Setting Up An Offshore Company in Singapore

An offshore company is established and managed in a country other than where its principals (shareholder, director, and parent company) are not situated. The incorporation of an offshore company is implemented only when a company wishes to expand its business internationally.

But, the question that still arises is why most people prefer choosing to incorporate an offshore company in Singapore? The primary reason to form an offshore company in Singapore is that it provides you with numerous business opportunities and a reduction in tax liability.

However, it will work if you keep on reading the article to know more about the benefits of incorporating offshore companies in Singapore and the key requirements of incorporation.

Also, if you are a foreigner and want to register a company in Singapore, in that case, you can check our guide for registering a company in Singapore.

What is an offshore company?

An Offshore company is a business entity registered in different districts other than where its shareholders, directors, or parent company reside. In short, the offshore company operation does not take place within the boundaries of the country where its principles are situated.

The primary reason for incorporating offshore companies is to receive benefits of the laws that are not available in their home district, including favorable tax systems or foreign business opportunities.

Why incorporate offshore companies only in Singapore?

Choosing a specific district for registering an offshore company and managing all its operations is one of the most significant initiatives to grow your business. When talking of an ideal location for registering an offshore company, Singapore is one of the most significant locations. It provides a plethora of benefits to all the business owners compared with several other districts. Some of the benefits of registering a Singapore offshore company are listed below:

Reduce tax liability

The primary concern for every business owner prior to registering the offshore company is tax liability. However, one of the primary benefits of forming an offshore company in Singapore is its most straightforward and low tax system.

Singapore tax system is known for its business-friendly characteristics. Some of them are as follows:

• Corporate tax and personal tax is relatively low
• There are no taxes for capital gains and dividends.
• There are no tax charges for the foreign-based income that was not earned in Singapore.
• There are no taxes charged for the first S$1,00,000 taxable income for the first three filing years for the newly started company.
• There are no taxes charged for the foreign source income which was received in Singapore.

Singapore uses a single-tier income tax policy, which simply means that, once your income tax get paid at the corporate level, the dividend distributed among the shareholders will be tax-free. As of now, the rate of corporate income tax is 8.5% if the profit earned is S$300,000, and 17% if the profit is above S$300,000.

Credible image

As Singapore is not a tax haven country, the offshore company registered in Singapore gives the benefit of greater credibility. If you register your offshore company in Singapore, the stakeholder will seriously take your business operations. It includes banking, professionals, and employees with whom you will be dealing.

Easy registration of offshore company

Another most significant benefit is that business owners enjoy expediting offshore company registration. It is the second most prestigious location for doing business all over the world. Here your company will be registered quickly and also it is free of bureaucratic red-tape. The business owners can register their company in few easy steps, i.e., company name approval and submitting incorporation documents. Both the steps can be done online by sitting in the comfort of your home. Even in normal circumstances, the registration of an offshore company takes up to 1 to 2 working days.

Liberal foreign ownership policy

Singapore’s foreign ownership policy is entirely open and liberal. There are no limitations if you are willing to set up an offshore company in Singapore. Even 100% foreign shareholding is granted in all the fields. Shareholders of the company can be anyone from individuals or corporate body. However, any foreigner willing to set up an offshore company in Singapore does not need any further approval from Singapore authorities before registering the company.

Political stability

As per the recent reports, Singapore is termed one of the most politically stable countries all over Asia and the least bureaucratic country in Asia. Singapore’s government is in the limelight for its next-level business approach and high integrity. However, it is also termed corrupt-free, transparent, rational, and pragmatic. There are almost no risks involved in starting an offshore company in Singapore. In some instances, there might be a minimum risk as compared to several other regions. It has straightforward rules and regulations that can be understandable by anyone.

Enlightened banking facilities

Singapore is described as one of the top financial centers in the Asia Pacific region. After registering an offshore company in Singapore, people get several choices for foreign banks to open the account. However, Singapore banks provide several notable features, including internet banking, credit card, trade financing, multicurrency, no restriction on transferring money from one country to another, and many more. Another remarkable thing about Singapore is that you don’t have to wait for too long for the account opening process. It rarely takes up to 2 to 15 days based on the amount of due diligence undertaken by a specific bank.

Innumerable business opportunities

Singapore is considered one of the emerging locations in South Asia for doing business, and it provides you numerous business opportunities for both start-ups and existing companies who are willing to expand their business globally.

The great thing about incorporating a company in Singapore is that the Singapore government has made it open to offer incentives and promote the free market for all the foreign investors out there who are willing to register a company in the country.

Various popular sectors include chemical products, mineral fuels, electronic components, general manufacturing, etc.

Favorable immigration policies

At times, it becomes challenging to appoint 10 foreign professionals, and it is even more complicated in an offshore company.

The fantastic thing about incorporating an offshore company in Singapore is that the Singapore government has made it easier for foreign investors to appoint an employee from any part of the world other than Singapore citizens.

Singapore offshore companies can now take advantage of the open immigration policy introduced by the Singapore government to obtain working permits and visas for eligible foreign employees.

Checklist for incorporation of offshore company in Singapore

After you have decided to start forming in Singapore offshore company, then the given checklist of key requirements will make your incorporation process speedy and smooth.

If you are also interested in taking over an existing business and enjoy the existing customer base and management system, then the first and foremost thing is to have a good understanding of the business.

Company name

• You must have that company name that does not match with any existing incorporated company.
• Must have obtained approval from accounting and corporate regulatory authority (ACRA).

Directors

• You must appoint a minimum of one director.
• There are no limits to appoint an additional director that can be local or foreign.
• Always ensure the director which you appoint should be 18 years of age or above.
• Out of all the directors that you appoint for your company, at least one should be a local resident of Singapore (Singapore citizen, Singapore permanent resident, Singapore employment pass holder, Entre Pass holder).

Shareholders

• There should be at least one shareholder in your company, either from a foreign country or Singapore.
• The maximum number of shareholders should be 50
• All the stakeholders should be natural people.
• Nominees’ shareholders are also granted.
• A shareholder that you hired in your company can be either individual or a corporate body.
• No matter you appoint residents or non-resident as your company shareholder, both are granted.

Company Secretary

• You need to appoint at least one professionally qualified company secretary.
• The company secretary should be on local resident and a natural person.
• Non-resident and corporate bodies cannot be appointed as Company secretaries.
• A sole stakeholder or director cannot be appointed as a Company Secretary.

Registered address

• The company must have a local Singapore registered address which can be commercial or residential.
• PO Box is not allowed.

Paid-up capital

• Your company must be having a minimum paid-up capital of S$1.
• There are no requirements for any authorized capital.
• There are no limitations on capital share value.

Documents and information that needs to be submitted are as follows:

• You must submit the photocopy of the valid passport of the appointed shareholders and directors.
• A proof of the permanent residential address of the proposed shareholder and directors.
• You are also required to submit the details of the parent company if the shareholder is a corporate entity.

What to do once you have set up an Offshore Company in Singapore?

First of all, congratulations on your offshore company formation in Singapore.

After your company formation is completed, the accounting and corporate regulatory authority (ACRA) will provide you with official documents through email containing the company registration number, which can also be termed an official certificate that your company is successfully registered in Singapore.

Compliance and regulation

After all the incorporation formalities have been completed, the offshore company will be considered a separate legal entity from its shareholders or parent company. This simply means that the offshore company will be solely responsible for all its regulatory requirements and require separate financial accounts and transaction records.

Unless the newly incorporated offshore company is termed as a small company as per the Singapore laws, you must also hire a certified auditor within three months once your company is registered.

Set up a corporate bank account

Once your company is incorporated, you will obviously need to keep the proper record of financial accounts. So in order to maintain complete track of financial records, you might be required to open a separate corporate bank account for the offshore company.

Several banks in Singapore have made it mandatory for the company’s directors and authorized signatories to be physically available at the bank while opening the corporate bank account. In contrast, several other banks suggest the company set up the corporate bank account online.

Get the required licenses and permits.

No matter what business activity you are going to operate in Singapore, you will always need to apply for the license and permits from the concerned authority in order to start managing your business. The documents required for applying for a license and permit depends on the type of business you are willing to operate.

There might be exceptions in some businesses, but if your business activity has made it mandatory for you to obtain a license, you must apply it from the relevant government agency.

You are required to apply for the license and permits once your company has successfully incorporated, but before you start running a business.

Must an offshore company register for GST

Once an offshore company is registered, it automatically gets registered for corporate income tax with the Inland Revenue Authority of Singapore (IRAS).

Moreover, the company is still required to separately register for goods and service tax (GST) with the inland revenue authority of Singapore (IRAS) only if its estimated annual turnover is more than S$1 million.

What activities can an offshore company engage in?

An offshore company is not restricted to get engaged in any business activities as it has the freedom to engage in all the business activities it wishes, no matter the business activities if varies from those of its parent company.

However, several business activities like running a restaurant might ask for a special license from relevant authorities. Business owners have the option to apply for those licenses by visiting the Singapore government’s Go Business portal.

Can an offshore company operate under a different business name from its parent company?

Since, offshore company, after getting registered, will be termed as a separate entity so it can operate with a different name from those of its parent company. Moreover, your company’s business name will only be assigned after getting approval from ACRA, which might reject your company name application if the name matches with any existing company.

Popular Sectors for Offshore Companies

There are some of the major sectors where offshore companies can open up in Singapore:

• Trading, investment, and asset holding: Singapore is termed as the Asian financial hub
• Consultancy service is also one of the most popular sectors for offshore companies in Singapore, especially in fields of activity like IT.
• Ship management and yacht ownership: It is also one of the most significant and most populated maritime hubs in Southeast Asia because of its strategic geographic position.
• Intellectual property ownership: Singapore is one of the leading and most advanced countries in this type of business sector. Also, this sector is well supported by its enforcement and strong legal system.
• Real estate business: it is one of the most relevant and consistently profitable business sectors in Singapore.

When should you consider Offshore Company Incorporation in Singapore?

If you are looking for the right time when you to register an offshore company in Singapore, then you should have a look at the below-given points:

When you are expanding your business

When you see an extreme increment in investment or shareholder of your business, and your investor, especially institutional investors, who chooses to invest in your company through the offshore jurisdictions.

When you are retaining assets to gain income

Another right time to consider incorporating an offshore company in Singapore is that if your company is too much into investment holding, the primary motive of holding assets is to earn income and again invest in them like a real state. Another essential thing about incorporating offshore companies in Singapore is that business owners get relief from stamp duty and capital gains.

When you are developing an Intellectual Property

If you are promoting intellectual property and willing to use it in several countries all over the world. However, as per the recent report, it has been found out that Singapore is the second most leading country in Asia for the best IP protection in the World Economic Forum’s Global Competitiveness Report 2019, and it tops the list of the world’s most competitive country.

There are several additional reasons why one chooses to set up an offshore company in Singapore:

• To acquire the higher return on investment
• Enhanced privacy
• Real estate planning
• Tax planning and relief

FAQs for offshore company incorporation

How many licenses do I require to begin operating business in Singapore?

The number of licenses required by any incorporated company in Singapore depends on your business activities. The same is in the case with the Singapore offshore company. Therefore it is not possible to tell about the exact number of licenses required.

Why local company in Singapore does not need a nominee director?

As it is a locally registered and owned company in Singapore, all its directors and shareholders are citizens and local residents. As per Singapore law, it is essential to have a director as the local resident for the offshore company. Therefore, there is no need for a local nominee director.

Do I need to appoint an incorporation agent for company registration?

Yes, as per Singapore law and regulations, it is not allowed for Singapore individuals or entities to self-register offshore companies in Singapore.

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