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Incorporation of a company in Singapore. Service offer

Among the usual set of forms of incorporation, which include partnerships, private and public companies, normally in Singapore, private companies are incorporated. Unlike private business or partnership, a private company has a legal status detached from its shareholders and directors, whose liability for the company’s obligations is limited to the amount of the contribution to the share capital of the company.

A private company can also obtain the status of an Exempt Private Company. The main feature of an Exempt Private Company is that such a company is exempt from the obligation to appoint an auditor and file audited accounts. However, an exempt company still shall file an annual report and tax return with the tax authority.

A company obtains the status of an exempt company if it complies with two conditions:

the company has at most 20 shareholders, all of which are individuals;

the company’s turnover does not exceed S$5,000,000 (around 3,900,000 USD).

Singapore employs a territorial tax system, so the profit tax is paid on income generated or earned or planned to be earned in the territory of Singapore. For example, having an account with a local bank or having a local director may be considered by the tax service as an intention to earn income in the territory of Singapore, which may possibly cause taxation.

The profit tax rate is 17%. The country has established a system of different tax benefits for local companies.

Resident companies are exempt from tax on dividends received from a foreign source (if a number of conditions are complied with); income from foreign branches and income from services provided abroad are also not taxed in Singapore, provided such income is not transferred to Singapore (for example, to the company’s account with a local bank).

Singapore also has no withholding tax on dividends paid to foreign shareholders of local companies, but it has a withholding tax on income paid to non-residents in the form of interest or royalty (15% and 10% respectively, unless another rate is provided for by double taxation treaties).

COMPANY INCORPORATION

The incorporation of a Singaporean company takes about 5 weeks.

Only individuals who have attained the age of 18 years can be companies’ directors; they must not have been declared bankrupt or indicted for illegal activity. It is important that at least one of the directors or the sole director of the company must be a resident of Singapore. Directors are personally liable for the company’s activity; due to such risks local nominee directors do not grant the client the right to manage the company’s bank accounts (or require regular provision of bank account statements) and do not issue a general power of attorney.

Both individuals and legal entities that are residents/citizens of any country can be shareholders. A private company can have 1 to 50 shareholders. There is no minimum amount of the share capital set for Singaporean companies, but a company must issue at least one share. A company needs a local shareholder if it plans to open an account with a Singaporean bank*.

There are no requirements for private companies regarding either minimum or maximum amount of the authorized or issued share capital; shares shall be issued with no par value. Issue of bearer shares is prohibited.

A company must have a local secretary; only an individual with certain qualifications can be appointed secretary. The sole director of a company cannot be appointed secretary.

Directors, shareholders and secretary’s data shall be filed with the Accounting and Corporate Regulatory Authority of Singapore, and it is available to the public.

The procedure of incorporation of a company is as follows:

1. The following has to be determined:

  • name of the company (the name of a private company must contain the words "Limited", "Pte" or “Sendirian Berhad”, “Sdn. Bhd.” (in Malayan), which indicate its form of incorporation), which must be checked for uniqueness;
  • structure of the company (director, secretary, shareholder, beneficiary);
  • amount of the share capital;
  • kind of the company’s activity.

2. Payment for services

3. The following documents have to be provided:

  • director, shareholder (unless nominee service is used) and beneficiary’s passport copy;
  • copy of a document proving director, shareholder and beneficiary’s residential address (in the form of a utility bill, bank statement not older than 2 months or analogous documents);
  • if a legal entity becomes a shareholder, then the complete set of its founding documents will be required, including the certificate of good standing (or an analogous document) if the company was incorporated more than one year ago. The provided documents have to reveal the ownership structure, including the ultimate beneficial owner.

For each company the beneficiary shall sign a service agreement and an audit services agreement.

4. Check of the company’s name with the official register of companies. A name that has successfully passed the check can be reserved

5. Preparation and submission of the following documents for registration:

  • Memorandum of Association – contains the company’s name, confirmation of the form of business incorporation, information on persons who signed the Memorandum of Association: full address, name and place of employment, number of shares issued by the company with the currency of the authorized capital and the Articles of Association of the company;
  • Statutory Declaration of Compliance;
  • Forms containing shareholders, directors and secretary’s data and the registered office address in Singapore and its business hours;
  • Consent to Act as Director;
  • Statement of Non-disqualification to Act as Director;
  • Consent to Act as Secretary.

Upon completion of the incorporation the Register of Companies issues:

  • Certificate of Incorporation of the Singaporean company;
  • Business Profile of the company containing the registration number (the registration number has to be stated on all outgoing documents, invoices and other documents used for business communication).

After the registration number has been assigned, documents for issue of shares are made and the company’s seal is ordered.

Since Singapore is not a party to The Hague Convention of 1961 "Abolishing the Requirement of Legalization for Foreign Public Documents", neither original company’s documents nor their copies can be apostilled in Singapore. The company’s documents will have to be legalized in the consulate of the country where the documents are to be used, for example, to open an account with a local bank. For this reason, it is recommended to find out the time frame and cost of legalization of documents beforehand as they may differ depending on the working order of consulates of different countries.
Singapore also did not join the Competent Authority Agreement on automatic exchange of financial information dated 29 October 2014, instead Singapore plans to enter into a separate bilateral agreement on automatic exchange with each country. Currently, Singapore has such agreements with the United Kingdom and Australia.

SUBSEQUENT WORK WITH A COMPANY

Singaporean companies must annually prepare and file a tax return and an audited profit and loss statement (exempt private companies have the right to file an unaudited statement). The tax return and statement shall be filed with the local tax service annually before 30 November, and companies must also file a preliminary report on estimated taxable income 3 months before the end of the reporting period. VAT accounts shall be filed quarterly.

Moreover, Singaporean companies must annually prepare and file with the Accounting and Corporate Regulatory Authority of Singapore an Annual Return signed by director and secretary within 1 month after the annual general meeting. The return shall contain data on the activity and structure of the company; financial statements of the company shall be filed along with the annual return.

Services of a secretary, nominee directors and shareholders shall also be paid for annually, normally a year after the company’s formation.

Сost of main services**

Service
Cost
Total cost of incorporation (including a registered address and a local secretary’s services for the first year, compliance fee, preparation and provision of the company’s original founding documents, documents made for issue of shares and the company’s seal)
4,500 EUR
Subsequent annual renewal (starting from the second year), including provision of a registered address and a local secretary’s services, but excluding compliance fee
2,100 EUR
Services of a local nominee director
from 4,900 EUR per year + from 6,500 EUR refundable deposit***
Services of a local shareholder
from 2,800 EUR
Preparation and filing of accounts for the company
100 – 400 EUR per hour of work (minimum – 2,090 EUR)
Opening an account with a Singaporean bank
3,800 EUR
Compliance fee. Paid in case of: company’s renewal, company’s liquidation, transfer to another agent, issue of a power of attorney for a new attorney, change of director/shareholder/beneficiary, except for a change to a nominee director/shareholder
250 EUR (standard fee – includes check of 1 individual) + 50 EUR for each additional individual (director, shareholder or beneficiary) or legal entity (director or shareholder) if legal entity is serviced by GSL; + 100 EUR for each additional legal entity (director or shareholder) if legal entity is not serviced by GSL. 350 EUR (check for High Risk companies, including check of 1 individual)

*In such a case, a local shareholder shall be appointed for 6 months.

**The cost of services is effective as of the date of sending the offer.

***Paid at director’s appointment; deposit is necessary due to the possibility of holding the company’s director accountable.

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13010 EUR
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