Choosing a business name is the first important step in the setting up of a business. An important matter to note when choosing an appropriate name for your business is that Accounting and Corporate Regulatory Authority (”ACPA”) must first approve the name you have chosen.
The approval process usually takes less than an hour, and the approval name can be reserved for 60 days from the date of application.
The company name required to meet the following conditions:
A Singapore private limited company can have a minimum of 1 and maximum of 50 shareholders. A director and shareholder can be the same or a different person. The shareholder can be a person of another legal entity such as another company or a trust. 100% local or foreign shareholding is allowed.
The minimum paid-up share capital for registration of a Singapore company is S$1.00. Paid-up capital (also known as share capital) can be increased any time after the incorporation of the company. There is no concept of Authorized Capital for Singapore companies.
A minimum of one resident director (a resident is defined as a Singapore Citizen, a Singapore Permanent Resident, or a person who has been issued an EntrePass by government) is mandatory. There is no limit on the number of additional local or foreign directors a Singapore company can appoint. Directors must be at least 18 years of age and must not be bankrupt or convicted for any malpractice in the past. There is no requirement for the directors to also be shareholders.
Every company must appoint a qualified company secretary within 6 months of its incorporation. It has to be noted that in case of a sole director / shareholder, the same person cannot act as the company secretary. The company secretary must be a natural person either a (1) Singapore resident either a Singapore citizen or permanent resident etc.
The registered address must be a physical address (can be either a residential or commercial address) and cannot be a Post office Box.
It normally takes 8-10 working days to complete the whole incorporation procedures upon receiving the required documents from client, including printing of all statutory books and records and making of company’s chops and seal.
Each private limited Singapore company must file an Annual Return (”AR”) with Accounting and Corporate Regulatory Authority (ACRA) signed by a director or company secretary within one month of its annual general meeting. Particulars of the company officers, registered address and auditors (if applicable) must be included in the AR.
Each Singapore company must hold an Annual General Meeting (”AGM”) once every calendar year. The following general rules apply to AGMs:
All companies incorporated in Singapore must keep proper books and records, accountable to Accounting and Corporate Regulatory Authority (ACRA) and IRAS (”Inland Revenue Authority of Singapore”). The accounting records must be kept for 5 years after the completion of the transactions or operations to which they relate. The financial accounts should consist of Statement of Comprehensive Income (i.e. Profit and Loss Account), Statement of Financial Position (i.e. Balance Sheet), Cash Flow Statement, and Statement of Changes in Equity etc.
All Singapore companies (except dormant companies) are required to file an audited accounts. The following company is exempted from having its accounts audited, keeping unaudited accounts for record only:
- Private company with annual revenue of $5 million or below. A company qualifies as a small company if they have not more than 20 shareholders and all shareholders are natural person instead of body corporate.
Each Singapore Company must file its annual tax return with IRAS by November 30 of each year.
Income tax is levied on income accruing in or derived from Singapore. There are two main sources of income tax in Singapore, being
(a) Individual Income Tax; and
(b) Corporate Income Tax
(a) Individual Income Tax
Individuals are liable to income tax on their Singapore source income. There is no capital gains tax or withholding taxes on dividends. Currently, the progressive resident rate is from 0% to 20% as per chart below:
- Employment Income: 15% or Progressive Resident Rates whichever is higher;
- Director’s fees, rental income & other sources of income: 22%.
(b) Corporate Income Tax
The corporate income tax rate is 17%. It is applicable to all companies incorporated in Singapore. From Years of Assessment (YA) 2020, the Tax Exemption Scheme for new start-up companies for their first 3 consecutive YAs. From the fourth YA onwards, the companies can enjoy the Partial Tax Exemption except companies whose principal activity are that of investment holding and undertake property development for sale or investment. The new start-up company must also:
- Be incorporated in Singapore;
- Be a tax resident of Singapore; and
- Have its total share capital beneficially held directly by no more than 20 shareholders throughout the basis period for that YA where:
- All the shareholders are individuals; or
- At least 1 shareholder is an individual holding at least 10% of the issued ordinary shares of the company The tax exemption scheme for new start-up companies was introduced in the Year of Assessment (YA) 2005 to support entrepreneurship and to grow our local enterprises.
The Tax Exemption Scheme: New companies that qualify are given a 75% tax exemption on the first S$100,000 of normal chargeable income and an additional 50% exemption on the next S$100,000 of normal chargeable income.
The Partial Tax Exemption Scheme: All companies are given a 75% tax exemption on the first S$10,000 of normal chargeable income and a 50% tax exemption on the next $190,000 of normal chargeable income.
Singapore taxes are on territorial basis. Accordingly, a Singapore company is taxable on its income accrued in or derived from Singapore, and offshore income only when remitted to Singapore. However, tax exemption will be granted to all persons resident in Singapore on foreign sourced dividends, foreign branch profits and foreign sourced service income (collectively “specified foreign income”) received in Singapore if:
- In the year the income is received in Singapore, the highest corporate tax rate of the country from which specified foreign income is received is at least 15%; and
- The specified foreign income has been subjected to tax in the country which it is received.