks may engage in the same range of banking business as full banks, except that they do not carry out Singapore Dollar retail banking activities. They operate within the Guidelines for Operations of Wholesale Banks issued by MAS.All wholesale banks in Singapore, operate as branches of foreign banks.



Q : Do the individual need to be present for account opening procedures?

A: The specific requirements for opening a bank account vary from bank to bank. Most banks require that the bank signatories be personally present for the account opening witness by the bank staff.

For foreigners who are unable to attend, the sighting can

be arrange if the bank has branch in the overseas countries.

Q : How long does it take to open a bank account?

A : Bank Accounts are open immediately upon signing of bank papers and transferring of funds. Some bank services such as internet banking may take some time for activation


Q : Can an individual open a multi-currency account?

A : Yes, bank allows clients to open multi-currency accounts.

Q : Can the funds be move freely between home country and Singapore?

A : Singapore has no currency / funds transfer restriction to any where in the world. Funds can move in and out freely.


Foreign Missions Accredited to Singapore

There are 63 resident foreign Embassies and

High Commissions, 41 foreign Consular posts

and 10 international Organizations in

Singapore.

Employment regulations

A foreigner who wishes to take up employment

or engage in business in Singapore must obtain

an employment or entrepreneur pass.

Requirements for Employment Pass and

Dependent’s Pass Recognized educational or technical qualification and

earn a monthly salary of SGD2500. Entrepreneur will need to submit business plan together

with application.

An employment pass holder can apply dependent pass for

his/her spouse or children below 21 years of age to enable

them to stay with him/her in Singapore


Terms and conditions for employees earning up to SGD1600 a month are subject to the Employment Act.

Other statutes dealing with workforce matters are the Industrial Relations Act, Trade Dispute Act and Workmen Compensation Act.


A contract of service must be sign by employer and employee and would include (i) salary and working hours(ii) leave entitlement (iii) sick leave entitlement (iiii) notice period for termination of employment (v) details of contribution to CPF.

Trade Union, registered under the Trade Union Act which regulates the rights and liabilities and proper use of funds. Purpose is to promote a harmonious labour relations and strike free environment.


Documents

Doing Business In Singapore 2008. Introduction Geography Singapores strategic location at the southern tip of the Malaysian peninsula has ensured its