Singapore has a unique position in the global economy and a pivotal role as a business epicenter in the heart of Asia. The city-state has been consistently acknowledged as a global business hub – one that features developed infrastructure, political stability, open business policies, a skilled workforce, the use of English as the main working language and respect for intellectual property rights.

Global businesses will find it advantageous to site their headquarters in Singapore. Strong trade and investment make Singapore the most competitive Asian country and the world’s easiest place to do business.

Related Post: Why is Singapore is preferred by the rich and mobile?

Many multinational companies have chosen to set up their bases in Singapore, next to 154,000 small and medium enterprises. Business owners all over the world regard Singapore as an ideal location to grow their businesses, with many of them using the country as a springboard to tap into other emerging markets in Asia.

Singapore has established itself as a reputable financial and regional trading center. It is the world’s busiest port and a top location for investments in the Asia Pacific region. Factors such as strategic location, a competitive workforce, pro-business environment, and forward looking economic policies have enabled Singapore to be the world’s gateway to Asia.

Whether you are a non-resident individual, small and medium company or a multinational, opting for Singapore company incorporation will give you a launch pad to region’s other developing economies. This aside, you can benefit from Singapore’s wide network of trade agreements, ease of doing business, an attractive tax system, and sound intellectual property protection.

So what makes Singapore attractive to foreign firms?

Singapore is a unique convergence of the East and West. The social fabric consists of a mix of Asian, European and American influences making it attractive and friendly to the international business community. Since it is a former British colony, its legal and financial structures bear a close resemblance to the US and the UK. Major international banks, multinational organizations and financial institutions all over the world have established their branches in Singapore, often making the country the location of their branch office in Asia. Singapore is called the “Lion City” because of its strong currency and infrastructure which in turn makes it the best place to set up an overseas corporation.

Go Global. Incorporate in Singapore

Singapore flag

Singapore is consistently ranked highly in international surveys. Some of its most recent accolades include:

Why Singapore is preferred by foreign firms

1. Ease of Starting a Business

According to World Bank’s Doing Business 2019 report, Singapore has been consistently recognized as the world’s best place to do business in the World Bank’s annual survey of 189 economies around the world.

Compared to many countries that are considered as business hubs, it is easier and quicker to register a company in Singapore as the process takes only one day to complete given all the proper requirements are completed and the application is duly submitted. Owning a company in Singapore can set up by anyone including foreigners. An easy and fast procedure availability of an online system has been made by the incorporation where you can submit your application forms via the internet on-line.

2. Strong Legal System and High Degree of Personal Safety

Singapore has one of the most stable political environments in Asia, offering entrepreneurs and investors a strong sense of security and comfort. Its judicial system has been recognized as one of the most efficient in Asia, enforcing anti-corruption laws so that investors can conduct business without fear of bureaucratic malaise.

Moreover, through strict law enforcement, Singapore has a persistently low crime rate and offers residents a high degree of personal safety. In the event of cross-border disputes, businesses can rely on Singapore’s reputation as a world-class arbitration facility.

3. Business Friendly Ecosystem

Singapore business friendly ecosystem

Singapore’s business environment has been recognized by a long list of accolades and international rankings such as World Bank’s Doing Business Report, the World Economic Forum’s Global Competitiveness Report and Global Information Technology Report as well as Economist Intelligence Unit’s Country Forecasts Report.

These rankings are a testament to the quality of Singapore’s capabilities and infrastructure. As a result, Singapore has attracted thousands of multinational corporations (MNCs), many of which have chosen Singapore as their Asia Pacific headquarters, says Singapore’s Ministry of Trade & Industry (MTI).

4. Strategic Position and Network of Trade Agreements

Singapore Trade Agreements

Singapore is home to the world’s top players across all industries, in part, due to its location in the heart of Southeast Asia and close proximity to surrounding emerging markets. By means of Singapore, you can reach out to the other countries in Asia effectively. Air travel is also frequent with daily inbound and outbound flights thus making business operations easier and more convenient. Singapore preserves good international connection with other countries when it comes to trade and industry.

Since the signing of the first FTA under the ASEAN Free Trade Area (AFTA) in 1993, Singapore’s network of FTAs now includes 21 bilateral and regional FTAs in force and 41 Investment Guarantee Agreements. Ongoing FTA negotiations with other countries are being facilitated.

These agreements facilitate business and trading across borders and make it less costly for Singapore firms to expand their operations internationally.

5. Extensive Air Connectivity

strategic air connectivity

Singapore facilitates trade through a dynamic supply chain management as well as efficient logistics infrastructure.

As of February 2019, the Singapore Changi International Airport serves more than 100 airlines flying to some 400 cities in about 100 countries and territories worldwide. Each week, about 7,200 flights land or depart from Changi, with more than 62.2 million passengers passing through the airport a year. It is also home to many leading logistics firms such as UPS and FedEx.

6. Comprehensive Intellectual Property Protection

According to the World Economic Forum’s Global Competitiveness Report 2015 – 2016, Singapore offers the best IP protection, infrastructure and incentives in Asia. It also comes a close second in that ranking globally, next to Finland and Luxembourg, which tied in the first place.

Singapore financial centre

7. Vibrant Financial Center and Affordable Access to Funding

Singapore is a vibrant nerve center to 124 commercial banks, 365 fund managers and 531 capital markets services license holders, as of March 2016. It is not only a hub for wealth management and investments in Asia, but has the fourth largest forex trading center, the Singapore Exchange (SGX).

As a result, entrepreneurs are in good stead to have access to a combination of private and commercial banking services to fund the expansion of their business and at rates as low as 1% per annum.

8. Incentives for headquarter setup

Also, to encourage multinational companies to relocate their headquarters to Singapore, the Economic Development Board (EDB) offers regional headquarters (RHQ) and international headquarters (IHQ) incentives. Companies which are conferred the RHQ status enjoy a concessionary tax rate of 15% for qualifying income arising from headquarters activities and operations carried out from Singapore. Those awarded IHQ status enjoy even further attractive tax rates of between zero and 10%.

Regional headquarters which use Singapore as an international intellectual property (IP) holding location may claim writing-down allowance (WDA) for the cost of acquisition of the IP.

9. Foreign income exemption

Another benefit is that Singapore-based holding companies or headquarters can repatriate dividends from their directly held foreign subsidiaries to Singapore free of Singapore tax. Those whose foreign subsidiaries are engaged in substantive economic activities but are unable to meet the qualifying conditions for this tax exemption may apply for a specific exemption.

This is because Singapore adopts a territorial basis of taxation. Foreign-sourced income is taxed only when it is repatriated back into Singapore. In addition, tax is not levied on foreign-sourced dividends remitted back into Singapore if – the dividends are received from a country with a headline corporate tax rate of at least 15%, some tax was paid in that country (such as withholding tax paid on the dividends or income tax paid on the profits out of which the dividends were paid), and the exemption is beneficial to the Singapore company.

10. Attractive Personal Tax Framework

The Singapore personal tax structure is progressive. Marginal rates range from 0 – 22% and the framework allows residents to tap various reliefs, thereby lowering their effective payments. Use our Online Personal Tax Calculator to estimate your personal tax.

PERSONAL TAX RATES (FA 2020)
Chargeable IncomeRate (%)
On the first
On the next		20,000
10,000		0
2
On the first
On the next		30,000
10,000		–
3.5
On the first
On the next		40,000
40,000		–
7
On the first
On the next		80,000
40,000		–
11.5
On the first
On the next		120,000
40,000		–
15
On the first
On the next		160,000
40,000		–
18
On the first
On the next		200,000
40,000		–
19
On the first
On the next		240,000
40,000		–
19.5
On the first
On the next		280,000
40,000		–
20
On the first
In excess of		320,000
320,000		–
22

Source: IRAS

In addition, Singapore offers the Not Ordinarily Resident (NOR) Scheme. It grants a favorable five-year tax treatment for qualifying individuals working in Singapore. Such individuals are employees of a Singapore incorporated company, earn at least S$160,000 per annum and spend at least 90 days per year outside Singapore for work purposes. As such, IRAS will not tax the individual on the income of the duration spent outside Singapore for business.

11. Attractive Corporate Tax Rates

Besides its vast network of free trade and tax treaties, Singapore also offers one of the most attractive corporate tax structures in the world. Although its marginal rate is the third lowest in the world, its effective tax rate is even lower, compared to other more developed countries. The first three years the taxable income of non-resident corporations are exempted from taxes where it is considered a “zero tax” jurisdiction. Avoidance of Double Tax Agreements (DTAs) is also entered into by the Singapore government with other international jurisdictions in order to ensure the country’ financial success and prosperity.

By situating their international HQs here, companies benefit from Singapore’s network of 76 comprehensive Double Taxation Avoidance Agreements. They also gain from Singapore’s many free trade agreements and the Investment Guarantee Agreements.

Our Singapore Corporate Tax Calculator is made available online to help entrepreneurs estimate their corporate tax rates when they do business in Singapore. Use it to estimate your effective corporate tax rate.

TIMELINE OF SINGAPORE HEADLINE CORPORATE TAX RATES
1997-00200120022003-042005-062007-092010-21
26%25.5%24.5%22%20%18%17%