Re-domiciliation of a Foreign Company to Singapore

If you are currently operating a foreign company but want to enjoy the benefit of Singapore’s tax exemptions, stable political environment, and its link with Asia and beyond, you might consider re-domiciliation of a Foreign Company to Singapore. This means that you are just transferring the place of your business entity from its initial originating place to Singapore, but it’s a business activity; owners and several others things will remain the same.

However, to increase the competition in the market, the Singapore government has introduced re-domiciliation, which grants foreign companies to redomicile to Singapore.

Instead of registering a branch office or subsidiary company, foreign businesses now have the option to re-domicile and get their company incorporated in Singapore without changing its business operations. By doing this, the company will be considered a Singapore incorporated company. However, the foreign-based company still needs to fulfil the requirements to get eligible for re-domiciliation. Continue reading the article to know more about re-domiciliation.

Also, there are several GST-related regulations in Singapore under which the GST registered businesses need to charge GST on taxable goods from the customer. Therefore, every foreign business needs to register for GST to continue offering goods and services in Singapore. For GST registration in Singapore, you can refer to our comprehensive guide on GST registration for foreign businesses.

What is Re-domiciliation?

Re-domiciliation is defined as the process under which a Company transfers its place of registration from one country to another. However, the process of Re-domiciliation is far different from establishing an overseas branch or registering a subsidiary company in a foreign country or region.

Let us understand this process will the help of an example; suppose, when the foreign-based company establishes a branch in Singapore, it is the same company engaging in the business activities in Singapore. However, the foreign-based company is regulated by the laws of their home country.

When a foreign-based company is registered as a subsidiary company in Singapore, there are two options under which the company can be incorporated. The first one is an overseas parent company, and the second one is a Singapore subsidiary. The Singapore subsidiary company enjoys separate legal existence from the foreign-based parent company and can also take up the contract independently. However, after this, the company will be regulated both by the law of their home country for the parent company and Singapore law for the subsidiary company.

In comparison, when you plan for re-domiciliation of a Foreign Company to Singapore, you are transferring your foreign company into a Singapore-based company. After this, all the rights and liabilities of the foreign company will be transmitted to the Singapore-based company, and there will be only one entity throughout. In addition, after the redomicile, the company will be regulated only by Singapore law.

From 11 October 2017, the Singapore government has granted a company registered overseas to re-register as a Singapore company as Part XA of the companies act. The criteria for the redomicile as a Singapore company establish further in the companies regulation 2017.

If you wish to determine the types of company you can register in Singapore. Then it is suggested to have a look at our guide on Different Types of Companies in Singapore.

Why Redomicile?

There are several reasons why various companies choose to redomicile – whether commercial, practical, or legal.

Re-domiciliation allows for continuity of the business

Redomiciling is a beneficial choice in terms of commercial perspective. As already mentioned, when a foreign-based company decides to change its domicile to Singapore, always remember that the entity and its business activity will remain the same, but the things that will change will be its place of the corporation from a foreign country to Singapore.

This grants the company to keep operating its business activities. Also, the goodwill, track record, and credit ratings will not be affected. These things will be crucial when a re-registered Singapore company looking to acquire credit from the banks in Singapore or required to determine its track record in the type of business structure to acquire the license whenever required

Redomiciling to Singapore has tax advantages

When talking of the taxable benefit, Singapore charges tax at a much lower rate when compared to several other developed countries. Several foreign-based companies can take advantage of tax benefits by transferring their business to Singapore.

However, many countries have introduced stricter criteria in terms of taxation to lower down the profit shifting and base erosion. These are some of the measures where most of the company chooses to make it appear as a profit acquired by that company, but the parent company actually earns the profit. So to get the profit earned taxed at the relatively low rates as specified in the second country company law.

Let us understand with the help of an example, suppose Australia recently launched diverted profit tax of 40% on the significant global entities. A significant global entity is basically considered as the corporate group with some of the Australian operations with an annual turnover of over A$1 billion. As per the DPT legislation, if the Australian taxation department noticed that the profit earned in Australia by the concerned business entity had been transferred out of the jurisdiction to the foreign-based company to avoid paying tax on the higher profit earned. If this happens, then the particular Australian entity will get liable to pay the tax twice means the taxes on the profit earned will be paid in the country where the profit was diverted to as well in Australia.

Upon successful process of re-domiciliation, your company will be discontinued to be registered overseas. This is because the company will be subjected to the Singapore company law along with the taxation purpose instead of its original place of incorporation. In this way, your company will be prevented from the risk of double taxation under stricter taxation rules.

If the company’s original place of incorporation declares some troublesome or unsuitable regulatory requirements on your company like higher corporate tax rate, in that situation, re-domiciliation to Singapore can help the overseas company to prevent complying with such unsuitable requirements.

Redomiciling to Singapore will allow you to leverage Singapore’s Free Trade Agreement memberships

Generally, substantially and redomiciling transmit business operations to Singapore would go hand-in-hand process, making it easier for the foreign-based company to enjoy the benefit of various free trade agreements of which Singapore is part.

Redomiciling to Singapore signals your commitment to do business in this region

Further, proceeding with the permanent decision to redomicile in Singapore (because there are no such regulations to redomicile Singapore based company to overseas) is an essential message to all the clients and the market as well ensuring that your overseas company is quite serious about focusing on the operating business activities in Singapore.

Redomiciling causes all legal rights and liabilities to be transferred to the Singapore entity – no assignment is needed

From the legal point of view, redomiciling is far better and more accessible than registering a subsidiary company in Singapore. The primary contracts will generally have the non-assignment section. In order to acquire permission from the Singapore government to assign the contract within the same corporate entity is usually a straightforward process. As re-domiciliation files, the process is easier since all the relevant rights and liabilities will be transferred to the Singapore entity, which will be owned and operated by the same legal person as originally overseas-incorporated company.

Is Your Company Eligible for Re-domiciliation to Singapore?

Prior to applying for re-domiciliation of a Foreign Company to Singapore, you need to ensure that if your current company name will be accepted for registration in Singapore or not. However, if you wish to use the same name of your company used overseas, this will not be possible if there is already a Singapore-based company with the same name.

The most important thing that you need to check is whether your entity is eligible for re-domiciliation to Singapore. There are three significant requirements related to solvency, legality, and size of the business.

Size requirement

Your business entity will first be required to fulfil the size requirement. This means that your company needs to fulfil at least 2 out of 3 following given requirements:

• Total assets worth over S$10 million
• Annual revenue over S$10 million
• At least 50 employees

If you intend to redomicile your complete corporate group along with the parent company and two subsidiaries, all are incorporated overseas. Therefore, in that situation, the entire group will have to fulfil the size requirement.

Solvency requirement

The following criteria that you need to fulfil are the solvency requirement. Your business entity must be capable enough to pay off all its debts if it is outstanding over the next 12 months following the date of applying for re-domiciliation. However, make sure that your company must not be in the state of receivership, liquidation, or several other situations equal to the winding-up process.

In the end, your assets must be more than the liabilities, which means your net asset value should not be negative.

Legality requirement

The third major criteria to make your company eligible for re-domiciliation to Singapore are legality. This means that you have to fulfil all the specified company law rules in your business entity’s home country of incorporation. However, you must not redomicile to Singapore for an irrelevant purpose like defrauding creditors.

Most essentially, your place of Company registration needs to have a legal plan for the company to redomicile abroad. Few countries grant 2-way re-domiciliation (i.e., to the foreign-based company to re-register as a local company and for local companies to again incorporate as foreign companies). Some countries that grant such permission include Australia, Canada, New Zealand, and the British Virgin Islands.

In contrast, several other countries like the United Kingdom, Singapore, and Hong Kong only grant foreign-based companies for inbound re-domiciliation. Thus, foreign companies can re-register as local companies for these three countries but are not allowed to re-register local companies as foreign companies.

By the way, if your company is transferring from one country to another, then the company structure will be the same. Therefore, it is expected that few terms with which you are familiar, including director duties, will continue to operate in the same form even after your company gets redomiciled as a Singapore company.

Also, you must know about the UEN number prior to registering a company in Singapore and how it is beneficial. For more information on UEN numbers in Singapore, you can check our step by step guide How to Get a UEN Number in Singapore.

How Do You Redomicile Your Company to Singapore?

For re-domiciliation of a Foreign Company to Singapore, you will require to complete and submit the application for transfer of registration form with the Accounting and Corporate Regulatory Authority (ACRA), the regulatory body of the operating business entities in Singapore. According to the CA, along with your application, you need to provide the following documents:

1. You need to submit the certified true copy of the Articles of association, Memorandum of Association, or several other constitutional documents that you submitted when your company initially incorporated.
2. A photocopy of the Constitution that your company will utilize after successfully re-domiciliation is a Singapore company.

However, you need to present your Company existing constitutional documents if your company is registered in any other ordinary law jurisdiction; there will be many aspects of Singapore law that each company needs to consider. This means that additional sections must be included along with the application.

3. The following relevant prescribed documents:

Here is the list of few supporting documents that you need to submit:

• You need to submit the certified photocopy of the foreign certificate of incorporation or the documents equivalent to the same.
• You must also submit the signed declaration letter by all the present company directors confirming that the company has fulfilled all the specified solvency requirements.
• From every proposed director, you have to provide the following things separately:
• A declaration of the consent from the individual separately for acting as a director upon re-domiciliation of a Foreign Company to Singapore
• A declaration letter specifying that the individuals are neither disqualified nor eliminated from serving as a director in Singapore.
• If the individuals are willing to own shares in the company. A declaration letter will be issued specifying the intention to hold several shares in the company upon re-domiciliation of a Foreign Company to Singapore only if they do not have any shares in the company.
• A written declaration letter from every proposed secretary specifying the following things:
• A proposed Secretary specifying that they will be acting as a company secretary in Singapore as well.
• They will not be terminated from serving as a company secretary in the past.
• If the overseas company intends to re-domiciliation as a public company in Singapore, they were required to hold relevant professional or academic qualifications to be considered the secretary of the public company. The qualifications include qualified lawyer, member of Singapore Association of chartered Secretary and administrators and accountant.
• If the re-domiciliation process is being managed by the concerned lawyer or filing agent. A confirmation statement will be issued from the lawyer or filing agent specifying that the director has passed consents to serve as a director and are not disqualified. Also, every proposed secretary has passed the content stating to work as a secretary.

4. The prescribed fee

The prescribed fee that needs to be paid is S$1000.00 and will not be refundable.

What Happens after Re-domiciliation?

If your company is qualified for Re-domiciliation of a Foreign Company to Singapore and you have successfully submitted all the required documents along with the application form, then the other steps of successful redomicile rest in the hand of ACRA. However, they are the ones responsible for the acceptance or rejection of the application.

However, it’s effortless to get your application approved if you have fulfilled all the mentioned eligibility criteria. As mentioned above, Accounting and Corporate Regulatory Authority (ACRA) have the complete right to reject the application if something went wrong or if the company doesn’t fulfil re-domiciliation requirements. If the application form gets rejected, your company still has the right to appeal to ACRA and then to the Minister of Finance.

Once the application for the re-domiciliation process gets accepted, your overseas company will be considered a Singapore registered company. This means that the overseas company will be subjected to Singapore company law just like the company initially been incorporated in Singapore.

After this, it will be your responsibility to De- register your overseas company from its original place of incorporation within the deadline of 60 days and then submit the approval of Deregistering to the Accounting and Corporate Regulatory Authority. However, you have the option to acquire permission from the ACRA to extend the deadline, but it’s always suggested to submit the evidence within the given deadline to be on a safer side.

Apart from that, you also require to make sure that pre-existing charges are registered within the deadline of 30 days of successful re-domiciliation. For example, suppose a bank has imposed a floating charge over your Company’s assets; these charges also need to be completely registered. The current directors of your Company will also be responsible for the various sanctions, including penalties if they do not comply with the requirements.

After you are sure that all the above steps have been completed, now you will get eligible to proceed to the next stage of your company re-domiciliation process and enjoy the benefit of new status as a Singapore registered company, same as the initially incorporated company in Singapore.

Other Considerations

However, re-domiciliation of a Foreign Company to Singapore is the permanent choice as presently there are no regulations for Singapore companies to redomicile local companies as foreign companies. Now more and more companies are planning to introduce re-domiciliation regimes. This will be more likely to benefit various overseas companies and provide them with multiple-choice over which jurisdiction will be the perfect choice depending on the requirements, especially tax and other regulatory benefits.

As of now, seeking Re-domiciliation is no doubt a beneficial choice for most foreign-based companies. But remember, it is still a relatively new process, so those foreign-based companies looking to redomicile their company to Singapore must think twice about their decision. However, the foreign-based company can also seek advice from the corporate lawyer and tax specialist currently based in the original place of your Company incorporation.

Undoubtedly, there are various attractive business and regulatory environments in Singapore accompanied by various tax exemptions; redomicile into Singapore is something significant that most foreign companies must have dreamt of, or various Asian operations must have plausibly considered.

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