Starting a Business in Singapore vs Australia

Both Singapore and Australia are among the best places globally to do business. However, there are some stark differences that entrepreneurs need to consider when choosing a launchpad for their next venture.

If you are currently operating in Australia and are considering setting up a subsidiary in Singapore, this guide is for you. In this article, we have analyzed the differences between doing business in Singapore and Australia.

Economic Overview

 As of 2021, Australia was the 13th largest national economy by nominal Gross Domestic Product (GDP). Its economy is dominated by its service sector, comprising 62.7% of the GDP. In addition, due to abundant natural resources, the Australian economy enjoys a competitive advantage in producing primary products, such as wine, meat, and dairy. 

On the other hand, despite being a small country, Singapore has driven itself to become one of the world’s most competitive economies. Due to its highly innovative human capital, the country has become a leading global economy for high-end manufacturing, engineering, biotechnology, and financial services. Moreover, its strategic location makes the city-state one of the world’s most important commercial maritime destinations. As a result,  Singapore’s trade to GDP ratio is among the highest in the world.

Foreign Investment Friendliness

To encourage investors to inject capital into businesses, every country must have regulations to protect them (e.g., ensuring the transparency of transactions or the shareholders’ ability to sue officers and directors for misconduct and liability for self-dealing). According to the Doing Business 2020 report, Singapore scored 86 for the investor protection index strength, while Australia scored 64. This places Singapore in the 3rd position and Australia 57th globally in the category of protecting investors. 

In addition, on the report of CBRE’s 2021 Asia Pacific Investor Intentions Survey, which polled more than 490 Asia Pacific-based investors in 2020,  Singapore ranked 2nd as Asia Pacific investors’ most preferred market for investments, while Melbourne ranked 10th. Overall, Singapore ranks higher when it comes to foreign investment friendliness, mainly due to its high-value-added sectors, financial infrastructure, strategic location, business-friendly laws, and attractive tax regime (which will be discussed later). 

Company Registration

 In terms of ease of starting a business, both Singapore and Australia provide convenience for companies. As stated by the Doing Business 2020 report, Singapore ranked 4th while Australia came in 7th worldwide.

The two most common types of registration in Australia are in the Subsidiary and Branch Office categories. Meanwhile, in Singapore, they include Private Limited Companies, Subsidiaries, Representative Offices, and Sole Proprietorships.

In addition, regarding the cost of business registration, Australia offers higher fees ranging from $422 – $512 (depending on the type of your business), while in Singapore, the cost starts from S$315. As for the average time to incorporate a business, it takes one up to three days in both countries. 

For comprehensive information about the Singapore company in incorporation, you may refer to this article or talk to us if you need immediate assistance.

Taxation

Singapore offers one of the lowest effective tax rates in the world. The country follows a progressive resident tax rate starting at 0% and ending at 22% above S$320,000. As for the corporate tax rate, it is imposed at a flat rate of 17%. In addition, newly established companies can enjoy partial or full tax exemptions, provided they meet the criteria set by the Inland Revenue Authority of Singapore (IRAS).

In contrast, Australia has one of the highest tax rates in the world. Its personal income tax rate is progressive up to 45%, and the full corporate tax rate is 30% (except for small businesses, which can be subject to a reduced tax rate of 25%). However, similar to Singapore, there are certain tax exemptions that can be applied for.

Workforce

Both Australia and Singapore have multicultural, multilingual, and educated workforces. However, according to the World Bank, Singapore ranked higher than Australia when it comes to labor market efficiency.

More importantly, the average cost of labor is significantly different in both countries.  Australia has a minimum wage system in place; $772.60 per week (before tax), or $20.33 per hour. In addition, where employees are required to travel long distances, it is often market practice to pay workers additional benefits or provide accommodation in Australia. On the contrary, there is no minimum wage in Singapore, making it the perfect place for potential investors running a relatively tight budget. 

Immigration Requirements

In Singapore, an Employment Pass can be issued to foreign professionals, managers, and executives, who are required to receive a minimum monthly salary of S$3,600. In addition, foreign entrepreneurs who wish to start and operate a new business in Singapore can apply for an EntrePass.

Similarly, in Australia, certain foreign skilled workers, who hold occupations on Australia’s skilled occupations list, can apply for a Skilled Independent Work Visa. Alternatively, people with investor funding to develop an enterprise or business can apply for an Entrepreneur Visa.

Trading Relationship

In particular, Singapore is Australia’s largest trade and investment partner in Southeast Asia, and the two countries have signed the Singapore-Australia Free Trade Agreement (SAFTA). This agreement includes vital aspects, such as the elimination of tariffs on certain goods, open market access to various sectors, facilitation of paperless trade and e-commerce, etc.

Given the strong ties between the two countries, investors looking to set up business in both countries will indeed find it easy to access both markets. However, investors looking to trade outside the borders of Singapore or Australia may refer to the Open Market Index, a global survey conducted by the International Chamber of Commerce. According to the survey, Singapore ranked 1st for the most open country to international trade and scored 5.63 out of 6, while Australia ranked 19th, with a score of 4.06.

Final Thoughts

With a vast market and natural resources, Australia has become one of the world’s largest economies. On the downside, however, businesses and individuals in Australia pay more income tax than most other nations. Thus, if you are looking for a place with business-friendly laws, favorable tax policies, and a strategic location, Singapore will be an excellent choice for your business.

Entrepreneurs in Singapore are suggested by the government to engage a corporate services firm to help them with the incorporation process and compliance advisory. Therefore, whenever you are ready to set up your business here, feel free to contact us or book a meeting for immediate assistance.

Need advice on the best structure
for your business

Biz Atom helps entrepreneurs and international business make the right choice when setting up in Singapore.