If the question, “Can I start an Indian company in Singapore?”, is doing rounds in your mind, the answer is Yes! You can start or shift your business to Singapore. The entrepreneurs on starting an Indian company in Singapore, get 100% of stake-holding in the Singapore firm. But why immigrate to Singapore?
A country like Singapore is widely known for its ability to stick to rules, be free of corruption, and for having a blossoming economy. While the companies in India have to face the wrath of cronyism and corruption. Another thing that keeps Indian companies from growing is the rule of License Raj.
In this article, we will be going to brief you on the process of incorporating a business in Singapore and the various documents required for it. So, with any more delay, let’s begin.
Why Singapore is a fantastic location to incorporate a business?
Several reasons make the Singapore market a great place to incorporate a company.
Let’s go through the reasons:
- In India, the dividends are taxed, but in Singapore, there is no such rule.
- Usually, the company tax rates for the general Indian firms remain 30%, but in Singapore, a tax rate of only 17% is applied.
- The percent range of Indian GST is 5%-28%, but in Singapore, the GST is 7%.
- The capital tax lies between 15-20% in India, but in Singapore, there is no capital tax.
- As per the Global Competitiveness Report of 2020, Singapore stands on the 4th rank, and India holds the 43rd. position.
- The work ecosystem in Singapore is better and more supportive than the Indian ecosystem.
- India has rigorous restrictions regulating foreign direct investment, foreign exchange, and the import and export of particular products and machines, among other things.
- Singapore has a variety of tax treaties in place that help Singaporean businesses to prevent double taxation in nation-to-nation transactions.
- The limitations result in resource waste and lower productivity.
Singaporeans take a unique approach to entrepreneurship. Flipkart’s Singaporean venture firm was sponsored by GIC, Singapore’s wealth fund. Other businesses have profited from foreign investments as a result of their relocation to Singapore. Around 12 Indian businesses have benefited from the Joyful Frog Digital Incubator.
Venture capital firms and private equity firms are interested in investing in Indian startups settled in Singapore. This enables them to leave without having to spend capital gains taxes in India.
They additionally benefit from dividends, which lower earnings taxes. When a firm like this produces money, it can gather 15% on dividends by offering tax-free payments to the foreign or parent investor.
Indian Businesses & Holding Company
It is the job of the holding companies to purchase and keep the assets or shares of their subsidiaries and other organizations. The parent company is put at risk when the holding company uses subsidiaries. The firm’s ownership also gets distributed amongst several parties. Holding companies can protect taxes for the owners of subsidiaries, and that can be achieved through:
- Transfer pricing between the subsidiaries
- Obtaining tax incentives through a subsidiary
- Segregating tax losses or profits
- Tax residency of a subsidiary
MNC’s Investing by Singapore Subsidiaries
As you would know, in 2005, Singapore came on mutual terms with India on a bilateral tax treaty.
Any foreign shell firm that comes under the Singapore Stock Exchange, and has a yearly expense on Singapore operations, exceeding the amount of S$200,000 in the time span of 2 years, can benefit from the capital gain tax release. All of this comes under the guidelines of Limits of Benefits.
Exportation of Goods or Facilities from India
A Singapore firm with an Indian owner can operate as a reseller for the goods and/or services of its owner. It can take advantage of the India-Singapore trade deals to facilitate the exchange of goods and finances between the 2 countries.
This corporation can bill the overseas customer and send part or all of the collected amount to its Indian owner. The owner and subsidiary can reduce their taxes by optimizing transfer costs for goods, services, or maintenance fees.
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Bringing Products from Other Countries into India
An Indian importer might also establish a subsidiary in Singapore to operate as its agent and handle all operations with overseas suppliers.
Recruiting Foreign Employees for Indian Businesses
Indian companies benefit from hiring overseas leaders via a Singapore unit. They can provide new employees with a competitive after-tax take-home salary and perks package. Following that, the appointee is deputized for the Indian task.
Traveling Internationally Is Simple
If you have a work visa for Singapore and also an Indian Passport, you won’t have to face a lot of travel restrictions. The workers or owners of a Singapore unit of any Indian firm can apply for a work visa.
Handling Assets of a High-net-worth Individual
A family office is a Singapore-based corporation that handles a family’s fortune and property. It can verify that they are passed down safely from successive generations. It also oversees the property’s procurement, growth, and disposition.
A family office also can assist the family with tax and legal matters. It aids in the establishment of a revocable trust, as well as land and property handling. It can locate more affordable insurance, educational possibilities for kids, health treatment, and leisure facilities. The Global Investor Program (GIP) allows these households to get instant and permanent resident status in Singapore.
How to kickstart a firm in Singapore?
The first and foremost thing to be done by the Indian businessmen and firm-owners is to recruit authenticated filing personnel who can help them in setting up their company in Singapore. Some other requirements should be met before starting the process of company formation.
The requirements are as follows:
- Company Secretary: You would need to recruit at least 1 company secretary in Singapore. And this should be done in 6 months once the incorporation date is assigned.
- Local Director: Minimum one local director having either of the following- Singapore Permanent Resident, Singapore Citizen, or EntrePass holder
- Initial Paid-Up Capital: Minimum initial paid-up capital of S$1
- Registered Local Office Address: Another requirement is an authenticated and physical office address located in Singapore.
- Shareholder: You would need at least one shareholder for your firm and a maximum of 50
Registration of a Firm Name With ACRA
You must give your company a unique identity by providing it with a name that is trendy and also subtly defines the motive of the business. It is suggested that you register your firm name with ACRA, as it won’t bring copyright issues. Using this, your firm name would get easily registered.
Important Incorporation Documents Needed to Register the Firm
- Detailed information on business activities
- Firm name issued with ACRA
- Information details of directors, shareholders, company secretary
- The official local address of the firm
- Foreign Firms: Certificate of incorporation, Company Constitution
- Foreign Businessmen: A photocopy of their passport and evidence of housing address (overseas)
Contact ACRA to Establish a Firm in Singapore
It is advised that you contact ACRA, apply there, and submit all the mandatory papers. It is to be noted that foreigners can’t establish their Singapore firm on their own. Instead of you establishing your firm on your own, contact your hired agent, he/she can then visit the online portal, and start your Singapore company registration process online.
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Many Indian businesses seeking to grow their companies internationally are finding that incorporation in Singapore has grown to be an appealing alternative. Singapore has a number of advantages that can aid Indian businesses in growing there, including access to capital, government incentives, and a strategic location in Asia. Indian business owners can benefit from Singapore’s flourishing economy by setting up enterprises there. Additionally, Singapore provides several tax benefits to Indian business owners, including double tax treaties that prohibit paying taxes twice.
If you are an Indian business owner who wishes to set up a company in Singapore, you may get in touch with our business formation specialists at Odint Consulting. Our professionals will help you with the incorporation process and ensure that you adhere to all legal requirements.
One of the world’s most straightforward and sensible tax systems is found in Singapore. It does not impose taxes on capital gains or corporate dividends.
The capital tax rates, and GST are sky-high in India, whereas in Singapore there is no capital tax, and the GST percentage is just 7%. Plus, the work environment in Singapore is a lot better than what you will get in India.
By fulfilling the set requirements for an Indian business establishment in Singapore, and by gathering all the necessary documents, you can easily move your business to Singapore.
Due to its welcoming environment, the island has the second-most competitive economy in the world.
If you have a firm in Singapore and have an Indian owner, you can resell your services or goods, and make use of the India-Singapore trade treaties to carry forward the goods and finances exchange between the 2 nations.
- It must have at least one stakeholder
- It must have at least one local director
- A regional registered office location
- An SGD 1 minimum paid-up capital
- A resident of Singapore who serves as the company secretary
Azhar Ansari is a company formation specialist with 8+ years of expertise in international business. Financial planning, risk management, and other related areas.