A Definitive Guide to Setting Up an Offshore Company in Singapore

Setting up an offshore company in Singapore is not as complicated as you may think. In fact, it is easy. Incorporating a Singapore offshore company enables you to manage a tax-efficient company in a politically and environmentally stable environment. This article will help you understand all requirements and the procedure you must go through when registering an offshore company in Singapore. 

What is an offshore company?

An offshore or overseas company is a company registered in another country outside where its principal investors live. It is also an offshore company if it is registered away from its main operation and offices. Usually, it operates outside the country where it was formed. In Singapore, an offshore company represents a tax-efficient corporate entity that is simple and easy to operate in a politically and economically stable environment.

Why set up an offshore company in Singapore?

You can get several benefits from setting up a Singapore offshore company. Some of the main advantages include:

Reduced tax liability

One of the main considerations for setting up an overseas company in Singapore is taxes. Singapore’s tax system is simple and low. It is characterized by low corporate and personal income tax rates, tax incentives, and tax relief measures; no capital gains tax; no dividend tax; a single-tier and territorial-based corporate income tax system and an extensive network of tax treaties.

As Singapore follows a  territorial-based, flat-rate corporate income tax system, taxes apply to income derived by the company from Singapore or foreign-sourced income received in Singapore. Singapore’s foreign-sourced income that meets certain qualification requirements is exempt from Singapore tax. In contrast, foreign-sourced income not sent to Singapore is exempt from the Singapore tax. Singapore follows a single-tier tax policy which means once income is taxed at the corporate level; dividends can be distributed to shareholders tax-free.

Singapore’s corporate income tax rate is around 8.5% for profits of up to S$300,000 and remains 17% over S$300,000. A newly incorporated company for the first three consecutive Years of Assessment (YA) 2019 and before enjoys full tax exemption on the first S$100,000 of normal chargeable income and a further 50% exemption on the next S$200,000 of normal chargeable income. Whereas, a newly incorporated company for the first three consecutive from YA2020 onwards enjoys 75% exemption on the first S$100,000 of normal chargeable income and a further 50% exemption on the next S$100,000 of normal chargeable income provided the company satisfies these three qualifying conditions: 

1. Must be incorporated in Singapore.
2. Must be a tax resident in Singapore for that YA.
3. Total share capital is beneficially held directly by a maximum of 20 shareholders throughout the basis period for that YA. At least one is an individual shareholder holding at least 10% of the issued ordinary shares, and none of them is a corporate shareholder.

Improved business credibility

As Singapore is a trusted name, having an overseas company gives your business credibility and status as a legal entity. By incorporating a Singapore offshore company, your business will be taken seriously by stakeholders such as employees, bankers, or other professionals you will encounter.

Easy company incorporation

Singapore remains ranked # 2 as the world’s easiest place to do business by the World Bank Group. The company registration process is fast, efficient, and free of bureaucracy. The registration procedure is fully computerized and involves only two steps – approval of the company name and submission of incorporation documents. These procedures can be carried out online with the help of an officially registered corporate service provider like us. Under normal circumstances, a Singapore offshore company can be set up within 1-2 days.

Ownership flexibility

Singapore’s foreign ownership policy is open and flexible. There are no restrictions on the areas of business activity allowed if you wish to set up an offshore company in Singapore. 100% foreign ownership is allowed in all sectors. Shareholders can be individuals or legal entities. Besides, foreigners who wish to register an overseas company in Singapore do not require prior approval from the Singapore authorities. However, help from professional service providers, such as Biz Atom, is required if the company wants to have foreigners without any SingPass be registered in the company.

Political stability

Singapore is the most politically stable country in Asia and the most bureaucratic country in Asia, as rated by The Political and Economic Risk Consultancy. Apart from being renowned for its high integrity and pro-business approach, Singapore is also noted for its transparent, sound, and efficient legal system. There are clear rules and regulations relating to trade, intellectual property protection, employment, and other related business areas. This is why the level of risk involved in setting up and operating a Singapore offshore company is minimal and almost non-existent.

Advanced banking facilities

There is a wide selection of reputable local and foreign banks that Singapore offshore companies can choose from. They offer various attractive features such as multi-currency accounts, internet banking, credit cards, trade finance, freedom to move funds across countries, and many more. Although most banks require a physical presence at account opening, some banks are also willing to make exceptions on a case-by-case basis. The account opening process can take between 2-15 days, depending on the bank’s due diligence.

When should I consider incorporating an overseas company in Singapore?

Here are some instances where you know you should consider setting up an overseas company in Singapore:

When you are expanding your business

When there is an increase in investment or shareholding and, your investors – especially institutional investors – prefer to invest through offshore jurisdictions.

When you are holding assets to earn income

Suppose your company is engaged in investment, where the main purpose of holding assets is to earn income or invest in them. For example, suppose you invest in real estate. There is a substantial relief from Stamp Duty and Capital Gain in Singapore.

When you are developing an Intellectual Property

You should consider setting up a Singapore offshore company while developing Intellectual Property and intend to use it in other countries. Singapore is ranked second in the world and top in Asia for the best IP protection in the 2019 World Economic Forum Global Competitiveness Report. Overall, Singapore ranks first as the world’s most competitive country.

And here are some other reasons why you should set up an overseas company in Singapore:

-To get a higher return on investment;

-Tax planning and relief;

-Estate planning;

-Improved privacy.

What do I do to register an offshore company in Singapore?

To streamline the registration process, entrepreneurs are advised to hire a Singapore registered filing agent like us. We will advise you to complete the before and after company registration requirements issued by the Singapore Company Registrar (i.e., ACRA).

There are only two procedures involved in the process of setting up an overseas company in Singapore:

-Company name registration with ACRA

-Company registration with ACRA

Pre-company registration requirements

We will advise you on the documents, processes, and steps you have to complete. Note that, in general, business owners prefer to enter private limited companies. Following are the requirements for setting up a private limited company in Singapore.

• At least one shareholder
• At least one resident director
• At least one company secretary
• Minimum $1 initial paid-up share capital
• A registered office address (P.O. box address is invalid)

Incorporation documents for foreign individuals

For efficient company registration, you must submit the following documents to ACRA:

• Proposed Company Name (must be available and not similar to other registered Company. Biz Atom can assist in checking the availability).
• SSIC Code for Company’s activity. You may add a description to be reflected in the Company’s profile. 
• Company’s Constitution.
• Copy of passport (for foreigner) and NRIC for Singapore Citizen or Singapore Permanent Resident.
• KYC documents – Proof of address of residence abroad, bank reference letters, personal and business profiles, and particulars of directors, company secretary, and shareholders, including email address and contact number.

How Biz Atom can help register your company in Singapore

If you still find the registration process and requirements complicated, you can always contact us for complete guidance and assistance. We will advise you on the documents you must prepare. All you have to do is upload them to the Biz Atom online platform. We will then verify them, and once they’re complete, we will submit them to ACRA. 

In most cases, the company registration process is very short in time; however, if your application is forwarded to an external authority, it may take up to 2 months for approval. You might come across such situations if your business belongs to a niche such as education, finance, or casinos, highly regulated by government authorities. Otherwise, your offshore company can be registered in just 1-2 working days.

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