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SINGAPORE OFFSHORE COMPANY FORMATION
An offshore company refers to a company that is incorporated outside of the country where the principal investors and management reside. It refers to an entity that is incorporated outside of the jurisdiction the entity primarily operates. In layman’s terms, an offshore entity refers to an entity that is incorporated outside of the investor’s and management’s home country.
The objective of setting up a Singapore offshore company in recent years is mainly due to the tax benefits available to such an entity and the extremely simple reporting requirements. Singapore is regarded as one of the most reputable jurisdictions regarding ease of company setup and administration. In addition, political and economic stability can positively impact your business in the long term.
Relin Consultants’ guide below explains the benefits of incorporating a Singapore offshore company and provides an overview of how to set up an offshore company in Singapore.
WHAT IS AN OFFSHORE COMPANY IN SINGAPORE?
Singapore Offshore Companies refers to a Singapore-incorporated company legally exempted from paying any corporate tax in Singapore. The Singapore tax authorities (IRAS) adopt a territorial tax system that taxes the companies based on the location of the profits generated rather than the place of incorporation. This means your Singapore-incorporated offshore company that earns its income and profits outside of Singapore (foreign-sourced income) will not be subjected to Singapore tax.
Generally, a Singapore company can qualify for legal tax exemptions if it meets the following conditions:
- No business operations were conducted in Singapore during the financial year.
- The management and employees involved in controlling and executing the contracts were not in Singapore.
- The income and profit were not earned in or remitted to Singapore.
Relin Consultant highly recommends our clients reach out to us for a non-obligatory review of their business plan to confirm the tax exemptions applicable based on their circumstances.
WHEN SHOULD YOU CONSIDER SETTING UP AN OFFSHORE COMPANY IN SINGAPORE?
- When the business is growing
When the firm begins to grow, which results in an increase in investor interest and shareholder buy-in, the business owner may want to think about setting up an offshore company. It would be beneficial to look into the perks of setting up an offshore business in Singapore if the investors they attract prefer to invest through an offshore jurisdiction.
This is frequently the case when institutional investors search for profitable business investment opportunities.
- In the process of creating an intellectual property
Singapore has the best IP protection if a component of the business involves producing intellectual property that the owner intends to utilize in several countries. Overall, Singapore is recognized as the most competitive nation in the world, therefore it is understandable why setting up an offshore corporation may be such an attractive opportunity for foreign business owners.
- When retaining assets in order to generate income
Not every company uses the same model or structure. Perhaps investment holding is the business’s main activity. This is frequently the case in real estate because the major reason people hold onto assets (like property, for instance) is so they may utilize them to generate additional income or as investments.
One advantage of establishing an offshore company in Singapore is the significant exemption from Stamp Duty and Capital Gains.
INCORPORATION CHECKLIST FOR SINGAPORE OFFSHORE COMPANIES
| Component | Description |
| Directors | At least one local resident director must be a Singaporean citizen, a permanent resident of Singapore, or a holder of a Singapore work permit. It is possible to appoint any number of additional local or international directors. Directors must be at least 18 years old and natural people. |
| Shareholders | There must be at least one local or international shareholder. A maximum of 50 stockholders are permitted. Directors and shareholders may be the same person or different people. A shareholder may be a natural person or an entity. |
| Company Name Approval | Before incorporation, the business Registrar must approve the proposed name of your Singapore offshore business. Relin Consultants provide name reservation services. |
| Paid-up Capital | There must be a minimum of $1 in paid-up capital. Authorized capital is not necessary. |
| Company Secretary | The company secretary must be a qualified local person. A natural person must serve as the company secretary, not a corporate entity. A company secretary is not permitted to be a sole shareholder or director. |
| Appointment of Incorporation Agent | To register a Singapore offshore corporation, you must work with a qualified organization like Relin Consultants. Self-registration of an offshore corporation in Singapore is not permitted by Singaporean legislation for foreign people or companies. |
| Registered Address | The business needs a local registered address (either a business or a residence). PO Boxes are not accepted. |
| Documents Required for Incorporation | The following documents are usually needed: ● copies of the proposed shareholders' and directors' passports ● proof of the proposed shareholders' and directors' residential addresses ● If the shareholder is a corporation, information about the parent company |
| Company incorporation process | Once all the required documents are received by Relin Consultants, we will start the process of registering the company with Singapore company registrar. Our company registration services also include services such as company seal, rubber stamp, share certificates, company profile, certificate of incorporation, etc. |
| Bank Account Opening | Relin Consultants will assist you in opening a bank account for youe newly incorporated business. |
| Registration for GST | Your offshore business might need to register for Singapore's Goods and Services Tax. |
| Obtain Business Licenses or Permits | Depending on the type of the firm, you might need a business license if you intend to conduct activities in Singapore. Only specific commercial operations need a license. Following company incorporation but before starting business operations, the business license(s) must be secured from the pertinent government bodies. |
| Relocation to Singapore | Without having to move, you are free to incorporate and run your Singapore offshore company from abroad. You are permitted to travel to Singapore on a visitor visa whenever necessary in order to handle business concerns temporarily. Either an Entrepreneur Pass or an Employment Pass kind of work pass must be obtained if you intend to migrate to Singapore to run the business. |
PROS OF SETTING UP A SINGAPORE OFFSHORE COMPANY
Singapore is one of the leading countries as a business center for the Asia market. Opening an offshore company can be one of the easiest ways foreign investors can access the Asian market to widen their market base.
Reduced tax liability
Singapore is not regarded as a total tax haven nation. Offshore companies in Singapore can work to expand their business without having to bear a big tax liability and be legally tax exempted while enjoying a credible reputation.
Setting up an offshore company in Singapore provides the entity with many tax incentives.
The incentives range from tax exemption to low tax rates. The Singapore offshore company tax rate is effectively 0% is properly structured. Singapore tax authorities adopt the single-tier tax system. This means any dividends that are distributed to the shareholders are not subject to additional tax liability. Shareholders do not have to pay any taxes on the same.
Straightforward incorporation procedure
The process for Singapore offshore company formation is extremely straightforward. On average, setting up an offshore company can be completed within 2 to 3 business days. The company name approval can be obtained within hours, and all the filing can be completed online without requiring the shareholders to travel to Singapore.
Foreign ownership
Singapore’s government does not restrict offshore companies from being foreign-owned. A Singapore offshore company incorporation can be 100% foreign-owned. There are no restrictions on the types of business activities a company can undertake; selected business activities must secure a license. Shareholders can be either natural persons or legal entities.
In addition, foreigners wishing to set up an offshore company in Singapore do not need to secure pre-approval from government officials.
Advanced and progressive banking infrastructure
Singapore offers an extremely advanced banking infrastructure. Singapore has more than 100 banking institutions that offer a state of art internet banking platform and good customer service to support company operations. This creates an opportunity for an offshore company to access a wide range of trustworthy banks to establish an account for the company.
Most banking institutions offer multi-currency accounts, online banking, credit cards, trade finance, and the flexibility to transfer money internationally. You may refer to our Singapore corporate bank account opening for additional information. The account opening procedures with an international bank will usually take around 3 to 4 weeks.
Transparency
Singapore promotes a corruption-free environment. Through ACRA (Accounting and Corporate Regulatory Authority) website, the public can access all the information relating to the company.
Information such as the member’s name, shareholder names, directors, and share capital that the owners have invested are all available for purchase by the public. This encourages transparency and further enhances the reputation of the jurisdiction among stakeholders.
Strong economic fundamentals
Amid the global pandemic, Singapore remains one of the world’s strongest economies. The low corruption rates and transparent governance supported by sound monetary and fiscal policies have allowed the country to be classified as a low-risk economy.
This can be seen and supported by the recent exemplary action taken by the Monetary Authority of Singapore to tighten its monetary policy to ensure stable future economic growth and prevent inflation of the Singapore dollar after the COVID-19 global pandemic. Singapore’s gross domestic product (GDP) is the highest in the region compared to neighbouring countries.
Solid political situation
Investors can benefit from the nation’s solid political situation. There are no drastic regulatory changes in terms of Singapore income tax laws over the past decade. Hence an offshore company can continue to enjoy stability and continuity.
Singapore is known for having a fair, solid, and effective judicial system. With trade, the protection of intellectual property, employment, and other aspects of business, there are unambiguous norms and regulations. As a result, there is little to no risk associated with establishing and running a Singapore offshore corporation.
CONS FOR SETTING UP A SINGAPORE OFFSHORE COMPANY
Anonymity
An offshore company in Singapore engages in a lot of transparency as compared to other Offshore jurisdictions. BVI Company Incorporation and Seychelles Company Incorporation will be more suitable for investors seeking anonymity.
Not eligible for buying, leasing, or renting a property in Singapore
An offshore company in Singapore is prohibited from buying, leasing, or renting any property in Singapore. Once a company operates in Singapore. It might lose its offshore status and be subject to Singapore corporate tax.
STEPS TO REGISTER OFFSHORE COMPANY IN SINGAPORE
Foreigners setting up an offshore company in Singapore must appoint a local registered filing agent/Singapore company secretary, such as Relin Consultants, to assist with the incorporation process.
Before the submission of the company incorporation application. Relin Consultants will assess our client’s business activity and confirm whether they can meet the tax exemptions and business objectives. Our team will advise whether other licensing requirements apply to our client’s business activity.
If our clients are satisfied with the preliminary assessment. Relin Consultant’s team of the company secretary will prepare the company incorporation documents and complete the Singapore offshore company registration.
The following prerequisites for forming an entity may also be important to note.
- At least one director of the offshore firm must reside in Singapore. Relin Consultant can act as your firm’s nominee resident director.
- Directors must be at least 18 years old and cannot have a criminal record that includes convictions for fraud or dishonesty.
- The company must have a physical Singaporean registered office where correspondence or notifications may be sent. Relin Consultants can provide registered office address services.
- Within six months of its establishment, the company must name a Singaporean to serve as company secretary. It can either be an individual or a corporation. Relin Consultant can act as your Singapore company secretary.
If you have further queries about the offshore company in Singapore, you can email our team at enquiry@relinconsultants.com
COMPLIANCES FOR A SINGAPORE OFFSHORE COMPANY
A Singapore offshore company must still fulfill all the local reporting requirements to ensure your company is legally in good standing.
A company must maintain records of all accounting transactions and prepare annual financial statements. An offshore company must submit its annual tax declaration to continue to enjoy tax exemptions. Relin Consultant can assist our clients with filing their tax returns and financial statements to IRAS and ACRA annually. The company must also retain the financial records for a minimum period of at least 5 years.
Refer to Singapore’s Annual accounting requirements for additional information.
FAQs
Can My Offshore Company In Singapore Conduct Any Business Activity?
Yes, you can participate in any business activity outside of Singapore. If your company conducts business within Singapore, you will lose the offshore status and be subjected to Singapore corporate tax. For selected business activities, you must also obtain an exclusive license. Relin Consultant can assist you in assessing the applicable business license and guide you through the application process.
Do Offshore Companies Pay Tax In Singapore?
Singapore adopts a territorial basis of taxation. Hence taxes are only applicable to income that is accrued to or derived by the company from Singapore. A Singapore offshore company does not have to pay any tax in Singapore if it meets the following conditions:
- No business operations were conducted in Singapore during the financial year.
- The management and employees involved in controlling and executing the contracts were not in Singapore.
- The income and profit were not earned in or remitted to Singapore.
Can An Offshore Company Open A Bank Account In Singapore?
Companies incorporated in other offshore jurisdictions can open a bank account in Singapore. However, most banks will conduct an enhanced due diligence check on the shareholder and director of the company before onboarding a non-Singapore company.
What Are Offshore Banks In Singapore?
Offshore banks in Singapore usually have similar powers to those commercial banks. However, most of these banks will have fewer branches and products as compared to Singapore commercial banks. You can refer to the following link for a comprehensive list of banks in Singapore.
Do I Need To Declare Income For An Offshore Company In Singapore?
All Singapore-incorporated companies must file their annual income tax declaration irrespective of whether the company is offshore. An offshore company will declare its income exempted during the tax filing.
Can I Register My Offshore Company In Singapore Remotely?
Yes, Relin Consultants can assist you in remotely registering your offshore Singapore company.
Does My Offshore Company Require Any Employees?
No, it is not mandatory to appoint employees for your company.
What Is The Price For An Offshore Company Setup?
The government fee to set up an offshore company is approximately US$350.
Can Foreigners Open An Offshore Bank Account In Singapore?
Foreigners are allowed to open an offshore bank account in Singapore. However, the application is assessed on a case-by-case basis, and the success rate is dependent on the individual’s profile.
Why Do You Need To Open An Offshore Company In Singapore?
Most business owners set up an offshore Company in Singapore primarily due to the tax benefits available to such an entity and the country’s positive reputation among international financial institutions.
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