History of Singapore

A city-state in Southeast Asia, Singapore comprises 64 islands, the largest of which is the highly urbanised Pulau Ujong. Singapore is a true economic success story. Since gaining independence in 1965 the country has become one of the most developed nations in the world despite having very few natural resources. Nicknamed ‘the Garden City’, Singapore has a dense vegetation despite the high population density. The country is also called “the Switzerland of Asia” for its high standard of living.

Singapore as an Offshore Centre

Singapore is an offshore destination that enables a large variety of activities, and ensures a good brand image. As a general rule, the preferred type of offshore company is the Private Limited Company, whose registered office must be located in Singapore. No minimum share capital is required, and setting up a company can be simplified by opting for a Ready Made (or Shelf) company. This means that you select from a number of companies that have already been formed in order to decrease waiting time. Holding companies are also often based in Singapore and are easy to establish.

Singapore Summary

In Singapore nominee Directors may be engaged to protect the privacy of the company’s managers and control structure. Singapore is a popular destination for company formation and offshore banking.

Types of Singapore Companies

Creating a company in Singapore is fast compared to the rest of Asia and takes around three days.

Types of companies	Minimum Capital	Number of Shareholders, Members or Partners
Company limited by guarantee	No minimum capital	At least one guarantee member, liability is limited to the amount guaranteed.
Company limited by shares and guarantee	No minimum capital	At least one member, liability limited to the amount of the guarantee.
Private Company (Sendirian Berhad)	25,000 SGD minimum	Up to 50 shareholders, limited liability.
Public Company	No minimum capital	At least one shareholder, limited liability.
General partnership	Not Applicable	Minimum of two partners, maximum of 20. Unlimited liability for debts and obligations, liability is joint and several.
Limited partnership	Not Applicable	Minimum of two partners, maximum of 20. One general partner must assume unlimited liability but all limited partners enjoy limited liability.
Sole proprietorship	Not Applicable	A sole trader is personally liable for all business debts. Liability extends to private wealth, no limited liability.
Unlimited company	No minimum capital	At least two shareholders, unlimited liability.

Link : Accounting and Corporate Regulatory Authority

Different Tax Rates

Singapore has a unique corporate tax system: corporate tax is fixed at 17% for residents and non-residents, regardless of whether or not income is generated in Singapore. Capital gains, however, are not taxed in Singapore. GST (Goods and Services Tax) is the country’s value added tax, which is fixed at 7%. GST does not apply to international services and goods exports.

Personal income tax is calculated using a progressive tax system, with rates ranging from 0 to 20% :

Personal income (SG$)	Tax rate
0 to 20,000	0%
20 001 to 30,000	3.5%
30 001 to 40,000	5.5%
40 001 to 80,000	8.5%
80 001 to 160,000	14%
160 001 to 320,000	17%
320,000 and +	20%

 

It is possible to obtain NOR status, and there be eligible for the Not Ordinarily Resident taxpayer scheme, which was introduced in 2003 to encourage the influx of foreign companies.
France also signed a double taxation agreement with Singapore in 1974.

Links :
Inland Revenue Authority of Singapore
Ministry of Finance Singapore

 

Accounting Overview

Accounting in Singapore is governed by the (Accounting Standards Council). The country’s accounting rules are adapted for international purposes. Singapore’s fiscal year begins on 1 January and ends on 31 December of the same year.

Companies must file a tax return, computing the tax on net taxable income, and must additionally provide their complete annual financial statement. An external auditor must also carry out an annual audit of the company.

The main professional accounting body in Singapore is the Institute of Certified Public Accountants of Singapore.

Links :
Certified Public Accountants of Singapore
Singapore Accounting Standards

The jurisdiction in detail

Because Singapore is very open on the world and highly financialised, the city-state was deeply affected by the 2008 financial crisis. Its growth dropped from 7.5% to 1.3%. But the country’s economic situation quickly rebounded, thanks to a rise in exports and substantial national demand. Two years later, its growth was at + 10%.

The growth estimate for 2013 is 4.2%, and will be government regulated in an effort to limit inflation. Currently in full transition, Singapore now emphasises innovation and high value added activities (R & D, biotechnology, pharmaceutical sector…). Singapore has a low unemployment rate of 2%, and the standard of living in the country is one of the highest in Asia.

Singapore’s main economic strength is its powerful industrial sector, dominated by manufacturing. In terms of economic importance, industry is followed by trade, then business services, transport, communication, and finally, financial services. The electronics and petrochemical industries are dominant, and industry overall represents 25% of GDP. The remaining three-quarters of the country’s GDP are produced by the services that employ 75% of the population. Singapore has no agricultural workforce.

The city-state is now a platform for international exchange and relies heavily on exports. This makes Singapore’s economy vulnerable to external market conditions. Free trade agreements and bilateral agreements have been signed with several countries, and Singapore currently has a surplus trade balance.

The benefits of investing in Singapore :

• according to the World Bank report, Singapore is one of the countries in the world where it is easiest to do business (it was number one in 2009)
• highly efficient financial and communication networks, as well as public transport system
• Singapore is located at a major maritime crossroads
• the country is very close to other major world powers, such as China
• tax breaks and loan facilities to promote investment are available

 

Disadvantages :

• the entire administrative sector lacks transparency
• the Singapore dollar is not recognized everywhere in the world
• there is no tariff protection for industrial companies
• strong presence of public companies

 

Singapore allows foreign investors to benefit from incentives after registering with Economic Development Board. Certain sectors are still State controlled (finance, professional services, media).

Access to and functioning of the market

Singapore is a member of the World Trade Organization and has signed a number of protocols and cooperation agreements: Kyoto Protocol, Washington Convention, Basel Convention, Montreal Protocol, APEC, ASEAN, ASEM and SEAT.

Singapore only has customs duties for cars, diesel fuel, tobacco and alcohol. It is relatively easy to import goods into the country, which enables a great deal of freedom where imports are concerned. Only firearms and chewing gum are prohibited. Permits are also required for certain products, which together represent 6% of all imports:

• fresh fruit and vegetables
• meat
• plants
• animals
• medications
• volume products
• potentially hazardous products

 

Import licences are generally issued by the International Enterprise Singapore. Companies importing to Singapore must make an ‘IN’ declaration and have an import permit.

In Singapore, distribution is as important as it is in Western countries, and continues to develop thanks to increased standards of living for consumers. New retail centres such as VivoCity, Central and Ang Mo Kio Hub have been developed, in addition to the existing Centrepoint, Tampines Mall and White Sands.

The country’s infrastructure is well-maintained and highly developed. The port of Singapore, for example, is the world’s second largest in terms of container and transhipment traffic. Singapore’s airport is also famous, and considered one of the best in the world. The Land Transport Authority also aims to promote road transport, with 8 highways and 9 expressways under construction.

Industry and the service sector are the two most dynamic sectors, with the largest impact on Singapore’s economy. Electronics and chemical products are extremely dynamic. By increasing wages, the Government of Singapore is highlighting sectors with high added value, such as telecommunications and finance. It has also emphasised energy production in an effort to remain competitive.

Links :
Ministry of Health of Singapore
International Enterprise Singapore
Land Transport Authority
Maritime and Port Authority of Singapore
Civil Aviation Authority of Singapore
Singapore International Chamber of Commerce

Employment law

The legal working week in Singapore is 8 hours a day, or 40 hours per week, with a one hour lunch break. Retirement age is set at 62. There are several types of employment contracts: annual contract, casual employee, work from home, job sharing, flextime, part-time or self-employed worker. There is no minimum wage, and the average gross monthly salary is US $ 2,500.

An employer must pay social security contributions at a rate that ranges between 14.5% and 5% (depending on age), and the employee at a rate that ranges between 20% and 5% (depending on age). Trade unions in Singapore are very close to the Government, as most are affiliated with the National Trades Union Congress. Approximately 25% of employees are union members.

Intellectual property

Type of rights	Text of Act	Validity of protection	Agreements signed
Patents	1995 patent law	20 years, renewable	- Patent Cooperation Treaty (PCT)
Trademarks	2005 trademark legislation	10 years, renewable	- Nice Agreement on the International Classification of Goods and Services -The Madrid Agreement concerning the International Registration of Marks
Design	2000 law on registered designs	5 years, renewable for up to a maximum of 15 years
Copyright	2005 copyright law	Varies according to the nature of the work	- Berne Convention for the Protection of Literary and Artistic Works - WIPO Copyright Treaty - WIPO Performances and Phonograms Treaty
Industrial designs	1999 law on drawings, design, and integrated circuits	15 years maximum

 

Links:
Singapore National Employers Federation
National Trades Union Congress
Intellectual Property Office of Singapore

Political data

The President of the Republic represents executive power in Singapore, although the role is largely ceremonial. The real head of Government is the Prime Minister (currently Lee Hsien Loong), leader of the party majority and appointed by the President.

Legislative power lies with Parliament, which has 84 seats. 9 members are elected in a first past the post system, whereas others are chosen in teams of 4 to 6, representing 15 districts. Parliament controls Government action. The Government therefore depends on Parliament’s confidence, which is expressed through regular votes.

Since independence, Singapore has been governed by a single party, the PAP (People’s Action Party). Other political groups are allowed and exist, but are not considered to have a chance of one day winning elections. They are therefore simply opposition parties:

• the SDA (Singapore Democratic Alliance)
• the SDP (Singapore Democratic Party)
• the WP (Workers’ Party of Singapore)