Introduction Geography • Singapore’s strategic location at the southern tip of the Malaysian peninsula has ensured its importance, which is greater than its size might seems to justify. • Singapore consists of Singapore island and 63 islets within its territorial water. • The Central Business District spreads from the central and southern parts of Singapore. Population • Resident population of 3.58 million in June 2007, of Singapore citizens and permanent residents • Total population : 4.59 Million
Introduction Political System • Singapore is a republic with a parliamentary system of government, with a written constitution to provide for the organs of the state, namely the executive, the legislature and the judiciary. Languages • Official languages are Malay, Chinese, Tamil and English. Currency • The monetary unit used in the Singapore dollar (S$) which is divided into 100 cents.
Reasons for doing business in Singapore • Strategic Location • Access to unlimited markets • Pro – business environment • Nucleus for talents • Educated workforce • Opportunities to innovate
Different types of business entities • Sole Proprietorship • Partnership • Private Limited Companies • Exempted Private Companies • Public Companies • Branches of Foreign companies
Sole Proprietorship An individual carrying on business on his own behalf. • Simplest and most flexible business structure. • It is not a separate legal entity. • Sole proprietor is liable for the debts of the business.
Partnership Defined under the Partnership Act(Cap.391) as a relationship that subsists between person carrying on business in common with a view of profit. • Minimum of 2 partners and maximum of 20 partners
Private Limited Companies A private company is one which has a small group of no more than 50 shareholders.
Exempted Private Companies This is a private company • Has not more than 20 shareholder and none of the shareholders is a corporation or that is wholly owned by the Government and which the Minister, in the national interest, declares by notification in the Gazette to be an exempt private company.
Public Companies Public Company limited by shares A local incorporated company in which the number of shareholders can be more than 50. • The company may raise capital by offering shares and debentures to the public. • Must register a prospectus with the Monetary Authority of Singapore before making any public offer of shares and debentures.
Branches of Foreign Companies Instead of incorporating a local company to conduct business, some foreign companies may choose to register Singapore branch under the Companies Act(Cap.50). A Singapore branch of foreign company is part of the same legal entity as the foreign company at its head office and branches of the foreign company in other parts of the world.
Representative Office A temporary establishment for foreign companies to assess the business environment in Singapore before making business decision. • To undertake promotional and liaison activities on behalf of head office or overseas branches. • May not be engage in any trading or business. • Usually manufacturing, trade logistics and trade-related services sectors.
Operational Headquarter Companies using Singapore as a base to conduct HQ management activities. Regional Headquarters International Headquarters Operational Headquarters Business Headquarters Manufacturing Headquarters
Registera Business ACRA Accounting and Corporate Regulatory Authority • To register business entities and public accountant. • To ensure compliance with legal requirements. • To enforce and prosecute offenders. • To provide information on registered entities.
ACRA LIMITED LIABILITY PARTNERSHIP BUSINESS COMPANY Any on person who wants to carry on business for the purpose of gain (profit) must register a business, company or a limited liability partnership in Singapore before carrying out such business
Register a Business For Local Sole Proprietor or Partnership • Log into www.bizfile.gov.sg to submit an online transaction to apply for a new business. • Engage the services of a professional firm (lawyers, accountants or chartered secretaries) or service bureau (DP Bureau) for assistance in submitting the online application to register a new business. • Call at ACRA in person to submit the online transaction at the BizFile Kiosks.
Register a Business For Foreigners Foreigner who wishes to engage in any business, profession, occupation or form of paid employment in Singapore must apply for an Employment Pass.
Register a Business A successful applicant will be issued with an Approval-In- Principle letter to enable him/her to register the business with ACRA. Upon receipt of the Certificate of Registration from ACRA, the applicant needs to send/fax a copy of the certificate and the Approval-In-Principle letter to the Employment Pass Department for the processing of his/her Employment Pass.
Incorporating a local company • Any person who wants to incorporate a local company may engage a professional firm or service bureau to assist him in the filing of the application for incorporation via Bizfile. • A company can also be incorporated by the directors themselves. (For convenience, we call this process “self-incorporation”.) For self-incorporation cases, the proposed directors, secretary and subscribers must all be Singapore NRIC holders.
Incorporating a local company Requirements: • Any person above the age of 21 years can incorporate a local company.A company may have only one director who must be “ordinarily resident in Singapore” i.e. a Singaporean Citizen, a Singaporean Permanent Resident, a person who has been issued an EntrePass/Approval-In-Principle letter or a Dependant Pass. • A foreigner who wishes to act as a local director of a company can apply for an EntrePass or Approval-In-Principle letter from the Work Pass Division of the Ministry of Manpower (MOM) under the EntrePass Scheme.
Register a Foreign Company • Any person who wishes to register a branch of a foreign company is advised to engage a professional, e.g. a lawyer or an accountant to assist him in the preparation and filing of the application for registration via Bizfile.
Register a Foreign Company • The Companies Act requires a foreign company to appoint two local agents in Singapore to act on behalf of the company. The agents must be ordinarily resident in Singapore i.e. a Singaporean Citizen, a Singaporean Permanent Resident, or a person who has been issued an EntrePass/Approval-In-Principleletter/Dependant Pass. A foreigner who wishes to act as a local agent of a foreign company can apply for an EntrePass or Approval-In-Principle letter from the Work Pass Division of the Ministry of Manpower (MOM).
Approvals, Licenses and Permits Certain business in Singapore are subjected to further regulatory control by other government agencies in Singapore. Certain licenses and approvals need to be obtain before the relevant business activities can commence. Finance Companies Insurance Companies Travel Agents Private Schools More information, www.traderegister.gov.sg
Audit and Accounting Requirements • All businesses are required to maintain a proper books of account for audit and taxation purposes. • For Companies, directors are required under the Companies Act to appoint a firm of auditors within 3 months of incorporation. • For Representative Offices, partnerships, sole proprietorships, LLPs, there are no requirements to have accounts audited.
Promoting Foreign Investment Economic Development Board The leading agency responsible for planning and executingstrategies to sustain Singapore’s attractiveness as a global hub for business and investment. Work closely with other agencies to promote innovation and develop humans, intellectual, financial and cultural capital in Singapore. I
Promoting Foreign Investment International Enterprise Singapore Promotes Singapore as a hub for Small and Medium-sized companies by attracting enterprises from other countries to be based in Singapore, so that they can collaborate with international Singapore companies to venture into the region.
Promoting Foreign Investment Jurong Town Corporation Leading provider of industrial spare solutions and specialized parks for various industries. Monetary Authority of Singapore Regulates all elements of monetary, banking and financial aspects of Singapore and oversees a wide range of tax incentives specifically for financial sector.
Taxation Taxes are used to develop Singapore into a stronger community, a better environment and a more vibrant economy. Main objectives of tax policy Revenue Rising • A substantial source of funding for government operations. Promotion of Economic & Social Goals • Influence behavior towards desirable social and economic goals. To encourage mechanization and automation, the government allows accelerated capital allowance for most assets used for business purposes.
Corporate Tax Taxed based on • Income accruing in or derived from Singapore • Income received in Singapore from outside Singapore Assessed Period • On a preceding year basis, generally refers to the financial year ending in the year preceding the YA Example: Company A accounts are prepared up to 31 December each. The basis period for each YA is the preceding calendar year ended 31 December. Thus a company’s basis period for YA 2008 is from 1 January 2007 to 31 December 2007
Corporate Tax A company is taxed on a flat rate on its chargeable income regardless of whether it is a local or foreign company. Tax rates and tax exemption for 2008
Corporate Tax Tax exemption scheme for new start-up companies was introduced in YA 2005 to support entrepreneurship and to help our local enterprises grow. Tax exemption for new start-up companies on chargeable income up to $300,000
Partnership Partnership does not pay income tax on the income earned by the partnership. Each partner will be taxed on his share of the income from the partnership. • If the partner is an individual, his share of income from the partnership will be taxed based on his personal income tax. • If the partner is a company, its share of income will be taxed based on the tax rate for the companies
Limited Liability Partnership (LLP) LLP will not be chargeable to tax at the entity level instead, each partner will be taxed on his share of income from LLP. • If the partner is an individual, his share of income from LLP will be taxed based on his personal income taxes. • If the partner is a company, its share of income from the LLP will be taxed based on the tax rate for companies.
Tax Treaties An avoidance of Double Taxation Agreement between Singapore and another country serves to prevent double taxation of income earned in one country by a resident of another country. • Makes clear the taxing rights between Singapore and her treaty partner on different types of incomes arising from cross-border economic activities between the two countries. • Provides for reduction or exemption of tax on certain types of incomes.
Tax Treaties Comprehensive Avoidance of Double Taxation Agreements generally cover all types of income. Limited treaties cover only income from shipping and/or air transport. Treaties which are signed but not ratified are either comprehensive agreements or limited treaties which are not ratified and therefore do not have force of law. Refer to appendix 1 for countries that Singapore has tax treaties with
Individual • All individual who earned an income in Singapore are subjected to taxation and need to declare all sources of income. • The amount of income tax need to pay depends on how much is being earned and whether the individual is a tax resident or non resident. • Tax Resident – Singaporeans, Singapore Permanent Resident or who stayed or worked in Singapore for more than 183 days or more in the year preceding the YA.
Individual • Non – Resident – Foreigner who stayed or worked in Singapore for less than 183 days in the previous year or who is the director of a company. • Non – Resident, employment income is taxed at 15% or the resident rate, whichever gives rise to a higher tax amount. Director fees, consultant fees and all other income are taxed at 20%.
Other Taxes Goods and Services Tax (GST) A consumption tax levied on the import of goods and nearly all supplies of goods and services in Singapore. • Business must register for GST when their turnover exceeds $1mil per year and after the registration, must charge and account for the GST at prevailing rate. This is known as output tax. • The business can also claim the GST incurred on their goods and services purchased if conditions are met. This is known as input tax.
Other Taxes Stamp Duty It is a tax on documents relating to properties and shares and payable only on documents described in the First Schedule to the Stamp Duties Act (Cap 312). Once the document is signed, the stamp duty must be paid 14 days from the date of execution if document is signed in Singapore and 30 days of its receipt in Singapore if the document is signed overseas.
Other Taxes Estate Duty It is a tax on the total market value of a person’s assets (cash and non-cash) at the date of his death. Common assets subjected to estate duty
Other Taxes Estate / Trust Income The assets left behind by a deceased may continue to produce income after his death. Rental income from property Dividends from shares declared after death Interest income from bank/finance company Share of profit from a partnership OR profit from a sole-proprietorship
Who can buy property in Singapore? Buying HDB flat in Singapore Citizenship • Must be a Singapore Citizen. The family nucleus must comprise at least another Singapore Citizen or Singapore Permanent Resident. Age • Must be at least 21 years old at the time of application. Family Nucleus • Must form a proper family nucleus under one of the following schemes:
Who can buy property in Singapore? Family Nucleus • Public You, the applicant and; - your spouse, and children (if any) - your parents, and siblings (if any) - your children under your legal custody (for widowed/ divorced) Fiance/Fiancee Orphan
Who can buy property in Singapore? Household Status • First-Timer Applicants You and the essential family members listed in the application for purchase of the flat must not: • be the owners of a flat bought direct from HDB, a DBSS flat or an Executive Condominium bought from the developer • have sold a flat bought direct from HDB, a DBSS flat or an Executive Condominium bought from the developer • have received the CPF Housing Grant for the purchase of an HDB resale flat; • have enjoyed other forms of housing subsidy (for example, enjoyed benefits under the Selective En bloc Redevelopment Scheme, privatisation of HUDC estate etc).
Who can buy property in Singapore? • Second-Timer applicants You or the essential family members listed in your application have owned/sold or are currently owners of • any HDB flat that was bought from HDB • any resale flat that was bought under the CPF Housing Grant Scheme; or any apartment under Design, Build and Sell Scheme or Executive Condominum from the developer • have enjoyed other forms of housing subsidy (for example, enjoyed benefits under the Selective En bloc Redevelopment Scheme, privatisation of HUDC estate etc).
Who can buy property in Singapore? Income Ceiling • Buying a 3-room Premium, 4-room or bigger flat Your gross monthly household income must not be more than $8,000. If you are buying a flat with your extended family, your gross monthly household income must not be more than $12,000. • Buying a 3-room Your gross monthly household income must not be more than $3,000. • Buying a 2-room Your gross monthly household income must not be more than $2,000.
Who can buy property in Singapore? Ownership / Interest in Property • You, your spouse, any occupiers listed in the Application Form or their spouses must not own or dispose any other flat, house, building or land* or have an estate or interest at any time within 30 months before the date of application, or between the date of the application and the date of taking possession of the new flat.
Who can buy property in Singapore? Stamp Duty / Fee Stamp duty is a government tax payable by a buyer who buys a property in Singapore. Stamp duty payable is calculated on a scale : 1% on the first $180,000 2% on the next $180,000 and 3% thereafter CPF savings may be used to pay the stamp duty.