It’s hard for a place to develop a business reputation. Some earn it, some buy it. Singapore earns its one-but exactly how is a tale that goes a little deeper than the standard hype. It has to do with a surprising lack of hassle at every turn – find for more bonuses here!
Everything-from initial application through incorporation-is filed electronically via BizFile+. ACRA takes between one to three business days to process the paperwork. They don’t ask for anything beyond what they need, and there’s no waiting around just to wait. Founders that I know have told me how anticlimactic the entire process was in Singapore compared to the convoluted, multi-stage systems in other countries; to say the least, it’s a relief.
The only true decision to be made pre-application is about business structure. If there’s one model in Singapore that’s clearly dominant and justified, it’s the Private Limited Company (Pte. Ltd.). Liability protection is at its most critical where personal savings versus the ventures are involved, so that legal barrier separating personal assets from business obligations is invaluable. Whatever bad that the company encounters (and they may do so), be it debt, litigation or insolvency, is contained within that separate legal entity; your savings account, your personal home equity or other property will never be at risk from the demands made upon the company. That has an obvious, and should have, significant impact upon how founders evaluate risk in starting a venture.
Where founders have to recalibrate their perceptions about ownership, Singapore is also accommodating. The foreign-shareholder restrictions that have come to define corporate establishment in a range of countries aren’t a factor here: any level of foreign ownership is allowed, and there’s no stipulation regarding local partnership or nationality. All that’s needed: at least one Singapore-resident director (this can be either a Singapore citizen or PR holder, or the holder of an employment pass or other pass, or even the holder of a dependent’s pass if there are no restrictions preventing the holder from being appointed director). Founders who are not yet located in Singapore have always arranged for a Nominee Director through a professional service company in Singapore. Standard practice, not at all an issue with regard to compliance and ubiquitous throughout the Singapore startup space.
Paid-up capital requirement is S$1. It’s the lowest amount possible and clearly establishes a policy of making entry affordable. They don’t want capital-heavy operations; they want ideas.
From a financial perspective, the tax structure is another compelling reason to choose Singapore. Corporate tax rate is a modest 17%, competitive in comparison with nearly all alternative jurisdictions a founder might be looking at. Beyond that, startups enjoy a substantial tax exemption period. Their first three consecutive years of incorporation get a 75% tax break on up to S$100,000 in chargeable income each year. For a young company where money is always at a premium, this represents substantial operating flexibility as opposed to a symbolic gesture.
There are really five requirements that make up the whole incorporation process: an approved name, Singapore registered address, minimum one shareholder, one resident director and one company secretary within six months after incorporation. A manageable checklist, which a well-prepared founder will not find challenging.
Post-incorporation compliance, much like everything else associated with Singapore’s regulatory environment, warrants its own brief description. Annual returns need to be filed. Proper books of accounts should be kept consistently. If revenue hits above S$1M, then GST registration becomes mandatory. Singapore’s credibility is partially due to enforcement; what it offers to its citizens, it demands of registered companies.
So yes, the reputation is real.