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Piloto Asia Explains Singapore Company Incorporation Advantages



Have you ever wondered why so many organisations decide to incorporate their business in Singapore? Well, the short answer for that is because Singapore is consistently ranked as one of the most business-friendly places in which to operate.

In this guide, Piloto Asia has highlighted some of the key reasons for the development of that reputation, making a compelling case for why you should consider Singapore company incorporation.

  • Attractive Tax System

In some countries, trying to work out the taxation system can seem close to impossible. Singapore, on the other hand, has developed a system that’s both simple and rational. 

No tax on capital gains on dividends when received from a business

When dividends are issued to shareholders, they come with a tax-free status. While they are taxed under corporate tax, they are not then taxed again under personal taxation. 

A tiered system for personal income tax

The personal tax rates in Singapore start at 0% and are capped at 22% for income above S$320,000 for residents and a rate of 15% to 22% for non-residents. 

Starting from year of assessment 2024, people who earn more than S$500,000 but less than S$1 million will have to pay 23% income tax. If you earn more than S$1 million, you will have to pay 24% income tax.

A single tiered tax system for corporate tax

This allows for a 75% exemption on the first S$100,000 of normal chargeable income and a further 50% exemption on the next S$100,000.

VAT, or the Goods and Services Tax as it’s known in Singapore, is just 7% for most goods and services, with a 0% rate for some goods such as the sale and lease of residential properties. Starting from January 2023, the GST rate will rise from 7% to 8%, then 9% on January 1, 2024.

2. Avoidance of Double Taxation

Singapore has signed Avoidance of Double Taxation Agreements (DTA), limited DTAs and Exchange of Information Arrangements with over 100 jurisdictions.  The full details of each agreement can be found on the website for the Inland Revenue Authority of Singapore.

Singapore has also put Unilateral Tax Credits (UTCs) in place for those countries where a DTA has not been agreed. This means that it’s highly unlikely that you will find yourself liable for double taxation when your company has Singapore tax resident status. 

  • Ease of the Incorporation Process and Business Operation

If you’re looking for a base that offers high levels of efficiency combined with minimal bureaucracy, then Singapore could be the solution. The World Bank has consistently ranked Singapore as being one of the top five countries in their Ease of Doing Business Survey.

And it’s clear to see why the country is awarded this type of accolade when the process for setting up a new business is so straightforward. 

The same approach is taken with annual compliance requirements, where you’ll find that the process is user friendly and the paperwork self-explanatory.

4. Start-Up Support

If you’re used to battling with a country’s government and found that growth is penalised rather than encouraged, then it’s likely that you’re going to be pleasantly surprised by Singapore’s approach to start-up businesses.

That’s because the government has decided to take an approach that is both pro-growth and encouraging towards innovation. There are a wide range of grants, tax incentives and assistance schemes to help start-up businesses. In some sectors, you’ll also find subsidies for labour costs. And the best thing? There is no differentiation between local and foreign-owned entities; all of the benefits are available to both.

5. Little Corruption

Some countries may seem very attractive until you realise that your work permits and company incorporation are entirely dependent upon bribes and ‘cash incentives’ to local officials. Singapore is at the opposite end of the scale and is well known for having little corruption.

There are three key reasons for this. 

Highly Qualified Government Officials

Government officials are selected from applicants that are highly qualified, and as a result, they are very well paid. This reduces the temptation for ‘under the table’ transactions.

Harsh Punishment if Corruption Does Take Place

While Singapore is proactive in its support to business, it also takes a very hard line when its laws are broken. Singapore retains both corporal punishment and capital punishment for serious offences.

High Level of Moral Responsibility

The founder of Singapore, Lee Kuan Yew, set a very high bar for moral rectitude and led the country by example. As a result, you will find that Singapore citizens also take their moral responsibilities very seriously; corruption does not fall within that remit.

6. English speaking workforce

While it’s not impossible to set up a business using translators, it comes with the concern that the intent of a conversation becomes distorted. Then there is the risk that comes from signing documents that you don’t fully understand.   

In Singapore, just about every young or middle-aged Singaporean speaks English. With an excellent education system, this also means that there is a skilled workforce while salaries remain competitive with other countries. 

Our Conclusion

When the need comes around to incorporate a business, you need a process that is quick and easy. It needs to have as little red tape as possible and have proactive policies to help you through the process.

Singapore offers all of this and more, making it one of the most appealing locations for your business incorporation.

For more information, please visit Piloto Asia website.

Allan Strauss has a proven track record of editing and formatting content for newspapers, magazines or any other publishing endeavor. His experience includes everything from layout design to public speaking on stages around the world.