If you are wondering Singapore VS India, where to incorporate? We have highlighted the differences.
With its recent economic reforms, India’s economy is among the fastest-growing in the world and offers a sizable market and a multitude of investment options. Singapore, on the other hand, is still regarded as one of the top and most reliable international financial centres in the world and a recognized capital market in Asia.
Although both countries have attracted a large number of international entrepreneurs and businesses, there are still significant differences that a company would need to consider when choosing a site for its next stage of growth.
SINGAPORE VS INDIA: COMPARISON OF WHERE TO INCORPORATE
India has gradually transitioned from a closed-door economy to an open one since the start of economic reforms in 1991. Indian strengths now include telecommunications, information technology, pharmaceuticals, and jewelry, and the country continues to rank third globally in the number of start-ups in the technology sector with over 4,750. The country is a good market since it has a domestic consumption-based economy and has a growing demand as a result of its population.
Singapore is ranked as the 12th best country in the world for business by Forbes, with one of the most entrepreneur-friendly business environments in the world. India, however, came in at position 85. Along with 154,000 small and medium businesses, many international corporations have chosen to establish headquarters in Singapore. For businesses and investors, Singapore’s cutting-edge public infrastructure, user-friendly online resources, and open rules are important draws.
Strategic location and market access
India’s greatest asset is its enormous domestic market. The country is well situated for accessing markets in Africa, the Middle East, East Asia, and Europe thanks to its ports’ connections to important sea routes. Indian companies are in a strong position to succeed because of new free trade agreements.
The abundance of available land enables companies to establish their specialized markets that serve the demands of both the expanding middle class and exporters. It currently has the third-largest startup ecosystem in the world.
Singapore is still miles ahead of India. Despite the lack of a sizable domestic market, it has served as a corporate center. The city-state is strategically situated where China, Japan, and India’s three largest economies converge.
Additionally, it is the largest wealth management hub outside of New York and London and the entrance to Southeast Asia. It is home to the largest financial centre in Asia and ranks fourth for economic innovation. For all types of investors, turning assets into cash is one of the simpler ways to increase liquidity.
Singapore’s location advantage is supported by its economic edge in luring both international talent and investors. Investors have an attractive choice because of the city-state’s multi-cultural, highly educated, and open immigration policy, as well as its diverse and sizable fund management industry.
Ease of Doing Business
According to the World Bank’s Ease of Doing Business Report 2020, Singapore ranks #2 in the world and India ranks #63. Singapore has consistently been ranked as one of the easiest places to do business due to its efficient business regulations, transparency, and low corruption levels. Singapore has a pro-business environment and provides various incentives for companies such as tax exemptions, grants, and funding.
On the other hand, India has implemented several reforms to improve its ease of doing business ranking. In recent years, India has made significant progress in areas such as starting a business, getting electricity, and getting credit. However, India still faces challenges such as high levels of bureaucracy, complex tax system, and slow court procedures.
A constitution must be signed in Singapore before a company may be registered. The company’s directors and shareholders are guided by the constitution. It also covers maintaining a business and the dos and don’ts of being a director and shareholder.
A Memorandum of Association (MOA), which outlines the range of a company’s economic activities and details the ownership of the organisation, must be executed in India.
Business Incorporation & Set-Up
The following types of business entities can be incorporated in India:
- Private Limited Company
- Public Limited Company
- Unlimited Company
- Liaison Office / Representative Office
- Project Office
- Branch Office
- Joint Venture Company
- Subsidiary Company
- Limited Liability Partnership (LLP)
- Sole Proprietorship
Sole proprietorship, partnership, limited liability partnership, limited partnership, and private limited company are examples of business structures used in Singapore.
In India, incorporating a business typically takes 2 to 7 days, however, in some circumstances, it may take up to 6 weeks.
In Singapore, incorporation can be completed in a single day.
A private limited company must have at least two shareholders and two directors in order to be incorporated in India. Companies can be incorporated in Singapore with just 1 shareholder and 1 director. Accounting and Corporate Regulatory Authority (ACRA) is the business regulatory authority in Singapore.
Refer to Singapore company registration for more information.
Companies must conduct an Annual General Meeting (AGM) each year in Singapore and India. The first AGM must be convened in both jurisdictions within 18 months of the company’s establishment date.
Similar to this, businesses are required to compile their accounts and have them audited at the conclusion of each fiscal year. The registrars in the relevant jurisdictions must later receive these reports.
Anyone planning to work in Singapore or India must have a valid visa or pass in order to do so.
In India, a business visa and an employment visa are the two most popular types of work visas. You can travel to India for business (for a maximum of six months) if you have a business visa. The validity of an employment visa, however, can be extended after its initial year of validity. An Employment Visa should only be granted to applicants who are at a senior level and should be highly skilled. Your annual salary must exceed US $25,000 in order for your application to be considered.
The Employment Pass, or “EP,” is the most popular type of visa for visitors to Singapore. Foreign professionals, managers, and executives who earn a monthly income of more than S$3,600 can apply for this visa. One can also apply for an EntrePass if they want to launch a new company in Singapore.
India boasts the largest pool of employable talent in the world with 1.3 billion individuals. With half of its inhabitants being under 25, it likewise has a young population. Those under the age of 35 make up two-thirds of the population. This reflects a bigger middle class and a larger pool of consumers for goods and services.
On average, labor expenses in India are cheaper than those in South East Asia.
In the modern Singaporean workforce, millennials—those born between 1979 and 2000—represent the largest generation. The quality of the workforce in Singapore is also rising; from 49% in 2007 to 55% in 2016, the percentage of PMET occupations (i.e., professionals, managers, executives, and technicians) has increased.
India has 2 official languages – Hindi and English, which are both spoken very widely.
In Singapore, both business and domestic communication are primarily conducted in English. Most Singaporeans also obtain official education in their second languages, like Malay, Mandarin, and Tamil, in accordance with their ethnic backgrounds.
This makes both nations the top choices for businesses trying to develop internationally.
The progressive personal income tax rates in India can reach a maximum of 30%, but there are also applicable surcharges of up to 10%. However, Singapore’s progressive personal income tax rate tops out at 22%.
The dividend distribution tax is a tax that corporations in India pay on the dividends they give to their shareholders. In India, there is a 15% dividend distribution tax. Singapore prevents double taxation of its investors by utilizing a one-tier corporate tax structure. Since shareholders won’t be taxed on dividends paid by a resident firm, taxes paid by businesses on their chargeable incomes are the last taxes paid.
In India, corporate income tax is assessed at a fixed rate of 25%, with an additional 5% assessed if a company’s yearly revenue exceeds 1 crore rupees (or S$210,000).
Singapore offers businesses a top corporate tax rate of 17% on their chargeable income.
Tax Exemptions & Incentives
Indian resident corporations may occasionally withhold dividends from other Indian residents. Venture funds and venture capital enterprises are also subject to special rules.
Newly registered businesses in Singapore are entitled to a complete three-year tax exemption on their first S$100,000 in chargeable income.
Companies in India are liable to a withholding tax of up to 40% when they pay non-residents. For instance, while withholding tax on interests is 20%, it is 40% and 30% on payments made by businesses and individuals, respectively, for services. However, resident corporations’ dividend payments are not subject to taxation.
The withholding tax in Singapore ranges from 10% to 17%. For instance, while service fees are subject to the current corporate tax rate, interests are subject to a 15% withholding tax.
Singapore only taxes foreign-sourced money when it is transferred there, but Indian businesses are taxed on their global profits whether they are transferred to India or not.
|17% (Eligible new start-ups are given full exemption on their first $100,000 for the first 3 years)
|30% (resident companies) 40% (non-resident companies)
|17% (Partial exemption on first $300,000)
|Capital Gains Tax
|0% - 22%
|0% - 30%
|Double Taxation Relie
|Foreign-Sourced Income Tax
|May be taxable if received or deemed received in Singapore
ADVANTAGES AND DISADVANTAGES OF INCORPORATING IN INDIA AND SINGAPORE
Advantages of incorporating in India:
- Large market: India has a large and growing consumer market, providing businesses with significant growth opportunities.
- Skilled workforce: India has a large pool of highly skilled workers, particularly in the IT sector. Labor costs are also lower compared to other countries.
- Low costs: The cost of doing business in India is generally lower compared to other countries, particularly in terms of labor and office space.
- Government incentives: The Indian government provides various incentives for businesses such as tax exemptions, grants, and funding.
Disadvantages of incorporating in India:
- Complex regulatory environment: India has a complex regulatory environment with multiple levels of bureaucracy, which can be challenging to navigate.
- Infrastructure challenges: India’s infrastructure is still developing, particularly in rural areas, which can pose challenges for businesses.
- Taxation: India’s tax system is complex and can be challenging to understand. The corporate tax rate is currently 25%.
Advantages of incorporating in Singapore:
- Strategic location: Singapore’s location and free trade agreements make it an excellent hub for businesses looking to access the Asia-Pacific region.
- Efficient business regulations: Singapore has a transparent and efficient regulatory environment with minimal bureaucracy.
- Strong economy: Singapore has a stable and developed economy, making it an attractive destination for foreign investment.
- Skilled workforce: Singapore has a highly skilled and educated workforce, with a good command of English.
Disadvantages of incorporating in Singapore:
- High costs: Singapore’s cost of living and doing business are generally higher compared to other countries in the region.
- Limited market: Singapore has a small domestic market, making it more challenging for businesses that rely on local consumers.
- Limited natural resources: Singapore has limited natural resources, making it dependent on imports.
Reach out to us at Relin Consultants – Leading Global Business Set Up Partners for further assistance.
What are the tax rates in Singapore and India?
Singapore has a corporate tax rate of 17%, while India has a corporate tax rate of 25%.
Which country has a more favourable regulatory environment for businesses?
Singapore is known for having a transparent and efficient regulatory environment with minimal bureaucracy, while India has a more complex regulatory environment with multiple levels of bureaucracy.
Which country offers a larger consumer market?
India has a larger and growing consumer market compared to Singapore, which has a relatively small domestic market.
What is the cost of labour in Singapore vs India?
Labour costs in India are generally lower compared to Singapore, making it a more cost-effective destination for businesses looking to hire skilled workers.
What are the advantages of incorporating in Singapore?
Some of the advantages of incorporating in Singapore include its strategic location, efficient business regulations, stable economy, and skilled workforce.
What are the advantages of incorporating in India?
Some of the advantages of incorporating in India include its large market size, skilled workforce, and government incentives for businesses.
Which country is more suitable for technology-based businesses?
Both Singapore and India have a growing technology sector, but India is known for its highly skilled IT workforce, making it an attractive destination for technology-based businesses.
Which country has a more favourable intellectual property regime?
Singapore has a strong intellectual property regime, with strict laws and enforcement measures in place. While India has made significant improvements in recent years, its intellectual property regime is still developing.