A Practical Guide to Setting Up an Offshore Company in Singapore
Embark on a seamless journey towards incorporating your offshore company in Singapore with our comprehensive and practical step-by-step guide. From selecting the right company name to engaging a registered filing agent, we’ll walk you through each stage, making the entire process efficient and stress-free.
What Is an Offshore Company?
As the term “offshore” implies, an offshore company can be defined as a company that is incorporated outside of the country where it primarily operates or where its principals and investors are located. An offshore jurisdiction is often an attractive place for foreign company incorporation because of the benefits it provides in terms of tax relief, economic stability, business-friendly culture, growth opportunities, and more. For example, a company can be incorporated in the jurisdiction of Singapore and have its main location of operations in another jurisdiction like the United States.
Now that we have taken a general look at what an offshore company entails, let’s dive into why Singapore is often considered one of the top locations for entrepreneurs to register an offshore company.
Benefits of Incorporating an Offshore Company in Singapore
It’s no doubt that Singapore is often one of the main countries prospective business owners think of to start an offshore business. In fact, according to the World Citizenship Report, Singapore was ranked first for the best place to do business in the world in 2022. Why? Because of the wide spectrum of opportunities and benefits it provides to companies. Amongst the several of these advantages, we have compiled a list of the ones that play the biggest role in the success of offshore companies.
Favorable Tax System and Schemes
The Lion City is widely known for its focus on creating favorable tax incentives, which have become a key driving point for entrepreneurs looking to set up an offshore company. Here are the primary advantages they provide:
- Corporate tax rate capped at 17%: Singapore has a 17% flat corporate tax for businesses with profits greater than S$300,000, and approximately 8.5% for those with a maximum of S$300,000 in profit. In fact, Singapore’s corporate tax rate is amongst the lowest in the world.
- Territorial tax system: Foreign-sourced income is only taxed once remitted to Singapore and if it has not already been taxed by an overseas jurisdiction.
- Single-tier tax system: Singapore imposes no taxes on capital gains, dividends, or inheritance.
- Tax exemption scheme for new start-ups: For three consecutive years of assessment, qualifying companies receive 75% tax exemption on the initial S$100,000 of chargeable income and 50% on the next S$100,000.
- Partial tax exemption (PTE) scheme for all other companies registered in Singapore: Qualifying companies (all companies are eligible) receive 75% tax exemptions on the initial $S10,000 of chargeable income and 50% on the next S$190,000.
Streamlined Offshore Company Incorporation
If you were under the impression that you had to travel to Singapore or even step away from your laptop to incorporate an offshore company in Singapore, then we have some great news for you – the entire incorporation process is done digitally. In fact, it’s a very straightforward process that only has a few requirements, including the approval of the company name and the submission of the company’s details over the Internet to the Accounting and Regulatory Authority of Singapore (ACRA) – the government entity overseeing the corporate regulations in Singapore. In most scenarios, it takes 1-2 days for an offshore company to be incorporated in Singapore, including the compliance checks performed by the incorporation agents on the foreign company founders and their documents. At Intracorp, company incorporation is at the center of our services, so reach out to us today to get started.
Political and Economic Stability
Singapore is often considered one of Asia’s most politically stable countries and least bureaucratic countries. This stability translates to the economic growth of the city-state because it allows the government to focus on regulatory bodies such as ACRA and the Inland Revenue Authority of Singapore (IRAS) to put measures in place for businesses and individuals, creating a pro-business environment for company owners looking to thrive in Singapore.
Sophisticated Banking Facilities
When looking to register an offshore company in Singapore, opening a corporate bank account is essential for the efficient management and growth of your business. Thus, it’s important to know that Singapore is one of the leading financial hubs, meaning that there are numerous banking options – such as major regional banks like DBS, UOB, and OCBC and international banks like Citibank, Standard Chartered Bank, and HSBC – that provide a wide spectrum of necessary banking features including multi-currency accounts, debit and credit cards, moving funds, trade financing, internet banking, and more. There are also a handful of new digital banks which provide lower fees and greater convenience – such as Anext Bank, Aspire, Fazz, Wise, and many others.
But, if you are concerned about how you can open a bank account in Singapore, know that although most banks require you to be in person to open a bank account, there are options that allow you to streamline the process remotely. Our Intracorp team of experts is here to aid you in the bank account opening process so that you can focus on other aspects of your company’s initial stage of growth.
How to Set Up an Offshore Company in Singapore
It’s important to note that Singapore law does not allow foreigners to directly apply for either company name approval or any aspect of the incorporation process. Instead, ACRA states that you need to seek the assistance of incorporation services such as those we provide at Intracorp in order to get started with the registration process.
Let’s now take a comprehensive look at the detailed steps and practical knowledge you need to understand to successfully set up an offshore company in Singapore.
6 Steps to Register an Offshore Company in Singapore
When it comes to company formation, there is normally a great deal of pre-planning involved. By the time you are ready to incorporate, you probably already have a good idea about your company name and its composition including the size of paid-up capital, allocation of shares between the members (shareholders) and appointment of directors. Some steps listed below should be made concurrently as they are all necessary in order to proceed to the next stage and complete the company registration.
Choose a Company Structure and Assign the Roles
The first step in setting up an offshore company is to determine the most suitable company structure and identify the company’s shareholders and directors. There are several company structures available, including a private limited company, a sole proprietorship, a limited liability partnership, or a branch office. For most businesses, establishing a private limited company in Singapore is the preferred choice for setting up an offshore company as it provides limited liability protection to shareholders, allows for easy transfer of shares, and offers tax incentives and exemptions.
To learn more about which structure is best fit for your business, check out our article on the types of business structures in Singapore.
Concurrently to deciding the company’s structure, you need to determine the shareholders and directors. Make sure to select individuals who are trustworthy and have the necessary qualifications and experience to fulfill their roles effectively.
At this stage of the process, all you have to do is keep this information at hand and have it ready for the following steps.
Decide on Company Name(s)
This is one of the earliest considerations in the process of company formation. We suggest that you prepare at least three variations of the name before continuing to the next stage because the desired name can be already taken.
If you want to ensure that your chosen company name(s) is not an exact or similar match to already registered names, you can visit the official Bizfile website and enter your proposed name(s) in the search bar located at the top. Once you click the ‘Search’ button, all matches (if any) for your company name will be displayed. If there is no name very similar to your proposed company’s name, you will not experience a delay in the filing stage.
There are some general requirements from ACRA – the regulatory authority with the power of approving company names in Singapore – which include the following:
- The name must not match or be similar to existing company names.
- The name must not contain offensive or reserved words.
- The name must not contain words that signify a connection to a Singapore government agency.
A complete list of requirements and recommendations on how to choose a name for the company and avoid clashing with other company names can be found here.
Engage a Registered Filing Agent (RFA)
As we discussed previously, foreigners looking to establish an offshore company in Singapore are required to engage the services of a registered filing agent (RFA) – an individual or entity that carries out transactions through ACRA on behalf of clients – such as those provided at Intracorp to complete the required applications of the incorporation process on your behalf.
And so, the next step you have to take is to engage the services of an RFA, to whom you can provide the information you have prepared in terms of company structure, shareholders, directors, and possible name(s) to streamline the incorporation process.
Our registered filing agent services at Intracorp provide comprehensive guidance throughout the entire incorporation process so that your company can get up and running in just a matter of days.
Company Name Approval
The next steps of the process are primarily in the hands of the registered filing agent, who in most cases will begin by submitting the company name approval application along with the initial company details through BizFile to reserve your chosen company name.
If the company name and the additional information you have provided are in accordance with ACRA’s guidelines, the name registration will be approved instantly. In some cases, where the company name must be checked with other authorities, it may take several days for the approval to be received – there will be an email notification. This usually takes 5-7 working days, although ACRA states that this process may take from 14 days to 60 days.
After the name has been approved, the company can be registered instantaneously or not later than within the next 120 days, after which the name or it will be released from your reservation and will be available for registration once again.
Provide Documentation
Once you have successfully registered the name for your company, you will need to provide a full set of information and documentation that your registered filing agent will submit through BizFile on your behalf. Below we have assembled a list of the necessary details along with important requirements that must be satisfied for each.
Details of Directors
- Your company is required to have a minimum of one local resident director (must be a Singapore permanent resident, citizen, or work pass holder)
- You can appoint as many local or foreign directors as necessary
- If you do not have a local resident director, you can get the help of a nominee director that we can provide with our incorporation services at Intracorp
Details of Shareholders
- Your company is required to have a minimum of one shareholder, who can be local or foreign.
- A shareholder can be an entity or an individual
- The shareholder and the director can be the same individual
- There can be a maximum of 50 shareholders for a private company
Details of Secretary
- Your company is required to have a company secretary
- The secretary must be an individual and not an entity
- If you are in need of company secretary services, we can provide them for you at Intracorp
Registered Address
- Your company must have a local registered address in Singapore (residential or commercial)
- The registered address cannot be a PO box
- If you don’t have any suitable address in Singapore for your company, such registered address may be provided by your registration agent
Paid-up Capital
- A minimum paid-up capital of S$1 is required to incorporate your company. The actual size of the capital depends on the company’s plans and financial needs.
Additional Required Documents
- Copies of the shareholders’ and directors’ passports
- Proof of the shareholders’ and directors’ residential address
- Contact details including phone numbers and emails
- Information about the parent company if the shareholder is an entity
Sign Post-incorporation Documents
Once your registered filing agent has submitted all the required information on your behalf, it will provide you with a variety of post-incorporation documents that you are required to sign in accordance with ACRA, such as the Directors’ Resolution and Register of Registrable Controllers (RORC).
And that’s it! At this point, you have officially set up an offshore company in Singapore.
Steps to Take After Setting Up a Singapore Offshore Company
Once you incorporate your offshore company, there are several steps that you need to take to ensure that it is ready to operate and compliant with regulations.
Open a Corporate Bank Account
Opening a corporate bank account is one of the first steps that you need to take after setting up your Singapore offshore company. There are multiple options for traditional and online bank accounts for Singapore companies, which we describe in our article Singapore Banks: Everything You Need to Know in 2023.
Register for Goods and Service Tax (GST)
If your Singapore offshore company is engaged in the supply of goods and services in Singapore, you may need to register for Goods and Service Tax (GST), which is a tax on the consumption of goods and services in Singapore. The current GST rate in Singapore is 8%. GST registration is mandatory if your annual taxable turnover exceeds S$1 million, and voluntary if your annual taxable turnover is below S$1 million.
Obtain Licenses and Permits
Depending on the nature of your business activities, you may need to obtain licenses and permits from relevant authorities in Singapore. Licenses and permits are required for certain business activities, such as food and beverage, financial services, construction, manufacturing, medical services, and others.
Get Started with Intracorp
Intracorp is a provider of corporate services for all types and sizes of companies. Our team of experts has incorporated hundreds of offshore companies in Singapore and has assisted with every step of the process, whether that is applying for company name approval, providing company secretary services, opening corporate bank accounts – you name it. Everything you are looking for to get started with the formation of your offshore company is here at Intracorp. Contact us today to get started!
