An offshore company is formed in an outside jurisdiction from where the company’s principal investors reside, or the main business practices take place. The parent company, shareholders, and directors are found in Singapore. This practice is common due to the favourable business environment that Singapore has to offer, including tax optimization in the form of a fixed rate for businesses. There are various attractive tax incentives for foreign companies and business operations due to Singapore’s extensive tax treaty network, and Singapore is trying to attract foreign investment, so Singapore offshore company formation is easier now than it has ever been.
There is always some risk involved with a newly incorporated company at any corporate level. If you are unsure how Singapore companies, such as a Singapore private limited company, would compete with multinational corporations with a lot of foreign-sourced income, do not hesitate to contact us today for expert guidance related to your dreams about a Singapore offshore company.
What can Offshore Companies do?
Offshore companies are not limited in the business activities they can engage in as the Singapore government does not monitor the business activity of an offshore company very closely. In some cases, there might be a need for licensing from regulatory authorities. You can apply for these licenses through the government’s GoBusiness License portal.
A Singapore offshore company does not need to operate under the same business name as their parent company. Even for offshore companies, business names are subject to ACRA (Account and Corporate Regulatory Authority) approval.
Checklist for Singapore Offshore Company Requirements
Offshore Singapore company formation requires:
Firstly, your business name must be approved by the Company Registrar, but setting up an offshore business has never been this easy. Many people who want to incorporate offshore will come to Singapore to do so because of favourable offshore structures and offshore strategy, as well as Singapore tax treaties, tax exemptions and favourable dividend tax regulations.
Directors of a Singapore offshore company:
You must have at least one corporate director who is a PR, citizen, or E-Pass holder in Singapore; any other directors that your business needs can be foreigners or can reside in Singapore. All directors must be 18-years or older, and if you cannot meet this requirement on your own, then you can find a nominee director service through a properly registered company. These details should be included in your business plan.
Shareholders
You are required to have a minimum of at least one shareholder, either Singaporean (Singapore permanent resident, citizen, or E Pass holder) or foreign. This person may also fill the role of a director within the company and can be either an individual or a corporate body. Any one company is allowed a maximum of fifty shareholders.
Company Secretary
The secretary must have the proper qualifications and must be a local resident. This function cannot be filled by a corporate body; it must be filled by a person. The sole director or shareholder cannot fill this position. Services must be directly accessible to local customers, even if you are running an international business.
Paid Up Capital
No authorised capital is required, but you must have a minimum of SGD 1 that is paid up.
Registered Address for a Singapore offshore company
A local residential or commercial address is required, and a PO Box is not sufficient for a new company. You must have a registered office address in Singapore (the address should be included in your incorporation documents upon registration of your offshore company in Singapore. Singapore must therefore be a major regional hub of your Singapore offshore company.
Documents Required for the Incorporation Process of an offshore company in Singapore
An original or certified copy of the passports of each of your directors and shareholders, as well as a proof of address for each individual, is needed. The details of the parent company are also needed.
Registration for GST
Once the company is incorporated, you might need to register for Goods and Services Tax (GST). Remember that you will need to file with the tax authorities yearly and pay taxes as required. Even if management lies outside of Singapore, but services and business practices occur within Singapore, then there is a tax liability. There is no capital gains tax, withholding taxes, or sales tax despite the fact that Singapore is not one of the traditional tax havens. As stated earlier in the article, the tax rate is fixed for corporate tax. Tax optimisation is one of the many benefits of the corporate tax structure in Singapore. One of the goals of corporation tax in the country is to ease the potential tax burden for overseas investors.
Business License and Permit for an offshore company in Singapore
Depending on the nature of your offshore business, you might require business licenses or permits. These licenses or permits can only be obtained from the relevant government agencies after incorporation but before business dealings begin. To obtain business licenses also helps with intellectual property protection, even for foreign-sourced income received.
Ongoing Filing and Compliance Requirements for a Singapore offshore company
There will be ongoing requirements connected to filing and compliance with corporate documents that the offshore company is required to uphold. These might differ slightly from what is expected of a local Singapore company.
Relocation to Singapore
It is not necessary for a business owner to relocate to Singapore. Business practices can be completed with a Short-Term Visitor’s Pass, after which the business owner can return to their home country. If you want to relocate to Singapore, you will have to obtain either an Employment Pass or an Entrepreneurial Pass in order to continue your business practices in the country. SPIC can help with this process.
Why set up an Offshore Company in Singapore?
Singapore is not only strategically located, but it also sports a highly skilled business environment. It is also ideal for global corporations wanting to expand into Southeast Asia. Specific benefits for offshore company incorporation. The World Bank Group has consistently afforded Singapore with a high rating for ease of business operations in the Asia Pacific region. The Singapore government also tends not to interfere with an offshore company in Singapore much as long as they are viewed as a trusted corporate service provider on the island.
Tax Havens
The corporate tax regime is extremely favourable. The corporation tax rate in Singapore is a flat rate of 17%, which makes it one of the most attractive corporate tax regimes globally.
Only revenues coming from or coming into Singapore are taxable. Dividends can be distributed to shareholders tax-free in Singapore. Ultimately, taxation might end up being less than it might have been in a different taxation system. At this point, however, Singapore is not considered a tax haven. Still, there are several tax relief measures in place, as well as extensive double tax treaties that allow for tax exemption from double taxation.
Should management have spent the preceding Assessment Year in Singapore, the offshore company can qualify for several tax benefits. Including exemption from double taxation and other exemptions related to tax treaties.
Singapore is consistently rated second out of 190 countries for the simplicity of business practice. There is also a considerable stable political environment. This is related to the transparency and efficiency of regular institutions, and public service and administrative support are easily accessed by the offshore company.
The ease of business practices in Singapore makes it a very attractive option for an offshore company. In conjunction with ease of offshore company set up, offshore corporations in Singapore are taken seriously by bankers and other professionals. Singapore also allows the company structure to be specific to the size of the company.
Offshore company formation in Singapore is free from a lot of the red tape that can be found in other countries. The process of offshore company registration is fully computerised, and there are only two steps involved: Registering the name and providing all necessary documentation.
Asset protection in Singapore for offshore corporations is high due to the pro-business approach. The efficient legal system and almost non-existent risk in starting overseas companies in Singapore make it a great destination for the purpose of offshore company formation. Furthermore, Singapore is corruption-free, so you can rest assured that your overseas company accounts are safe in the country. All elements of business practices in Singapore are clear cut, and complete foreign shareholding is allowed. No prior approval is required for offshore businesses registered in Singapore.
And on top of all this, Singapore has great personal income tax rates should you later wish to relocate there. Furthermore, corporate taxation in Singapore encompasses only 17% that is derived from only those revenues made within Singapore.
Global Financial Hub
When it comes to financial centres, Singapore is ranked fourth globally and is therefore recognised as a leading financial center. There are over 1,400 assorted foreign financial institutions and 200 foreign banks in Singapore. This makes the access that offshore companies have to world-class financial institutions in Singapore nearly unrivalled.
It is also a fintech hub which is also accessible to offshore company incorporation.
Internet banking and trade financing are readily accessible for a Singapore company and an offshore company in Singapore.
How to Set Up an Offshore Business in Singapore
Registration is done online on BizFile+ and is then managed by ACRA. The entire incorporation procedure takes a day or two. Offshore company registration is fairly easy in this country, and the offshore company formation does not take an overly long time.
If you do not have ties to Singapore, you should contact a filing agent that is appropriately registered, who can log into BizFile+ and do the registration as a SingPass ID is required. Law and accounting firms can do this, as can corporate secretarial firms.
You would require the following information for offshore company incorporation:
- The company name.
- A description of the business practices.
- The particular of directors and shareholders.
- The company constitution.
- The particulars of the company secretary.
- The official address of the offices.
- Any other documents required for the filing of the company.
The requirements listed here must be met in order to register an offshore company:
- A Singaporean resident needs to be appointed as the company secretary not later than six months after the registration of the offshore company.
- There must be a physical office in Singapore where notices and communications can be sent.
- At least one of the offshore company directors needs to be someone who often resides in Singapore. They must be 18 years or older and not have been declared bankrupt or convicted of criminal offences.
After Offshore Company Setup
When the official incorporation is over, ACRA will provide the company registration number via email. This will serve as the registration certificate of incorporation; it must be filed accordingly, along with any additional documents that pertain to your business. When you acquire assets for your own business or any privately held business entity or private limited company in Singapore, all documentation regarding that business set must be filed accordingly.
Regulation and Compliance
Once this stage is over, your offshore company is a legal entity that is separate from any shareholders or parent company. Therefore, it is liable for compliance on its own and must meet and maintain regulatory requirements with appropriate financial accounts on all transactions. An offshore company must recruit an auditor within three months unless it constitutes a small company under Singapore law.
Getting your Corporate Bank Account
In order to maintain financial accounts in accordance with the law, you will need to open a bank account for your offshore company. In order to open this corporate bank account, Singapore banks mostly require company directors and other signatories to physically attend the bank account opening. A few banks will allow some corporate bank accounts to be opened online.
Singapore is the leading Asian financial centre, and local banks offer a wide range of features, including the merchant account, multi-currency accounts, and automatic exchange and international trading.
Set up an Offshore Bank Account
Many banks that allow you to open an offshore bank account will not require you to be physically present for the process and allows for it to be done online. Some banks, however, might handle this type of account on a case-by-case basis, depending on your offshore structure in place in Singapore.
Closing an Offshore Company
It is much easier to close an offshore company that has no outstanding liabilities to pay off than closing an offshore company that still has outstanding liabilities. It is advised that offshore service providers complete outstanding services before closure, if at all possible.
If there are no liabilities, then the offshore company applies with ACRA to be removed from the register. This procedure will not relieve a company of any liabilities. If there are existing liabilities, the business will have to follow a complete winding-up process. Further differences in the process come in when the company does not have sufficient assets to cover the liabilities in full. Liquidators might need to facilitate the process.
Frequently Asked Questions
Is Singapore a desired offshore jurisdiction?
Singapore is one of the offshore jurisdictions with the best reputation in Asia. It is one of the more highly sought after offshore jurisdictions in terms of taxes and asset protection.
What is the difference between a parent company and a holding company?
A holding company has no say over the running of the business, whereas a parent company often does have a say.
Are there international banks and other offshore financial centers in Singapore?
Yes, there are several. We have an article specially dedicated to banking in Singapore which might be helpful.
Is corporate insurance necessary?
Yes, for the sake of asset protection, it is necessary to acquire an insurance policy with a competent authority.
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