60 Paya Lebar Road, #10-31 Paya Lebar Square, Singapore 409 051
KNAV Services LLP, Singapore is the member firm of KNAV International Ltd, a global network of firms working under the KNAV brand. KNAV specialises in assurance (external and internal), taxation, international transfer pricing, valuation and business advisory services. With our wide international network and deep expertise, our clients will experience advice and services from professionals all around the world who will offer both value adding and practical solutions.
WHAT WE DO
- Statutory Audit
- Special Purpose Audit
- Agreed Upon Procedures for Government Grant submission
- US GAAP Audit for reporting to overseas head office
- Tax computation and filing with IRAS
- Transfer Pricing documentation
- Tax advisory
- Business valuation
- Purchase Price Allocation for compliance with SFRS 103
- Valuation of funds for investor reporting
- Outsource Internal Audit Service
- Special internal audit assignment
- Full suite of finance functions
- Monthly management reporting
- Preparation of financial statements
KNAV’s Guide to set up a business in Singapore
In 2018, Singapore ranked second in global competitiveness and in ease of doing business globally. This article provides an overview of compliance and reporting requirements for corporates who are looking to come to Singapore for doing business.
Any entities or individuals planning to establish a business presence in Singapore will have to determine whether the planned operations create a requirement to register with the Singaporean authorities. A person or entity who is carrying on business in Singapore will have to register its business with the Accounting and Corporate Regulatory Authority of Singapore (ACRA).
DETERMINING THE TYPE OF VEHICLE
It is important to choose the most appropriate registration vehicle to be used for the business operations in Singapore. The two most common types of corporate registration vehicle are:
A private limited company is a company limited by shares. A company is a separate legal entity with limited liability and has its own identity for tax and legal requirements purposes. This is the most common form of entity choice in doing business in Singapore. Registration process: Can be completed within around two weeks provided all corporate information with respect to directors and shareholders is furnished.
A branch is not a separate legal entity but merely an extension of the Head Office. The Head Office is responsible for all the liabilities of the Singapore branch office.
Representative Office (“RO”) Foreign entities that are keen on exploring the viability of doing business in Singapore, or are interested in using foreign entity to assess the business environment in Singapore before deciding to set up a permanent presence. A RO is not allowed to undertake revenue generation activities on behalf of parent entity. All ROs should be registered with the International Enterprise of Singapore.
Sole proprietorship A sole proprietorship is an association of one or more person carrying on a business with a view to making profits.
Partnership In Singapore, two or more persons carrying on business with a view to profit may decide to form a partnership. There are different forms of partnerships, namely limited partnerships or limited liability partnerships. Both are required to be registered with ACRA.
Company All companies must have at least one resident director in Singapore at all times. A director of a company has fiduciary and statutory duties and can be subject to civil or criminal penalties. It is mandatory for a company to hold its annual general meeting (AGM) of shareholders where the financial statements will be presented to the shareholders. A newly incorporated company will need to hold its first AGM within 18 months from the date of incorporation.
Branch A branch office does not have its own directors. However, the branch must have at least one resident agent in Singapore who will be responsible for maintaining compliance with ACRA.
All companies and branches in Singapore are required to maintain their books and accounting records and prepare financial statements in accordance with Singapore Financial Reporting Standards.
AUDIT AND FILING
The Companies Act requires the annual financial statements of every company to be audited unless it qualifies for audit exemptions. Notwithstanding the audit exemptions, every company is still required to prepare financial statements. Every company (unless it is a private exempt company) is required to file its financial statements in XBRL (extensible Business Reporting Language) format together with the company’s annual return with ACRA within one month from the date of AGM on an annual basis. A private exempt company is one without corporate shareholder and less than 20 shareholders.
A small private company that meets at least two of three criteria for the immediate past two financial years (“FYs”) may qualify for audit exemption for that particular FY:
- Total revenue for each FY of not more than SGD 10 million
- Value of total assets at the end of each FY is not more than SGD 10 million
- Number of employees not more than 50 at the end of each FY
Company in a group may only be exempted from audit requirements if it qualifies as “small company” and the group qualifies under the “small company” criteria on consolidated basis.
A branch will have to prepare its accounts in accordance with the Singapore Accounting Standards. The Head Office accounts together with the Branch accounts must be lodged with ACRA within two months from the date the AGM is held for Head Office, or within seven months after the end of previous financial year end if Head Office is not required to hold AGM.
Where the laws in the country of its incorporation do not require Head Office to hold the AGM or to prepare the head office accounts and table the accounts at the AGM, the Head Office must prepare its accounts in accordance with the Singapore Accounting Standards unless prior approval is obtained from ACRA to waive this requirement.
- Income tax
Singapore Companies and branches are subject to Singapore corporate income tax on all income derived from sources in Singapore, and on income from sources outside Singapore if received in Singapore. There is no capital gains tax in Singapore
Foreign tax credit is claimable only by a Singapore tax resident, and limited to the lower of the foreign tax paid and the Singapore tax payable on that income. Foreign tax credits claims are governed by tax treaties and the unilateral tax credit provisions.
Remittances of foreign income in the form of dividends, branch profits and services income (specified foreign income) into Singapore by companies’ resident in Singapore are exempt from tax if prescribed conditions are met. For remittances of specified foreign income that does not meet the prescribed conditions, companies may be granted tax exemption under specific scenarios or circumstances on an approval basis.
The standard corporate income tax rate is 17%, subject to partial exemption on the first SGD300,000 of normal chargeable income. There are various tax incentives, exemptions and tax reductions available, depending on the investment level and activities performed in Singapore.
There is no withholding tax on payment of dividends by Singaporean companies or repatriation of profits by branches. Dividends paid by a Singaporean tax-resident company are exempt from income tax in the hands of shareholders, regardless of whether the dividends are paid out of taxed income or tax-free gains.
GOODS AND SERVICE TAX (“GST”)
Singapore currently has a 7% GST, imposed on goods and services supplied in Singapore as well as on importation of goods. A business is required to register for GST if its annual taxable supplies is SGD1 million or more.
***The information in this article is general and should not be relied upon as professional advice.