In recent times, Singapore is gaining more popularity as a destination for holding companies or as head offices for many companies around the world. It is also a becoming a popular destination which is being used by many business houses as their trading forte due to favourable indirect tax regime like GST, customs duties etc. To consider Singapore as an International Business Corporation (IBC) destination or as a destination for international businesses to set up an IBC like entity, there might be some pertinent points that might have to be considered in their totality.
We give below a summary of the points that might be considered,
Offshore Destinations Vs Singapore
1. In most Offshore destinations, the main advantage that entrepreneurs see is that there are no taxes in these jurisdictions, while this is a definite positive, it would sometimes be desirable to pay taxes. Singapore’s taxes are much lower than that of many advanced nations including the OECD nations with a top line tax rate of 17% at the maximum.
Also it is very important to note that any foreign sourced income which is earned outside Singapore and kept outside the jurisdiction of Singapore is not taxed in Singapore.
2. In terms of ease of setting up a company, is as easy as any other jurisdiction. In most circumstances, a Singapore Company Setup and registration can be done in an average of 3-4 days time after all the preliminary documentation is received. An overseas business vehicle generally takes an average span of about a week to 2 weeks’ time to set up.
3. Publicity of people registered as directors and shareholders in Singapore is mostly unavoidable. The shareholders can be corporates and many service providers offer a nominee shareholder service. For Directors, they have to be individuals with at least one of them a local Singaporean/PR. Again the option of nominee director is available.
As per the new amendments suggested under the Singapore Companies Act, Cap 50, there is move towards allowing company directors to use an alternate address rather than their residential address. This change is likely to be operational by late 2013 and would be a positive move towards ensuring privacy for Company officers.
4. Singaporean companies necessarily need to conduct a general meeting every year and have to file accounts with regulatory authorities. Many companies fall under the gamut of non-auditability, wherein the financial statements of the Company need not be audited. In tax haven jurisdictions, there are no compliance requirements and hence conducting an AGM is not required, but many companies still do maintain books of accounts to have an understanding of fund flows for internal management purposes.
5. Singapore unlike many other advanced nations do not levy a tax on capital gains. Hence Singapore has become the most popular destination for investment holding companies in this part of the world.
6. Singapore has treaties with over 60 nations both bilateral and unilateral and this avoids payment of taxes in more than one jurisdiction. If income is earned and taxed in a foreign countrythat has a tax treaty in place with Singapore, it will not be taxed again in Singapore.
On a relative basis there are a lot of advantages in registering a company in Singapore. It is understandable that many entrepreneurs might prefer a jurisdiction like the BVI, Panama or Cyprus based on their specific needs. In coming times, changes which are more favourable to Singapore are expected.
Servolve is a Singapore based service provider. Our service offering include Singapore company incorporation, corporate secretarial and support services, Singapore accounting, Singapore taxation and Due diligence/Acquisition services. For more information, please refer http://www.servolve.com or email us at info@servolve.com
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