Pros and Cons for Offshore Companies in Singapore‏

Image of Singapore via Wikipedia

by Gregory Smyth

Singapore is the smallest independent state in the world, a 710 square kilometer area at the tip of the Malay Peninsula.

What was once a Malay fishing village has grown to become one of the busiest commerce hubs in South-East Asia, home to nearly five million people - one of the main reasons being the widespread use of English in the region. So what does this tiny, busy, and sometimes expensive state have to offer companies looking to incorporate offshore? Plenty, according to business consultancy services.

One of the most attractive aspects of Singapore according to company formation services is that the legal system and political system is quite similar to many Western countries, due to the city-state's prior colonial relationship with Britain. Singapore has a Prime Minister, a Cabinet, a President, and a High and Supreme Court, as many English-speaking countries do. The business environment and culture, as well as the taxation system (if not the rates), are also broadly similar.

Corporations' tax in Singapore is currently 18%, and while this seems excessive in comparison to other offshore investment business locations recommended by business consultancy managers, it does not apply in all cases.

If the majority of a company's directors reside outside of Singapore, and profits are not derived from Singapore, then a company is considered not be a 'resident' company, and profits are therefore tax free. Foreign sourced income for individuals in Singapore is always exempt from tax.

As a notable and well established part of the worldwide business community, Singapore has negotiated double tax treaties with many other countries throughout Asia-Pacific, Europe, the UK and the Middle East. However, only resident Singapore companies can take advantage of these, according to company formation services experts.

For companies to whom reputation is important, Singapore also offers other offshore investment business benefits. The stricter requirement for businesses mean that Singapore companies generally come under less scrutiny than those in smaller jurisdictions, and these requirements can also make it easier to carry on local business when opportunities arise.

For example, local registered offices are required, as are filing of annual returns, auditable documents, and tax returns yearly. Local directors and a resident company secretary are required, which can cause some difficulties, but has rewards also. The minimum shareholder number is 1, and nominees are allowed. The minimum number of directors is one also, and only S$1 in paid up capital needs to be maintained. Incorporation time is also swift, at only 2 days.

If you are looking to relocate to Singapore for business, the Financial Investor Scheme is worth investigating, according to business consultancy services. Permanent residence in Singapore can be granted for certain individuals, with the main requirement being the placement of at least S$5 million in financial assets with Singapore financial services or institutions.

Companies looking for opportunities for banking offshore in Singapore have a wealth of options, including HSBC international bank. There are also Arab and Swedish-owned banks operating in Singapore, an advantage for companies from those areas.

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