Company Registration: The Singapore LLC
Singapore law is based on Common law and the relevant governing law for Singapore entities is the Companies Act Cap 50, with the most commonly used form of business entity being the Singapore Limited Liability Company (LLC) whereby the liability of the beneficiaries of the company is limited to the amount, if any, unpaid on their respective shares, in other words the liability of the members is limited up to the amount contributed to the capital of the company.
The information below relates to Singapore LLC registration procedure and the information & documentation that must be provided to our Law Firm by the client in order to register a Singapore LLC:
A company name that must be in English and must be provided by the client and approval is given within 48 hrs. The company name must not infringe any trademarks or patents nor be offensive.
Directors, Shareholders, Secretary & Registered Office
Details of beneficial directors and shareholders, such as nationality, country of residence, address, profession etc., are requested provide together with a scanned and notarized copy of their passport.
Also a scanned copy of a recent (not older than 3 months) utility bill, i.e. electricity bill, being proof of residence of the beneficiary shareholders and the directors will have to be provided to the law firm.
In the event the shareholder is a company the same should be provided for its ultimate beneficiaries together with copies of all the corporate documents of the beneficiary company.
The Singapore LLC can be incorporated with one director and at least one directormust be local individual resident.
The Singapore LLC can be incorporated with one shareholder, the maximum number being 50, and shareholders can be individuals or companies.
Furthermore, a security deposit of about SGD$2,000 / US$1,500 can be requested in order to safeguard the interests of the Local Director which cannot be involved in any financial, operational or management activities of the company.
Finally, a new Local Director can be appointed at any time, in such case the existing Local Director will resign and the deposit will be refunded once the appropriate changes are made at the Company Registrar.
The Singapore LLC can hold the annual meetings anywhere and must hold its annual general meeting of directors within 15 months of the previous one.
The Singapore LLC can be registered with nominee directors and shareholders to secure confidentiality.
The Singapore LLC must be registered with a secretary that must be a natural person resident of Singapore responsible for keeping and filing corporate document with ACRA (Accounting and Corporate Regulatory Authority), in practice provided by the agent.
The Singapore LLC must be registered with a Registered Address thatmust be provided for register of directors, shareholders, secretary and minutes of general and director meetings to be kept. All changes have to be filed with ACRA within a month of the date of change and this can be secured with the agent in Singapore.
The Singapore LLC cannot be subject to re-domiciliation.
A description of intended activities must be provided bearing in mind that government permits will be necessary if the company is to act as a bank, financial institution or in domains where permits are necessary, i.e. pharmaceuticals.
There is no standard authorized share capital.
Share paid-up capital requirement is min SGD$1 and there is a 0.2% of stamp duty is charged on authorized share capital.
Ordinary Shares and Preference Shares can be issued by a Singapore Pte Ltd company.
Shareholders must subscribe at least for two shares. The minimum number of shareholders required is one and there are no restrictions on foreign individuals or corporate bodies. The number of shareholders of private company is limited to 50.
‘Nominee’ directors and shareholders are permitted to secure confidentiality.
The names of the directors and the shareholders are not publicly accessible.
Time schedule & delivery
The client will receive company Incorporation documents that he will sign and return to us.
The Singapore LLC will be registered after a minimum 3 to 5 working days, the legalization of the documents will be completed after 7 working days and corporate documents sent to the client.
The registration of a Singapore LLC can be completed relatively quickly as the process is fully computerized.
Taxation, Reports & Double Tax Treaties
All private limited companies must comply with the statutory regulations set out by ACRA (Accounting and Corporate Regulatory Authority) and the IRAS (Inland Revenue Authority of Singapore)
Corporate income tax rate for 2010-2011 in Singapore is 17%.
Income Tax in Singapore operates with a territorial taxation principle therefore income derived in Singapore is subject to tax and foreign income is tax exempt. This means sales proceeds originating from outside Singapore but received in Singapore are subject to tax, so prior approval must be obtained by the Singapore Inland Revenue Authority before profit can be classified as non-Singapore Income (i.e. not derived from Singapore) and therefore be exempt from Singapore Income Tax.
Foreign source income is exempt from income tax if it is not remitted into Singapore. Income is not considered to be derived from Singapore if:
(i) A contract is concluded and signed outside of Singapore
(ii) Services rendered are outside of Singapore
(iii) Capital is employed outside of Singapore
(iv) If the title of goods is passed outside of Singapore
(v) Receipt of sales proceeds are outside of Singapore
(vi) Payment of expenses incurred in the provision of services or delivery of goods done outside of Singapore
(vii) Place where goods are stored and maintained is outside of Singapore
There is no capital gains tax in Singapore.
Stamp duty on transactions with securities is 0.2% and offshore loan agreements are exempted.
Interest received is subject to Income Tax, whether the source of the interest income is foreign or from Singapore, and interest paid to non-residents of Singapore is subject to withholding tax of 15% unless it is regulated under a Double Tax Treaty.
Royalty income received is subject to income tax with foreign source royalty income being exempt from income tax unless remitted to Singapore, and Royalty paid to non-residents of Singapore is subject to withholding tax of 15% unless it is regulated a Double Tax Treaty.
Dividend which is foreign dividend income is exempt from income tax.
The effective income tax rate for small to mid-sized companies is significantly reduced.
(i) For the first three tax years after incorporation the corporate income tax rate on any amount up to S$100,000 is 0%, on any amount from S$100,000 to S$300,000 is 8,5%, and on any further amount up from S$300,000 to S$2,000,000 is 17% provided the company meets the following criteria; be incorporated in Singapore, be tax resident in Singapore, has no more than 20 shareholders at least one of which must be an individual and must hold at least 10% of shares.
(i) Further to the first three tax years of the company, the corporate income tax rate on any amount up to S$300,000 is 8, 5%, and on any further amount up from S$300,000 to S$2,000,000 is 17% provided the company meets the following criteria; be incorporated in Singapore, be tax resident in Singapore, has no more than 20 shareholders at least one of which must be an individual and must hold at least 10% of shares.
Annual Reporting Requirements
The company must submit the annual return with ACRA which contains all information regarding the company and its financial accounts reports as well as submission of income tax return by 31st October.
Audit annual accounts requirement applies for companies with an annual turnover of over S$5 million annual and must have been audited by a qualified Singaporean accountant.
Companies can file annual accounts without audit if the number of shareholders is less tan 20, members of the company are individuals and not a corporation and annual turnover is less than S$5 million.
Double Tax Treaties
Singapore’s double tax treaties with the countries listed below include provisions for the exchange of information for tax purposes:
Australia, Austria, Bahrain, Bangladesh, Belgium, Brunei, Bulgaria, Canada, China, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Fiji, Finland, France, Georgia, Germany, Hungary, India, Indonesia, Israel, Italy, Japan, Kazakhstan, South Korea, Kuwait, Latvia, Lithuania, Luxembourg, Malaysia, Malta, Mauritius, Mexico, Mongolia, Myanmar, Netherlands, New Zealand, Norway, Oman, Pakistan, Papua New Guinea, Philippines, Poland, Portugal, Qatar, Romania, Russian Federation, Slovak Republic, South Africa, Sri Lanka, Sweden, Switzerland, Taiwan, Thailand, Turkey, Ukraine, UAE, UK, Uzbekistan, Vietnam.
The ultimate choice of jurisdiction for a company will be dependent on the following factors:
The economical & political stability (confiscation, expropriation and nationalization risks).
The level of taxation and the availability of tax exemptions.
The suitability of the Double Tax Treaties to reduce & optimize its tax burden.
The perception of the company depending on whether it is an offshore or EU jurisdiction.
The confidentiality provided by the jurisdiction in relation to disclosure of information.
The regulatory matters in relation to filing annual returns, accounts and have them audited.
The quality of legal and accounting firms.
The quality of local banking services.
The quality of infrastructure of communications and workforce.
The convenience of the time zone of the jurisdiction.
Singapore follows a territorial basis of taxation. In other words, companies and individuals are taxed mainly on Singapore sourced income. Persons, including corporations, partnerships, trustees and bodies of persons carrying on any trade, profession or business in Singapore are chargeable to tax on all profits (excluding profits arising from the sale of capital assets) arising in or derived from Singapore and certain foreign-sourced income from such trade, profession or business.
Foreign sourced income (branch profits, dividends, service income, etc.) will be taxed when it is remitted or deemed remitted into Singapore unless the income was already subjected to taxes in a jurisdiction with headline tax rates of at least 15%. Although the concept of locality of the source of income seems simple, in reality its application can often be complex and contentious. No universal rule can apply to every scenario. Whether profits arise in or are derived from Singapore depends on the nature of the profits and of the transactions which give rise to such profits.
Furthermore, there are various advantages to incorporating a Limited Liability Singapore Company:
Foreigners can own 100% of the ownership of a Singapore Company and can be directors of a Singapore Company
No minimum requirements for share capital
Only one director and shareholder is required to form a limited liability company
There is a concept of Territorial Taxation where foreign source trade profit is not subject to Singapore income tax if it is repatriated in Singapore
There is no Capital Gains Tax in Singapore.
Foreign dividends are not subject to Singapore Income Tax.
Tax Credits for foreign tax paid are available in Singapore, subject to some conditions.
There are some partial income tax exemptions available in Singapore.
There is no Net Worth Tax in Singapore.
Intensive Double Tax Treaty network with more than 60 other countries.
The Incorporation process for a Singapore Company is quick and efficient.
Common law applies and English is the official business language.
The Singaporean Tax System is straightforward and stable
Singapore is a world leader in foreign trade and investment and has one of the best business environments in the Asia Pacific region according to a recent World Bank study, which is the world’s upcoming region, being one of the most highly developed and well-regulated financial centers in the world built on the highest regulatory and prudential standards