Rules & Regulations To Follow While Establishing a Foreign Company in Singapore

Singapore continues to be one of the most attractive destinations for global business, thanks to its strategic location, pro-business environment, and robust legal framework. For many entrepreneurs worldwide, establishing a foreign company in Singapore represents an opportunity to tap into a vibrant economy with ease. However, the process comes with its own set of rules and regulations that every investor must navigate. This guide provides a comprehensive overview of these regulations and offers practical insights to ensure a seamless setup.  

1. Understanding the Business Environment in Singapore  

Before diving into the process of foreign company establishment in Singapore, it is crucial to understand the local business environment. Singapore is consistently ranked among the top countries for ease of doing business. According to the World Bank, Singapore ranks 2nd globally for business-friendly regulations. This favorable ranking is a direct result of transparent policies, efficient administrative procedures, and low levels of corruption. For foreign investors, such an environment means reduced bureaucratic delays and increased confidence in the legal system.  

2. Choosing the Right Business Structure  

Foreign entrepreneurs have a few options when it comes to setting up their business in Singapore. The most common structures include:  

• Subsidiary Company: A private limited company that is a separate legal entity from the parent company, offering limited liability protection.  

• Branch Office: An extension of the parent company, which is not a separate legal entity. This option is suitable for businesses aiming to test the market without a full incorporation.  

• Representative Office: Typically used for market research or promotional activities, this setup is not allowed to generate revenue.  

Each structure has its benefits and drawbacks, so it’s important to assess your business goals and requirements before making a decision.  

  

3. Registration Process & Compliance  

The registration process in Singapore is streamlined and highly efficient. The process begins with the approval of the company name by the Accounting and Corporate Regulatory Authority (ACRA). The name must be unique and not infringe on any trademarks. Once approved, the business must comply with several key requirements:  

• Appointment of Directors: A minimum of one resident director is required for a company registered in Singapore.  

• Company Secretary: A qualified company secretary must be appointed within six months of incorporation.  

• Registered Office: The company must have a physical address in Singapore, which serves as its official location for correspondence and legal notices.  

These steps are designed to ensure transparency and accountability when operating a Singapore corporation.  

4. Cost of Incorporating a Singapore Company  

Understanding the cost of incorporating a Singapore company is critical for budgeting and planning. While Singapore offers a cost-effective environment for business setup, there are several fees to consider:  

• Name Approval Fee: Typically around SGD 15.  

• Incorporation Fee: Approximately SGD 300.  

• Corporate Bank Account Setup: Fees vary by bank.  

• Office Rental: Costs can range from SGD 2,000 to SGD 5,000 per month, depending on the location and size of the space.  

Additional costs may include legal fees, professional services, and expenses related to licensing or permits. Overall, the transparent fee structure and predictable costs make Singapore an attractive destination for business registration.  

5. Navigating the Tax & Regulatory Landscape  

One of the major attractions for establishing a foreign company in Singapore is its competitive tax regime. Key highlights include:  

• Corporate Tax Rate: A flat rate of 17%, which is among the lowest in the world.  

• Partial Tax Exemption: The first SGD 10,000 of chargeable income is 75% tax-exempt, and the subsequent SGD 190,000 is 50% exempt.  

• Goods & Services Tax (GST): Set at 9% as of 2024, applicable for companies with annual revenues exceeding SGD 1 million.  

Furthermore, Singapore's commitment to transparency and efficiency means that companies must file annual tax returns and comply with stringent financial reporting regulations as dictated by ACRA and the Inland Revenue Authority of Singapore (IRAS). The government's emphasis on strict compliance has resulted in a high level of trust among foreign investors.  

6. Securing Work Visas & Adhering to Employment Regulations  

When it comes to operating a Singapore corporation, one of the most critical aspects is ensuring that the company complies with employment laws and visa regulations. Singapore offers various types of work visas tailored to different business needs, such as:  

• Employment Pass (EP): For skilled professionals earning at least SGD 5,000 per month. This pass allows companies to hire foreign talent.  

• EntrePass: Specifically designed for entrepreneurs looking to start innovative businesses in Singapore.  

• Dependent Pass (DP): Available for family members of Employment Pass holders.  

In addition to securing the appropriate visas, companies must adhere to the Employment Act, which ensures fair labor practices and sets standards for working conditions. The Singapore Ministry of Manpower regularly updates these regulations, ensuring that businesses provide adequate employee benefits and adhere to labor laws. This strong regulatory framework is a key factor for foreign companies that wish to ensure both compliance and employee satisfaction.  

7. How to Establish a Local Corporation in Singapore for Foreigners  

For foreign investors wondering how to establish a local corporation in Singapore for foreigners, the process is straightforward but requires careful attention to detail. Here are the primary steps:  

1. Determine the Business Structure: Decide whether you want to set up a subsidiary, branch office, or representative office based on your business needs.  

2. Reserve a Company Name: Submit your chosen company name to ACRA for approval.  

3. Prepare the Necessary Documentation: This includes the company's constitution, details of directors, shareholders, and the registered office.  

4. Appoint a Local Director and Company Secretary: As required by Singapore law.  

5. Register with ACRA: Once all documents are in order, the company can be incorporated.  

6. Open a Corporate Bank Account: Set up a bank account with a local bank, which is a critical step for financial operations.  

7. Obtain Business Licenses and Permits: Depending on your industry, additional licenses may be required.  

8. Ensure Ongoing Compliance: Regularly update ACRA with any changes in company structure, management, or operations, and file annual returns and tax documents.  

By following these steps, foreign investors can enjoy a smooth transition into the Singaporean market, leveraging the country's robust infrastructure and supportive government policies.  

8. The Statistics Behind Singapore's Business Success  

Statistics underscore the effectiveness of Singapore's regulatory framework. For instance, the World Bank's Ease of Doing Business Report places Singapore in the top three worldwide. Additionally, over 60% of the Fortune Global 500 companies have established a regional headquarters in Singapore, a testament to its stable economic environment. Furthermore, in recent years, Singapore has seen a steady 3-5% annual growth in new business registrations, indicating sustained investor confidence.  

  

Conclusion: How Mirr Asia Can Help  

Navigating the intricate regulations of foreign company establishment in Singapore can be challenging. From understanding the cost of incorporating a Singapore company to managing the nuances of operating a Singapore corporation and learning how to establish a local corporation in Singapore for foreigners, every step requires careful planning and expert advice. This is where Mirr Asia comes in.  

Mirr Asia specializes in providing end-to-end solutions tailored to your business needs. Our team of experts will guide you through every stage—from initial consultation and company registration to tax compliance and securing the necessary work visas. With Mirr Asia's assistance, you can confidently navigate the regulatory landscape and focus on growing your business in Singapore.