Singapore is considered one of the best places for doing business in Asia and globally thanks to its stable economic environment, business-friendly legal regulations, and transparent tax system. In 2019, Singapore ranked 2nd in the world in the World Bank’s Ease of Doing Business Index. Its high level of transparency and reliable legal system attract foreign investors.
The country actively implements government initiatives such as Smart Nation and startup support programs. Partner programs provide funding for companies involved in research and development (R&D). Singapore also offers simplified access to international markets through numerous international trade agreements.
Choosing the legal form of a company in Singapore
Before registering a company in Singapore, choosing the appropriate legal form is essential. There are 3 options available for foreign entrepreneurs:
- LTD
- Branch of a foreign company
- Regional office
A Private Limited Company (Pte Ltd) is the most popular business form that provides limited liability to its founders. It is suitable for most types of businesses, from small to large. The minimum share capital is 1 SGD. Based on our experience, a Private Limited Company (Ltd) is the most suitable option.
Business taxation in Singapore
In Singapore, corporate tax residency is determined by the place where the company’s central management and control are exercised. Generally, this refers to the place where directors meet to make key management decisions. Therefore, appointing a local director is essential.
More about taxes in Singapore:
- CIT (Corporate Income Tax) – 17%
Important: The country offers partial tax exemption provided as a deduction when calculating the taxable base (the profit is taxed at the standard rate).
|
Taxable Profit (SGD) |
Exempted from Tax |
Non-Taxable Income (SGD) |
|
First 100,000 |
75% |
75,000 |
|
Next 100,000 |
50% |
50,000 |
|
Total |
125,000 |
Tax Exemption for Startups as a Deduction When Calculating the Taxable Base (the profit is taxed at the standard rate)
|
Taxable Profit (SGD) |
Exempted from Tax |
Non-Taxable Income (SGD) |
|
First 10,000 |
75% |
7,000 |
|
Next 190,000 |
50% |
95,000 |
|
Total |
102,500 |
Singapore does not charge a dividend tax – the rate is 0%, but GST (Goods and Services Tax) applies, currently set at 9%.
GST (Goods and Services Tax) registration is mandatory only if the company makes taxable supplies exceeding 1 million SGD within a 12-month period. Voluntary registration is permitted if the taxable supplies are below this threshold, subject to certain conditions. After GST registration, the business may claim input tax deductions on its purchases and expenses, provided that the established conditions for input tax are met.
