Three type of business entities in Singapore:
- Private Limited Company
- Not more than 50 shareholders
- Public Company Limited By Shares
- 50 or above shareholders
- Public Company Limited By Guarantee
- Carry out non-profit making activities that have some basis of national or public interests
Among the three business entities, the “Private Limited Company” is the most common type of business entity registered in Singapore.
BASIC REQUIREMENTS FOR COMPANY REGISTRATION IN SINGAPORE
1. Company Name
ACRA is an organization that will inspect the company name and it has the authority to approve or to reject the company name. Singapore Company name must be in English.
2. Description of business activities
Use the Singapore Standard Industrial Classification Code (SSIC) to select the business activities the company will be engaging in.
3. Shareholders
The company needs to have a minimum of one and a maximum of 50 shareholders for a Singapore Private Limited Company.
- Shareholders can be foreigners or local Singaporeans.
- A Shareholder can be a natural person or a corporate entity.
4. Resident Director
The company must have at least one director who is a resident in Singapore, which means either a Singapore citizen, Singapore permanent resident or a person who holds an Employment Pass with a residential address in Singapore.
5. Company Secretary
The company must appoint a Company Secretary to ensure regulatory compliance. Company Secretary should ordinarily reside in Singapore.
6. Share Capital/Paid-up Capital
S$1 or its equivalent in any currencies is the minimum paid-up capital for registration of a Singapore company.
7. Registered Address
The company must have a physical address and cannot be a PO Box, to keep the various registers that it is required to maintain under the law. The address will also be considered as the official place to receive all notices and official documents.
8. ANNUAL FILING REQUIREMENT WITH THE ACCOUNTING AND CORPORATE REGULATORY AUTHORITY (ACRA)
Annual Return must be signed either by a director of the company or a company secretary. The key points to keep in mind while filing an annual return are:
- A company must attach its audited or unaudited financial statements when it submits an Annual Return with ACRA.
- The deadline for filing the Annual Return is 30 days from the date of the Annual General Meeting (AGM).
- An AGM is a mandatory annual meeting where the company presents its financial statements before the shareholders to give a clear report on the financial position of the business.
9. ANNUAL FILING REQUIREMENT WITH THE INLAND REVENUE AUTHORITY OF SINGAPORE (IRAS)
Estimate of Company’s Income (ECI)
The company has to report the ECI within a period of 3 months from the end of the Financial Year.
Income Tax Return
The company must file an income tax return which provides a calculation of the actual tax that is to be paid. The deadline for filing the tax return with IRAS is either November 30 for paper filing or December 15 for e-filing.
10. SMALL COMPANY AUDIT EXEMPTION
A Singapore Company is not required to perform an audit for their financial statements if they meet two of the three following criteria:
• Total annual revenue from the past fiscal year is less than S$10 million
• Total assets from the past fiscal year are less than S$10 million
• Total employees in the past fiscal year are fewer than 50
11. TAXATION
Singapore uses a tiered tax system for both personal and corporate taxes. New firms receive significant tax breaks during their first 3 years.
Partial tax exemption and tax exemption scheme for new start-up companies
Companies can enjoy the partial tax exemption and tax exemption for new start-up companies, as provided in the tables below.
Partial tax exemption for companies (from YA 2020)
| Chargeable income | % exempted from Tax | Amount exempted from Tax |
|---|---|---|
| First $10,000 | @75% | =$7,500 |
| Next $190,000 | @50% | =$95,000 |
| Total $200,000 | =$102,500 |
Tax exemption scheme for new start-up companies (where any of the first 3 YAs falls in or after YA 2020)
| Chargeable income | % exempted from Tax | Amount exempted from Tax |
|---|---|---|
| First $100,000 | @75% | =$75,000 |
| Next $100,000 | @50% | =$50,000 |
| Total $200,000 | =$125,000 |
The corporate tax rate is capped at 17%. Singapore taxation system is on territorial basis, without capital gains tax and dividend withholding tax.