Singapore is built on its ability to harness globalisation and is known for business friendly. But doing business in this jurisdiction is not without its challenges, and having local help on board is crucial.
Singapore is built on its ability to harness globalisation and is known to be business friendly. The World Bank ranks Singapore second in the world for ease of doing business, thanks to its many assets which are essential in the knowledge economy. In TMF Group's 2018 Financial Complexity Index, Singapore is ranked as one of the least complex jurisdictions in Asia for accounting and tax. Competitive tax rates and a strategic location make it a preferred destination for businesses looking to expand in the Asia Pacific region.
However, doing business in Singapore is not without some challenges, and demand from global businesses is providing tough competition, as well as increasing business costs and a squeezed labour market.
Starting a Business
Starting a business in Singapore is relatively easy but keeping up with regulatory compliance is a common pitfall for many new businesses, particularly when they are not local. New businesses must register online with the Accounting and Corporate Regulatory Authority (ACRA) via BizFile+, where a name search can be conducted and filing for the company incorporation can be completed. A SingPass ID, a Singapore Personal Assess Password used for carrying out government activities online, will be required in order to log into BizFile+.
The Importance of Company Directors
Under the Companies Act, every company in Singapore is required to have at least one director who resides in the country. A local resident director who does not make sure an annual general meeting is held and the annual return is filed with the Accounting and Corporate Regulatory Authority (ACRA), may find they are non-compliant and can be summoned to court.
Complying with the Common Reporting Standard
Singapore has committed to implement the Common Reporting Standard (CRS) and the first exchange will take place by September 2018. Under CRS, new entities will be classified for CRS purposes. They are also required to keep registers of controllers and nominee directors.
Opening a Corporate Bank Account
With the implementation of global information exchange regulations, such as the Foreign Account Tax Compliance Act (FATCA) and CRS, companies which set up a bank account in Singapore can expect stricter compliance checks and Know Your Customers (KYC) requirements from the banks. They will be required to provide information regarding company shareholders and ultimate beneficial owners, depending on their CRS classifications.
Paying Taxes
Singapore has a territorial tax system and some forms of taxes are administered by the Inland Revenue Authority of Singapore (IRAS). Companies will need to register for a CorpPass or SingPass to access the IRAS or the Central Provident Board portals in order to pay taxes. Companies seeking to get a Singapore tax residency certificate may be required to pass the "management and substance" test imposed by the IRAS.
Obtaining Work Passes
Non-nationals who wish to reside and work in Singapore need a valid working pass to do so. Labour legislations imposed by the Ministry of Manpower have made it more difficult to obtain a working pass. All applications are assessed on a case by case basis. Preliminary assessment is based on the individual's academic qualifications, experience, suitability for the job, along with the sector the prospective employer operates within.
High Operating Costs
The cost of opening and running a business in Singapore is relatively higher than other Southeast Asian countries. The strong Singapore currency makes paying employees locally more expensive. Limited land supplies mean that rental costs for offices or a retail space are twice as high as in neighbouring Asian countries.
Labour Shortage
While Singapore is well-known for having the "World's Best Professional Workforce", the government's strict employment limits on foreign workers can make it difficult to bring in manpower from other countries.
Trading Across Borders
Singapore has historically acted as a global trading centre and is one of the most competitive regions in the world for trading across borders when it comes to cost. However, it is important to note that certain goods are restricted from being imported into Singapore, and require approval or a special licence from the relevant government agencies. Businesses are also required to obtain an import permit online and pay the duty or GST due at time of importation.
Culture
Singapore is a multi-ethnic society comprising of Chinese, Malay, Indian and Eurasian communities. There are four official languages: English, Mandarin, Malay and Tamil, with English being the widely spoken language for business and administration purposes.
TMF Group
We have the local knowledge to help you navigate these minefields. Whether you want to set up in Singapore or simply streamline your Singaporean operations, talk to us.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
