Company Registration in Singapore - Sandhurst Consultancy
Company Registration in Singapore has always been seen as a gateway to doing business in Asia. The government has always been mindful of the needs of the business community in providing a pro-business environment. It has been described as the best place for doing business. A place with little or no hurdles for company registration, with the best infrastructure and with laws to protect intellectual property.
Sandhurst Consultancy is a leading Singapore Company Registration specialist who has assisted many foreign businessmen as well as locals in establishing their companies. Recent changes in the business environment around the world, including the tightening of corporate compliance regulations here, has and will result in more regulatory compliance procedures. This is evident currently in the manner in which new companies find that opening a current account is no longer a breeze. We continue to adapt and still provide advice that seeks to maximize the pro-business policies and tax benefits given to new companies seeking to make their presence here and the rest of Asia.
One of the most important and attractive tax incentive for a new company registration is the availability of tax exemptions.
To qualify for the tax exemption for new start-up companies, your company must:
a) be incorporated in the republic
b) be a tax resident for that YA; and
c) have no more than 20 shareholders throughout the basis period for that YA where:
i) all of the shareholders are individuals beneficially and directly holding the shares in their own names; OR
ii) at least one shareholder is an individual beneficially and directly holding at least 10% of the issued ordinary shares of the company
iii) the company must have its management control in Singapore
If a company satisfies the above criteria then the following tax incentives are applicable: (effective from 2019 onwards)
1. the first S$75,000 Net Profit is exempt of Tax and
2. the next S$100,000 Net Profit - 50% is exempted from tax.
Therefore a company with a net profit of S$300,000 in the first year will pay a tax of S$29,750. (S$300,000 less S$125,000 @ 17%). The effective tax rate is 9.92%. This is before any tax rebates that are applicable.
If your company has up to S$100,000 Net Profit for the first year you now pay corporate tax on S$25,000, which works out to S$4,250. This benefit is available for the first three tax years from the date of incorporation.
It is not to say that the tax incentives will no longer be available after the three year period. The pro-business policies are mindful of this and after the 3rd year onward the following tax incentives are still available:
i. For the first S$10,000 of taxable profits 75% is tax exempt.
ii. The next band of S$190,000 50% is tax exempt.
Therefore, if your company has a net taxable profit after the 3rd year of S$100,000 your corporation tax payable will be as follows;
a. The first S$10,000 less S$7,500 is S$2500
b. The next S$90,000 less S$45,000 is S$45,000
Total taxable income will be S$47,500 @ 17% which will be S$8,075
The effective corporate tax rate works out to be 8.075% for a net taxable profit of S$100,000.
In addition to the above, corporate tax rebates are announced annually in Parliament depending on the economic and business environment to assist companies in reducing their tax burden. Past rebates have been between 20% to 50% capped at between 10,000 and 25,000.
Recently in 2014 the Companies (Amendment) Act has brought about substantial legislative changes to corporate regulations. The first phase will be effective from 1st July 2015 and the 2nd phase will be effective in the first quarter of 2016.
An important change in the first phase is the change in the assessment for statutory audit. Previously the criteria for compulsory audit requirement for a company was as follows:
i) If there was a corporate shareholder in the capital structure of the newly established company.
ii) If the turnover of the company is more than S$5 million a year.
The new criteria for exemption from compulsory audit has been amended to the following:
a. If it is a private company at the time of incorporation
b. If it satisfy 2 out of 3 of the following conditions for the preceding 2 consecutive financial years
i) The total turnover is equal to or less than S$10 million per financial year
ii) The total assets is equal to or less than S$10 million reflected in the Balance Sheet.
iii) The number of employees is equal to or less than 50
The same criteria above applies at the group level. The audit exemption criteria will come into effect for financial years beginning on or after 1st July 2015.https://www.acra.gov.sg/legislation/legislative-reform/companies-act-reform/companies-amendment-act-2014/two-phase-implementation-of-companies-amendment-act-2014/more-details-on-small-company-concept-for-audit-exemption
Please note that the criteria for the 2 consecutive years may result in a private company satisfying all conditions but yet will still be required to go through the audit process. To ensure that your company is indeed exempted from statutory audit, kindly contact us for an evaluation.
Singapore company registration is a straight forward process and this is the starting point for anyone interested in using the republic as a launching pad.
For the incorporation of Private Limited Company, the basic requirements are as follows:
1. At least one resident director
2. A qualified company secretary
3. A local registered office address.
Sandhurst Consultancy will prepare all the necessary documentation related to company registration including the preparation of the Memorandum and Articles of Association.