Why Singapore is the Favored Destination of Global Businesses?

Last modified: January 29, 2016

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The Entrepot of Aisa

However, geographically, Singapore is located on the trading routes between the new world and the old world. It straddles the major sea routes between these destinations. Singapore has taken full advantage of the Situation and has emerged as a major entrepot of the world, catering to the demands of both these worlds. As a trading economy, it provides far-reaching Air connectivity and excellent transportation infrastructure.

Singapore: A Knowledge-based Society

Singapore has no natural resources worth calling on. That is why the country has committed itself to transforming itself into a knowledge-based society. It has attracted certified and experienced professionals, managers, bankers, and CEOs from all over the world. A large percentage of these speak English fluently. The presence of the pool of these qualified professionals is a testimony to this nation’s commitment to being a knowledge-based society.

Foreign MNCs and Mid-level Businesses

The Singaporean authorities have prepared the stage for the MNCs and Mid-level foreign businesses. These corporate are interested in establishing their headquarters or regional headquarters near their consumers. Singapore’s geographical location to the Asian markets gives these entities access to Asian consumer base measuring more than 2.5 billion consumers. In addition, Singapore offers these entities with incentives for establishing their offices.

Singapore Taxation

The higher rate of taxation in their own native lands is one the reasons that make the corporate search for the affordable tax regimes. Singapore taxation system is a territorial taxation system. Only the income generated within Singapore is taxed. Singapore corporate income tax ranges from 0% to 17%. It is lower than the corporate taxes applied by most other countries.

Singapore Corporate Tax

Singapore is a great place to start a new business. It is a highly competitive market. However, Singapore looks after its own. A Singapore registered start-up gets a helping hand during its first three years of operation. It gets 100% corporate tax exemption on its initial chargeable income of S$100,000. Next, S$200,000 is taxed at 8.5% of the tax rate. Even existing companies get corporate tax rebate.

Capital Gains

This pro-business regime does not apply taxes on capital gains. This is very beneficial from the point of view of investors. After a Singapore company has paid its corporate tax, it is free to distribute dividends to its shareholders.

In Singapore, such an income comes under the capital gains and is tax-free. In addition, Singaporeans do not have to pay any inheritance or the wealth tax. The Goods and Services Tax (GST) is pegged at 7%, which is also very low as compared to the most other economies.

Double Taxation Avoidance

Singapore authorities provide for all the eventualities that the Singapore companies might face during the course of their business activities. The Double Taxation Avoidance (DTA) treaties that the Singapore has signed with more than 50 trading nations are a prime example of its preparation to support its business communities.

The DTA treaties simplify the cross-border trade for the Singapore registered companies and they have to pay taxes only once. Sometimes, these entities operate in the countries that have not signed DTAs with Singapore and have to pay the local taxes. The provisions made by the Singapore taxation system allow them to claim credits for the loss of income.

Small and Medium Enterprises (SMEs) in Singapore

Singapore is a great supporter of the Small and Medium Enterprises (SMEs) sector.

Singapore Budget 2015

Through its Budget 2015, Singapore has announced a few changes that will enable its SMEs to go out of Singapore and leave their mark in other economies.

  1. Double Tax Deduction for Internationalization Scheme
  2. IE Singapore’s Grant Schemes for SMEs
  3. International Growth Scheme (IGS)
  4. SkillsFuture Credit Scheme
  5. Productivity and Innovation Credit (PIC) Bonus Scheme

Small Company

The authorities have tried to lessen the burden of statutory compliance and the costs of compliance to these entities. These entities get audit exemption if they qualify as a small company. They qualifying conditions are as follows:

  1. Annual turnover less than S$10 million
  2. Total assets less than S$10 million
  3. Number of employees 50 or less

Singapore Company Incorporation

Singapore company incorporation is a simple and straightforward process. The local and foreign entrepreneurs can set up a company in Singapore within 1 – 3 days, provided they are ready with all the required incorporation documents.

The process does not require the physical presence of the entrepreneur and therefore, the individual can appoint one of the competent Singapore incorporation services for the task. The process has only 2 procedures; a) Company Name Approval and b) Registering New Company with Accounting and Corporate Regulatory Authority of Singapore.

As per the Singapore law, a foreigner needs to acquire a Work Permit to work in Singapore. The foreign entrepreneurs and corporate representatives need to apply and acquire either, an Employment Pass or Entrepreneur Pass (EntrePass) to work as the local resident director of the company.