At its core, an offshore company is simply a corporate vehicle that investors can utilize for a variety of purposes, think tax planning, estate, or IP holding.
Throughout the years, the offshore world has experienced exponential growth, but the journey has been anything but smooth sailing. Curtailed by multiple international crackdowns and a slew of anti-money laundering and corporate transparency policies, once highly acclaimed jurisdictions are now making comprises in order to adapt.
Therefore, the focus is now on finding a jurisdiction that has a forward-thinking approach to rulemaking while retaining its business-friendly nature. And Singapore fits the description perfectly.
1. Reasons to set up an offshore company in Singapore
Singapore remains top of mind for many investors for its strategic location, highly-skilled labor force, and legislative system that puts the business in high priority. However, we’d like to present a further exploration into the intricacies of these aspects to show you just how much affinity this country has with entrepreneurs.
1.1. Tax-friendly environment
Doing business in Singapore gives you the foremost advantage of getting a flat 17% corporate tax rate, applicable for revenues derived or accrued from or remitted to Singapore.
This mechanism ensures that offshore companies can avoid double taxation in cases where they need to distribute dividends to shareholders as the income has already been taxed. As a result, an offshore company in Singapore would actually accrue less tax compared to other countries that lack this particular tax feature.
In addition, lots of tax exemption opportunities also exist for an offshore company if the right conditions are met.
The requisite of which is the tax residency status of the said company, i.e. where the business is controlled and managed. To further illustrate, if a Singapore company has maintained its control and management for the entire 2020 Year of Assessment (YA), then it is considered a tax resident for YA 2021 as well.
1.2. Liberal corporate regulations
It’s not by chance that Singapore is a place highly regarded as the destination for business startups. If you look at the list of the easiest countries to do business in, Singapore is always a prime contender, consistently making second place on The World Bank.
A stable political climate, highly capable corporate regulatory agencies and not to mention quick setup time allow it to be a highly coveted place in investors’ eyes.
1.3. Strong emphasis on fintech
Singapore is also one of the top fintech hubs in the world, with many initiatives being made by the government to facilitate its growth. A staple in its overall economy, fintech has also received massive fundings thanks to investors’ renewed fascination in midst of a global pandemic.
To name a few, Proof of Concept (POC) grants, (FTSI I & FTSI 2) business incubating infrastructures are some of the initiatives essential toward creating a flourishing fintech start-up ecosystem.
As for the current scale of the current fintech economy, Singapore is now home to +4000 tech startups working in tandem with 184 accelerators, incubators, and other intermediaries (venture capital firms).
But the glue that holds all of this entire structure together is undoubtedly the MAS-backed regulatory sandbox in which new and thriving fintech startups can freely experiment with innovative ideas in a controlled environment. As such, the island nation holds great potential for offshore companies in the finance sector.
2.How to set up one
Setting up an offshore company in Singapore depends on whether or not you’re a local as foreigners are required to incorporate their company through a registered agent. But apart from this difference, the process is relatively similar as shown in the following steps:
Step 1: Choose a name
The Singapore Accounting and Corporate Regulatory Authority (ACRA) has certain guidelines in terms of naming a business entity. Generally, the name must not
- Be obscene or offensive towards a certain religious group or organization
- Be similar or, under professionally conducted examination, bear too much resemblance to an already existing and reserved business name
- Be prohibited by the Order of the Minister for Finance. At the time of writing, the word “Temasek” is not accepted.
Note that these are just the most general guidelines by which most business entities in Singapore will have to abide. For a more exhaustive outlook on the matter, visit ACRA for more.
Step 2: Contact a Registered Agent
Foreigners will have to enlist company formation services from a trusted corporate service provider if they want to form an offshore company in Singapore. Note that on top of paying government fees, you will be incurring additional service charges.
Prior to sending your application to ACRA through BizFile+, you will need to send your registered agent the following information typically required when registering an offshore company in Singapore:
- The name of your company
- Brief description of business activities
- Shareholders’ information
- Directors’ information
- The registered address of the company (cannot be a P.O box)
- Company secretary’s particulars
- The Company constitution
* Depending on what registered agent you’re going with, the amount of required documentation might vary. Therefore, it’s always advisable to go through the Know Your Customer (KYC) procedures with your agent first before committing to a purchase.
Step 3: Register your offshore company
Since the entire company formation process is digitalized, you can expect the completion time to fall within just 24 hours. Simply sign in to BizFile+ and fill out the required information, this step will be assigned to the registered agent if you’re a foreigner.
You should be nearing the end of the journey at this point as the only thing left to do now is to wait for the certificate of incorporation to arrive in your email. In addition, a company profile will also be attached containing essential information about your company.
3. Conclusion
With all the above-mentioned facts, forming an offshore company in Singapore is the right move if you want to future-proof your business in today’s fast-paced world. The country’s strong dedication towards digitalization of its core economic sectors as well as the favorable corporate tax treatment promises a bright future for international investors.
