Guide to setting up offshore company in Singapore
As your business grows, you might start considering moving away from your home base of operation. Being a financial center with political and economical stability, Singapore is a great choice for setting up an offshore company.
Here is a guide on setting up offshore company in Singapore and what that entails.
As the name suggests, an offshore company is a company that is situated away from its region of main operations. Investors of an offshore company will not be from the same location the company is located in.
Typically, offshore companies are also not located in the same country as their headquarters. A business might want to incorporate an offshore company to get access to benefits that are not available in their home jurisdiction.
Offshore companies in Singapore can engage in any business activities so long as you fulfill the offshore company registration in Singapore accordingly. Business activities in your Singaporean offshore company can even differ from the ones carried out by its parent company.
However, when setting up offshore company in Singapore, keep in mind that certain business activities might require special licenses. Opening a restaurant, for example, will require a license from the respective regulatory authorities of the industry. The same goes for business activities in the sphere of financial services, and so forth.
During the process of setting up offshore company in Singapore, you will also be asked for a brief description of your business activities. Make sure that you have a concrete grasp of what are the business activities you want to carry out with your offshore company in Singapore.
Singapore is ranked very highly among countries that offer ease of business. With both political and economical stability paired the ease of incorporating your offshore company, you can conduct business in Singapore without constantly stumbling into walls.
Perhaps more importantly, the local government is also pro-business, meaning that it’s easy to get administrative support and public services for your business.
Our guide on starting a business in Singapore can help you in getting to know how to start a business in Singapore in simple steps and kick start your journey as an entrepreneur.
Incorporating your offshore company in Singapore is unsurprisingly very easy, given Singapore’s reputation as a business city. It’s straightforward and only requires two elements, which are acquiring the name approval and applying for incorporation.
Incorporating an offshore company typically only takes around 1-2 days before you can start doing your business operations.
If you're considering incorporating your business in Singapore, it's recommended that you also read our complete guide on how to register your company in Singapore to know the step-by-step process to register a company in Singapore.
As a global financial hub, you’ll find business resources of all kinds in Singapore. Many investors are familiar with the market and will be willing to invest in Singaporean companies. Other businesses in Singapore also can offer you all-in-one solutions for your business and financial needs, helping you grow your business more effectively.
Setting up offshore company in Singapore can help you be more tax-efficient. Singapore has one of the lowest standard corporate tax rates in Asia at only 17%.
Goods and services tax also only falls at 7%. You can enjoy a flexible tax system with your Singaporean offshore company and reap the benefits of it. This will be especially beneficial the bigger your business gets.
It can be difficult to set up companies with foreign ownership in most countries. Setting up offshore company in Singapore, however, is relatively simpler as Singapore allows foreign shareholders.
In fact, some companies can have up to 100% foreign shareholding. Shareholders of your offshore company can also be foreign corporate bodies such as corporate trustees.
The Singaporean government is supportive of businesses, which is a plus point for setting up offshore company in Singapore. With a transparent government backed by a just and reliable legal system, conducting business is much easier.
Singapore also is known to be economically stable, making it one of your best bets to safely and securely set up an offshore company.
Singapore is known to be a financial center in not only Asia but also worldwide. It’s a business-friendly country and is the birthplace of many rising businesses. Many investors look at Singapore as a country to make investments.
When you have an offshore company in Singapore, you’ll gain more credibility for your company and attract the trust of other businesses worldwide.
One of the key requirements, legal or otherwise, when setting up offshore company in Singapore is opening a business bank account. Known for its banking and fintech prowess, Singapore offers no shortage of banking partners.
You’ll have access to some of the best banking facilities for your offshore company. Some banking providers also allow you to open a Singaporean business bank account from anywhere in the world.
If you own an overseas corporation and regularly do business in Singapore, then try opening an offshore business bank account in Singapore.
When you get an increase in investment or have new investors and shareholders, you will naturally want to grow your business. Your investors’ preference might be that they invest through an offshore jurisdiction. In this case, then setting up offshore company in Singapore compared to other countries will net you many benefits.
Your business might be into investment holding, in which you retain assets to invest in them and gain income. Real estate is a primary example of companies retaining assets.
Retaining assets through setting up offshore company in Singapore can relieve you from Stamp Duty and Capital Gains, which will be favorable for your business.
In the World Economic Forum’s Global Competitiveness Report 2019, Singapore was ranked first in Asia and second in the world as the country with the best IP protection. If your company is trying to develop Intellectual Property, it would be advantageous to set up an offshore company in Singapore.
Zero corporate tax criteria
If your Singaporean offshore company is controlled overseas and has no local business operations, you can be subjected to zero corporate tax. Only income that is gained and accounted for in Singapore is subjected to tax.
However, in the case of zero corporate tax, your company also must not have a business bank account in Singapore. That being said, zero corporate tax also comes with a high level of accountability, as there are a lot of due diligence and reporting requirements that you must fulfill.
Some income that is received in Singapore can also be exempted from tax. For example, any foreign-source income not banked in your Singapore business banking account is exempt from corporate tax. The other types of income exempted are:
● Foreign-sourced dividends
Singapore has a single-tier tax policy. This means that when income has been taxed at the corporate level and your company has paid the appropriate corporate taxes, dividends that shareholders receive are tax-free.
If foreign-sourced income is remitted in Singapore with the purpose of being dividends for shareholders, then the income will be exempted from any further taxation. The income is not considered to have been received in Singapore as it isn’t corporate income, but rather the shareholders’ income.
● Foreign-sourced service income
Foreign-sourced service income that is received in Singapore can be exempted from tax if it meets all three of the following requirements:
• The base tax rate at the foreign jurisdiction must be at least 15% when the income is received in Singapore
• The foreign income was taxed at the foreign jurisdiction according to its rate
• And the Singaporean government is satisfied that the tax exemption is beneficial for the resident individual in Singapore.
● Foreign branch profits
Foreign branch profits are profits made overseas by a foreign branch of a Singaporean company. This means that the base of operation of the branch is located locally in Singapore. In this case, the foreign profits that are received in Singapore will be exempt from corporate taxes.
As a trade-off, you will likely be required to pay taxes according to the tax rates at the branch’s location. As the branch is an overseas entity, the Singaporean tax law would not apply.
To incorporate your offshore company, you’ll have to use the BizFile+ portal, which is authorized and managed by the Accounting and Corporate Regulatory Authority, or the ACRA. Setting up offshore company in Singapore through BizFile+ is done online.
● SingPass ID
You need a SingPass ID to log into BizFile+. The SingPass ID is a digital identity for residents of Singapore. As a foreigner, you might need to enlist the services of a registered filing agent like a law firm to help you incorporate your offshore company.
● Company director
Offshore company registration in Singapore requires that you name at least one director for your company. At least one director also must locally reside in Singapore and be either a citizen of Singapore or hold an EntrePass or employment pass.
● Physical office in Singapore
An offshore company in Singapore must have a physical office address as its registered address. Make sure that you have a physical office established when setting up offshore company in Singapore.
● Company secretary
Your offshore company must appoint a company secretary within six months of incorporation. The company secretary cannot be the company’s only shareholder and director. They must also be a natural person who is based in Singapore and are qualified under the Singapore Companies Act.
● Name of the proposed company
When doing your offshore company registration in Singapore, ensure that you’ve decided on a company name.
● Description of business activities
One of the requirements for incorporating your offshore company is a brief description of what your day-to-day business activities are. In short, the business you do and the market you operate in.
● Shareholders, company secretary & directors’ details
You’ll have to gather details of your shareholders, directors, as well as company secretary. This will include identification and proof of residential address.
● The registered address of the company
Your company must have a registered address. Ensure that the registered address is the same as your physical office address. This address must be a physical address and cannot be a PO box.
● Company constitution
You need to provide a document outlining the responsibilities and authorities of the shareholders and directors in your company. Basic company rules will also be noted here.
Once you have gathered all these necessary documents, you can begin the offshore company registration in Singapore. You’ll have to provide a ‘consent to act’ document from the directors and the company secretary before setting up offshore company in Singapore.
When everything is ready, the registered filing agent whose services you have enlisted will file all your documents with ACRA. The entire incorporation process happens online and will likely be completed in 1-2 days. You will then obtain your business license and the company’s business profile once the process has been completed.
Depending on what your business is, your company may need to register for goods and services tax, or GST, in Singapore. If your company is required to register, make sure you do that as soon as possible after the offshore company incorporation process has been completed.
There are some businesses and industries in Singapore that are closely regulated. In that case, you’ll have to apply for a separate business license. An example would be a financial services license.
It’s good practice to open a corporate bank account to keep track of the finances of your offshore company. You can apply for a corporate bank account through a number of banks or other providers, some of which enable you to do the entire process online.
The Central Provident Fund is one of the two boards that you must register to for paying taxes related to hiring employees in Singapore.
Along with the CPF, the SDF is one of the two boards that you must register to for paying taxes related to hiring employees in Singapore.
There are many benefits to setting up offshore company in Singapore. From flexible tax systems to supportive business environments, your business can easily benefit from an offshore company in the country.
The good news is that you can incorporate your offshore company in Singapore and kick-start its business activities in no time. Once you’ve gotten your offshore company incorporated, you’ll want to consider opening a business bank account in Singapore to strengthen your finances, reporting, and other business processes.
As a spend management platform, Volopay offers a robust business account that will optimize your processes and help scale your business. Volopay’s business account comes with many features, starting with corporate card management, vendor payouts, and a payroll module.
With a multi-currency wallet for business activities in foreign currencies, you can also easily conduct business activities without running into obstacles that come with international transfers. Open a Volopay business account online and get the best of business banking for your Singaporean offshore company.