FAQ on Business Set Up

The operating structure determines a business’s legal, financial reporting, auditing and taxation status. To assist with the future growth and development of the business while meeting the various needs of its owner(s), the operating structure requires careful selection to avoid the need to amend it at a later date that may be difficult and expensive to implement due to legal costs and taxation implications.

Self-employment / Sole Proprietor, Partnership (General and limited partnership), Company.

The application is usually processed within an hour after the name application fee is paid. This is on condition that the branch does not require any licenses/approvals from other government agencies in order to carry out the business activities.

In some situations, it may take between 2 weeks to 2 months if the application needs to be referred to another agency for approval or review. For example, if the intention of the branch of a foreign company is to carry out activities involving the setting up of a private school, the application will be referred to the Ministry of Education.

  In a Nutshell

Generally, the structure of a business determines its legal, financial reporting and tax status. Choosing the most appropriate business structure to meet your business needs requires careful consideration. Some of the factors you should consider carefully before deciding on the best suited structure:

• Your commercial objectives of setting up the business
• Amount of capital that you are prepared to invest
• The level of control you desire to have in the business
• Number of owners in the business
• To what extent are you prepared to shoulder liabilities and responsibilities in the business
• The extent of risks you are prepared to take
• Tax implications
• To consider the annual administrative and compliance cost of running the business
• The pros and cons of the different business structures
• How easily can the business can be closed

The operating structure determines a business’s legal, financial reporting, auditing and taxation status. To assist with the future growth and development of the business while meeting the various needs of its owner(s), the operating structure requires careful selection to avoid the need to amend it at a later date that may be difficult and expensive to implement due to legal costs and taxation implications.

Majority of companies we have registered for clients fall within the following timeframe:

Footnotes:

   *  1  The above is applicable provided no further referral to other government authority is involved. Also, dependent on the return of the duly completed incorporation questionnaire and due diligence documents listed in the verification list.

    *   2  The time frame for actual incorporation is usually around 2 to 3 working days, subject to all requested information made available and due diligence completed. However, if the documents have to be sent overseas for execution, the timeframe mainly depends on how fast the duly executed documents are returned for lodgement with ACRA.

Below is a list of referral authorities who review selected business name registration applications before they can be approved. There may be other referrals required by statutory or government authorities that are not listed below. The referral authority’s approval may be required for your application, based on your proposed business name or selected SSIC code. If referral is required, it can take between 14 to 60 days for the applied name to be approved.

Board of Architects, Singapore

Council for Estate Agencies

Ministry of Culture, Community and Youth – Charities Unit

Ministry of Defense – Defense Industry & Systems Office

Ministry of Education – Private Schools Section

Ministry of Law – Legal Services Regulatory Authority

Monetary Authority of Singapore

Professional Engineers Board

Singapore Tourism Board

Institute of Singapore Chartered Accountants

Ministry of Health

1. Generally, most banks have the following requirements for opening a corporate bank account for Singapore companies:

Documents required for opening of corporate bank account:

• account opening forms which will be provided by the respective banks (to be signed by authorized signatories)
• Directors’ resolution for the opening of the account indicating the authorized signatories for the account (most of the banks have their own format for you to sign)
• Company’ profile from the ACRA
• Company’s Constitution
• Passport / Identity Card of directors / authorized signatories for verification by bank
• Proof of residential address of Directors (i.e. latest Utility bill, phone bill etc. – not older than 3 months)
• The banks may require additional documents on a case by case basis which they will inform during enquiry stage

(Note: For single director company, banks will also require the company secretary to be present for verification purpose) 

Signing of documents requirements

Most banks will require the authorized signatories and at least 2 directors to be physically present in Singapore for the signing of forms and completion of formalities relating to the opening of the corporate bank account(s).

However, some banks will accept the signing of these forms and documents at one of their overseas branches or in front of a Notary Public or before a Singapore Embassy official in the country where you reside. With the worldwide pandemic, some banks have also turned to video conference/video calls for due diligence verification processes.

Sole-proprietor (self-employed)

Partnership

Company

• 100% shares can be held by foreign or local corporation or one individual shareholder
• Minimum initial paid-up share capital is S$1.00
• Minimum 1 shareholder, 1 director and 1 company secretary
• Sole shareholder can also act as sole director
• Sole director cannot act as company secretary
• Company secretary must be Singapore Resident
• At least one director must be a resident of Singapore (i.e. Singapore Citizen, Singapore Permanent Resident, Employment Pass holder)
• Directors must be a natural person of “full age” and capacity (must be 18 years old and above)
• Directors cannot be an undischarged bankrupt or convicted of any offence involving fraud or dishonesty whether in Singapore or elsewhere.

• Proposed name of company
• Principle activities for the proposed company (maximum 2 types of activities)
• Number of shares to be issued to each shareholders
• Photocopy or scanned copy of Passport and/or Identity Card of all shareholders and directors (if Shareholder is a company, please provide the Company Incorporation certificate or official company profile and a company resolution or Power of Attorney to appoint a representative for signing of the company incorporation documents)
• Proof of address of all directors and shareholders (i.e. latest utility bill or phone bill or credit card bill)
• Registered office address
• For Documents signed outside of Singapore, Notary Public witnessing is required
• Documents in other languages must be translated to English by certified translator

The timetable for the incorporation process; under normal circumstances are set out as follows –

The time frame for incorporation (with local director/ shareholder) is usually around 3 working days (1 day for name reservation and 2 days for incorporation, subject to all requested information made available to AM Corporate Services beforehand and receipt of payment on our invoice). However, if the documents have to be sent overseas for execution by the directors / subscribers, the time taken will depend on when these documents can be returned to us for submission to ACRA. Please note that with effect from 13 January 2003 the ACRA does not issue hardcopy of Form 9 (Certificate of Incorporation). Only an E-Notice confirming incorporation will be transmitted to the applicant’s email address. If you require a hardcopy of certificate of confirmation of incorporation from ACRA, this can be purchased from ACRA at S$50.00.

None. Director and shareholder can be same person. The only restriction is that you have to appoint a qualified company secretary.

Yes, the owner of the sole proprietorship business can be the sole director and the shareholder of the company. You will need to appoint a qualified company secretary.

Generally most banks have the following requirements for opening a corporate bank account for Singapore companies:

Documents required for opening of corporate bank account

• account opening forms which will be provided by the respective banks (to be signed by authorised signatories)
• Directors’ resolution for the opening of the account indicating the authorised signatories for the account (most of the banks have their own format for you to sign)
• Company’ profile from the ACRA
• Company’s Memorandum and Articles of Association (we will provide this)
• Passport / Identity Card of directors / authorised signatories for bank’s verification
• For single director companies some banks requires the company secretary to be present for verification purpose
• Proof of residential address of Directors (i.e. latest Utility bill, phone bill etc.)
• The banks may require additional documents on a case by case basis

Document Signing Requirements
Most banks will require the authorised signatories and majority of the directors to be physically present in Singapore for the signing of forms and documents for the opening of the corporate bank account. However, some banks will accept the signing of these forms and documents at one of their overseas branches or in front of a Notary Public or before a Singapore Embassy in the country where you reside.

• Business license: Certain business requires one or more licenses and you can check by visiting https://www.business.gov.sg/EN/StartingUp/LicencesNPermits/index.htm., fortunately, very few business activities in Singapore require business licenses. We can assist with application of relevant business licenses if required for your business.
• Opening of bank account soon after your company formation. This will help you with injecting funds into the company, receiving payments from customers, and paying your company bills. We can assist with the bank account opening process.
• You will need to decide whether you should register for Goods & Services Tax (GST). GST registration is not mandatory unless your annual turnover exceeds S$1 million. We can advise and assist you to register for GST, if required.
• In you are importing and exporting goods, you will need to obtain a Central Registration (CR) number. The CR number is for use in all import, export and transhipment permits, certificates and any other documents issued by the Singapore Customs. We can help obtain a CR number for your company if required.
• You should get basic stationary and marketing materials ready for your company as soon as possible. These include such items as business cards, letter heads, website, brochure, etc.
• If you plan to bring any foreign employees, you will need to apply for their employment pass (EP) before they can commence their employment with your newly formed Singapore Company. We can advise and assist you with EP applications.
• Renting an office space and acquiring office equipment to commence your business.
• Holding the first board of directors meeting within 3 month of the company’s incorporation to ratify pre-incorporation matters such as confirmation of registered address, adoption of company’s common seal, issuance of subscribers shares, appointment of directors/ company secretary/ company auditor and other routine matters.
• Review and sign the terms of engagement of the company secretary, company auditor, tax agent, bookkeepers, if you require all or some of these services.

• Review and select your required package by visiting our company set up service packages page.
• Once we receive your instruction / order and the duly completed incorporation questionnaire, we will work with you to clarify any other information (if required).
• Upon the receipt of the questionnaire and your payment, we will be able to commence our service immediately.

In Singapore, the tax residence status of a company depends on where the control and management of its business is exercised. A company is tax resident in Singapore if the control and management of its business is exercised in Singapore. Generally, a Singapore branch of a foreign company is not treated as a Singapore tax resident since the control and management is vested with an overseas parent company. The basis of taxation for a resident company and non-resident company is generally the same. However, there are some benefits that a resident company can enjoy that a non-resident would not. These include:

• It is entitled to benefits conferred under the Avoidance of Double Taxation Agreements (DTA) that Singapore has concluded with treaty countries.
• It can enjoy tax exemption on foreign-sourced dividends, foreign branch profits, and foreign-sourced service income under section 13(8) of the Income Tax Act.
• It can enjoy the tax exemption scheme for new start-up companies.

Corporate Tax Rates

Personal Tax Rates (From YA 2012 onwards)

Singapore’s corporate tax rate is a flat 17%. In order to make Singapore as an attractive investment destination, income tax rates in Singapore have been going down consistently. As in many jurisdictions, income tax rate in Singapore does not necessarily provide an accurate indication of effective corporate tax rate. The effective rate is normally lower than the headline tax rate due to applicable tax exemptions.

General Tax Exemptions Below are general tax exemptions currently available to Singapore resident companies. With these tax exemptions, the effective income tax rate for Singapore companies is reduced significantly. About the Tax Exemption Scheme for New Start-up Companies

With effect from Year of Assessment (YA) 2010 If your company is not excluded from the Tax Exemption scheme, it can enjoy the tax exemption if it meets the following qualifying conditions:

• incorporated in Singapore (including a company limited by guarantee**);
• a tax resident* in Singapore for that YA; and
• has no more than 20 shareholders throughout the basis period for that YA where:
• all of the shareholders are individuals beneficially and directly holding the shares in their own names; or at least one shareholder is an individual beneficially and directly holding at least 10% of the issued ordinary shares of the company.

The exempt amount for each YA is as follows:

Companies not Eligible for the Tax Exemption Scheme New!
As announced in Budget 2013, the Tax Exemption scheme does not apply to the following companies incorporated after 25 Feb 2013: A company whose principal activity is that of investment holding; and A company whose principal activity is that of developing properties for sale, for investment, or for both investment and sale.
Investment holding companies derive only passive incomes such as dividend and interest income, while the real estate industry typically incorporates a new company for each new property development. The start-up tax exemption for encouraging entrepreneurship is not intended for such companies. These companies will be given partial tax exemption.

Abuse of the Tax Exemption Scheme
IRAS has observed some companies set up not for entrepreneurship and genuine commercial reasons but rather to take advantage of the tax exemption scheme. IRAS will take actions against such abuses. Normal companies and newly incorporated companies after the third YA are eligible for partial tax exemption.

Effective from YA 2008, a partial tax exemption is given to companies on normal chargeable income* (excluding Singapore franked dividends) of up to $300,000 as follows:

Effective Corporate Tax Rate The above general tax incentives mean very attractive tax rates. See illustration below for tax rate for various annual taxable income:
First Three Years of Income Tax Filings for Newly Incorporated Companies

Singapore adopts a one-tier corporate tax system with effect from 1 Jan 2003. Under the one-tier corporate tax system, tax paid by a company on its chargeable income is a final tax. All dividends paid by a company are exempt from tax in the hands of the shareholders. There is no withholding tax on dividend, if it is remitted to non-resident.