There are over 90,000 foreign enterprises currently operating in Singapore, a figure that has been rising steadily every year. This shows the country’s strong appeal as a global business hub, but more importantly, it demonstrates the confidence foreigners have in Singapore’s ecosystem.
So what makes Singapore so appealing to international entrepreneurs? Here’s everything you need to know about setting up a company in Singapore as a foreigner:
Can Foreigners Set Up a Company in Singapore?
Foreigners are allowed to set up a company even if they are not Singapore citizens or permanent residents (PRs). They can also own 100% of the company’s shares, meaning there is no requirement for a local business partner.
Additionally, foreign business owners do not need to reside in Singapore to own a company. However, there are several requirements that must be fulfilled before your company incorporation can be completed.
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Is Setting Up a Company in Singapore Easy for Foreigners?
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Setting up a company here is straightforward and simple. In fact, Singapore is considered one of the easiest countries to start a business. Most companies can be incorporated quickly once all the required documents are in order.
The registration process can also be completed online through the Accounting and Corporate Regulatory Authority (ACRA) BizFile+ portal. Businesses are often approved within a short period, especially if they meet all the requirements and legal obligations.
The Benefits of Setting Up a Company in Singapore
Singapore has built a strong reputation as one of the world’s leading business destinations. Its pro-business policies and stable economy continue to attract entrepreneurs and investors from around the globe. Here are some benefits of starting a business here:
- Strategic Location: Located at the heart of Southeast Asia, Singapore serves as a gateway to regional markets. Its strategic location between trade routes allow businesses to deal efficiently with the rest of the world.
- 100% Foreign Ownership: Unlike many countries that require a local partner, Singapore allows foreigners to own 100% of their company’s shares. This gives business owners complete control over their operations.
- Attractive Tax System: Singapore offers one of the most competitive tax rates globally. The country has a flat corporate tax rate of 17%, a one-tier tax system where dividends are tax-exempt, and no capital gains tax.Not to mention various tax exemptions and incentives that can help businesses reduce their overall tax burden.In addition, Singapore has an extensive network of Avoidance of Double Taxation Agreements (DTAs), making it easier for international businesses to manage cross-border taxation.
- Strong Legal Framework: Singapore is known for its transparent legal system and strict regulatory standards. This gives businesses greater confidence when operating in the country.The stable legal government also helps build trust with customers and business partners across the globe.
- Access to Talent: Singapore is home to a highly educated, multilingual workforce. They come from various countries around the world, including Malaysia, China, and India.This makes it easier for businesses to recruit suitable professionals across different industries. Companies can also hire foreign employees through the appropriate work pass schemes when local talent is unavailable.
- Excellent Business Infrastructure: Singapore provides businesses with the resources they need to operate efficiently. The country has reliable public transport, modern office spaces, world-class banking, and advanced infrastructure that supports all businesses.
Everything You Need to Start a Company in Singapore
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Before registering your business, it’s important to understand the basic requirements for setting up a company in Singapore. Although foreigners can own 100% of the company, every business must comply with Singapore incorporation rules. This includes completing the following steps:
1. Business Structure
The first step is selecting the type of business entity you want to register. There are five main business structures in Singapore:
| Private Limited Company (Pte Ltd) | A separate legal entity from its owners. This means shareholders have limited liability and are only responsible for the amount they have invested. |
| Sole Proprietorship | A business owned and operated by one individual. It is the simplest business structure to set up, but the owner is personally liable for all obligations. |
| Partnership | A business owned by two or more individuals. Each partner shares the responsibilities and liabilities of the business. |
| Limited Partnership (LP) | Consists of at least one general partner and one limited partner. The general partner has unlimited liability, while the limited partner’s liability is limited to the amount they have invested. |
| Limited Liability Partnership (LLP) | A separate legal entity that allows partners to operate the business while protecting their personal assets. |
Among these options, a Pte Ltd is the preferred choice for both local and foreign entrepreneurs. It offers greater credibility and provides more opportunities for business growth and investment.
2. Company Name
It’s recommended to reserve your company name before proceeding further. This can be done with ACRA through the BizFile+ portal. The name can be reserved up to 120 days before it is released for others to use.
Your proposed name must be unique, should not be identical or too similar to an existing business. It must not infringe on any registered trademark or other forms of intellectual property too.
Names that contain regulated words or are considered sensitive may require approval from other authorities. This includes terms such as ‘bank’, ‘university’, ‘education’, or ‘Singapore’.
3. Primary Activity
You will also need to select the appropriate Singapore Standard Industrial Classification (SSIC) code for your business. The SSIC is a system used to identify the type of business a company carries out.
You must choose a code that best reflects your company’s primary business activity, as well as any secondary activity. Selecting the correct SSIC code also ensures compliance, helping you avoid any issues.
4. Registered Office Address
Every company in Singapore must have a registered office address. This will serve as the company’s official address for receiving government notices. The address must be a physical location in Singapore and cannot be a post office (P.O.) box.
It must also be accessible to the public during normal business hours. While many businesses use their office premises, some choose to use a registered address service instead.
This is where businesses can use the address of a service provider even if they operate from another country.
5. Local Director and Company Secretary
While foreigners can own 100% of the company’s shares, they must still appoint at least one resident director. This individual should be a Singapore citizen, PR, or someone who holds a valid work pass.
The director should be responsible for managing the company and ensuring accurate record keeping. You are also required to appoint a company secretary within six months of incorporation. The director and secretary cannot be the same person.
The company secretary is responsible for ensuring compliance with the Singapore Companies Act. This includes maintaining statutory records and filing the necessary documents with ACRA.
You must then decide how much capital to invest in the business, as well as how the company shares will be allocated among shareholders. The minimum capital to incorporate a company in Singapore is S$1.
Registering With ACRA
You can now register your company with ACRA. Submit all the documents and wait for your application to be processed. This includes the details you’ve gathered earlier:
- Business structure
- Company name
- SSIC code
- Registered business address
- Details of directors and shareholders
- Company secretary information
To ease the registration process, it’s best to prepare all the documents beforehand. If the information is correct, your application can be processed within a day or even a few hours.
You will then receive your Unique Entity Number (UEN), which serves as the official identification number for your business transactions.
Opening a Bank Account
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After incorporating your company, the next step is to open a corporate bank account. This allows your business to manage all daily transactions such as payments from customers and business expenses.
The documents to open a company bank account generally include your incorporation documents, UEN, details of directors and shareholders, and proof of business activities. Foreign entrepreneurs can also open a corporate bank account without being Singapore residents.
However, some banks may require an authorised representative to attend a verification meeting before the account can be approved.
Ongoing Compliance After Setting Up a Company in Singapore
All Singapore companies must continue to meet compliance requirements to remain in good standing with the authorities. This includes:
- Filing an annual return with ACRA by providing updated information about the company.
- Ensuring records are properly maintained and updated whenever there are changes.
- Fulfilling tax obligations with the Inland Revenue Authority of Singapore (IRAS).
- Preparing financial statements and undergoing audits if necessary.
Failure to comply with these requirements will result in immediate penalties or even court prosecutions. In worst case scenarios, repeated offenses can result in the dissolution of your company.
The Bottom Line
Setting up a company in Singapore is something foreign entrepreneurs can easily do. Just remember to prepare all the details from the start to ease the entire process.
More importantly, remember to remain compliant throughout your time as a business owner because this helps your company stay in good standing with authorities.
With the right preparation and understanding, foreign entrepreneurs can successfully establish their business and enjoy the many opportunities Singapore has to offer.
Need help with company incorporation in Singapore? Visit onetaxcm.com to find out more!