Doing Business in Singapore - Nexia TS
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Doing Business in Singapore
Doing Business in Singapore Contents Foreword ......................................................................................................................... 4 Nexia International ............................................................................................................................. 5 Chapter 1 - Introducing Singapore..................................................................................... 6 Geography and Climate ...................................................................................................................... 6 Political System ................................................................................................................................... 6 Legal System ....................................................................................................................................... 6 Population ........................................................................................................................................... 6 Language ............................................................................................................................................. 6 Economy.............................................................................................................................................. 7 Currency .............................................................................................................................................. 8 Business Hours .................................................................................................................................... 9 Public Holidays .................................................................................................................................... 9 Additional Information: Singapore’s History ...................................................................................... 9 Additional Information: Infrastructure ............................................................................................... 9 Chapter 2 - Government Policies and Business Regulatory Environment.......................... 11 Introduction ...................................................................................................................................... 11 Business Regulations......................................................................................................................... 11 Bank Accounts ................................................................................................................................... 12 Copyright and Intellectual property (IP) ........................................................................................... 13 Privacy ............................................................................................................................................... 13 Mergers and Monopolies.................................................................................................................. 13 Import and Export Controls .............................................................................................................. 13 Consumer Protection ........................................................................................................................ 14 Environment, Pollution and Waste Management ............................................................................ 14 Chapter 3 - Banking and Finance ..................................................................................... 15 Introduction ...................................................................................................................................... 15 The Banking System .......................................................................................................................... 15 Sources of Funds for Businesses ....................................................................................................... 16 Currency Exchange Control ............................................................................................................... 16 Other Financial and Investment Institutions .................................................................................... 16 Singapore Exchange Limited (SGX) ................................................................................................... 17 Additional Information: Asian Dollar Market ................................................................................... 18 Chapter 4 - Business Entities ........................................................................................... 19 Introduction ...................................................................................................................................... 19 Companies ........................................................................................................................................ 20 Business Trusts .................................................................................................................................. 20 Chapter 5 - Company Formations and Administration ..................................................... 21 Forming a Company .......................................................................................................................... 21 Directors............................................................................................................................................ 21 © 2018 Nexia TS. All rights reserved. 1
Doing Business in Singapore Type of Directors ............................................................................................................................... 21 Duties of Directors ............................................................................................................................ 22 Shareholders’ Meetings .................................................................................................................... 23 Striking Off ........................................................................................................................................ 23 Liquidations ....................................................................................................................................... 23 Administrative Receivership ............................................................................................................. 24 Chapter 6 - Financial Reporting and Audit Requirements................................................. 25 Reporting and Audit Requirements .................................................................................................. 25 Statutory Requirements.................................................................................................................... 26 Chapter 7 - Company Taxation ........................................................................................ 28 Introduction ...................................................................................................................................... 28 Company Taxation ............................................................................................................................ 28 Resident Companies ......................................................................................................................... 29 Non-Resident Companies ................................................................................................................. 30 Tax Returns and Assessment ............................................................................................................ 30 Profits Subject to Tax ........................................................................................................................ 31 Employee Taxes ................................................................................................................................ 31 Calculating Trading Profits ................................................................................................................ 31 Interest Deduction ............................................................................................................................ 32 Capital Assets .................................................................................................................................... 33 Double Taxation Relief ...................................................................................................................... 34 Withholding Tax ................................................................................................................................ 34 Capital Gains Tax (CGT) ..................................................................................................................... 35 Use of Tax Losses .............................................................................................................................. 35 General Anti-Avoidance Provision .................................................................................................... 36 Transfer Pricing ................................................................................................................................. 36 Planning Points for Foreign Investors ............................................................................................... 36 Chapter 8 - Personal Taxation ......................................................................................... 38 Residents and Non-Residents ........................................................................................................... 38 Income Tax ........................................................................................................................................ 38 Capital Gains Tax (CGT) ..................................................................................................................... 39 Personal Tax Rates ............................................................................................................................ 39 Temporary Residents ........................................................................................................................ 40 Other Rates ....................................................................................................................................... 40 Calculating Taxable Income .............................................................................................................. 41 Employee Share Scheme................................................................................................................... 41 Deductions ........................................................................................................................................ 42 Additional Information: Income Tax Administration ........................................................................ 43 Chapter 9 Labour Regulations, Welfare and Social Security ............................................. 44 Introduction: ..................................................................................................................................... 44 Employment and Labour Standards.................................................................................................. 44 Other Employment and Industrial Relations Information ................................................................ 45 Statutory Board Contributions - Central Provident Fund (CPF) ........................................................ 46 Work Injury Compensation Act (WICA) ............................................................................................ 47 © 2018 Nexia TS. All rights reserved. 2
Doing Business in Singapore Chapter 10 - Indirect Taxes ............................................................................................. 48 Introduction ...................................................................................................................................... 48 GST Registration ................................................................................................................................ 48 Types of Supplies .............................................................................................................................. 49 Charging GST on the Supply of Goods and Services in Singapore .................................................... 49 Charging GST on the Importation of Goods into Singapore ............................................................. 50 Claiming of Input Tax ........................................................................................................................ 50 Accounting for Indirect Taxes ........................................................................................................... 50 Other Taxes ....................................................................................................................................... 51 Additional Information...................................................................................................................... 51 Contact Details ............................................................................................................... 52 © 2018 Nexia TS. All rights reserved. 3
Doing Business in Singapore
Foreword
About Nexia TS
Nexia TS is recognised as an established mid-tier local accounting firm. We have grown significantly in
size over the years. Being an independent member firm of Nexia International, we are affiliated to
accounting firms in many parts of the world. This means that our clients will get to enjoy personalised,
comprehensive and good services at competitive rates in Singapore and globally. Our desire for quality
has been recognised by clients and the accounting profession. As testimony to this, we are among the
first local accounting firms to be accredited by the Institute of Chartered Accountants in Australia,
Institute of Chartered Accountants in England & Wales and Singapore Accountancy Commission –
Singapore Qualification Programmes (Singapore QP) to provide the supervision of professionals
undergoing traineeship to qualify as Chartered Accountants.
The Nexia TS group of companies comprises mainly Nexia TS Pte Ltd, Nexia TS Public Accounting
Corporation, Nexia TS Tax Services Pte Ltd, Nexia TS Risk Advisory Pte Ltd, Nexia TS Advisory Pte Ltd,
Nexia TS Technology Pte Ltd, Nexia TS (Shanghai) Co. Ltd., NTS Asia Advisory Sdn Bhd (“NTS Malaysia”)
and NTS Myanmar Co. Ltd (“NTS Myanmar”).
Our Service Portfolio
We believe that we must continually evolve and augment our skills to protect your business interests.
We are continually expanding our range of services in tune with your changing business needs. We serve
you with:
Tax Compliance & Advisory Services
Assurance & IPO Reporting Auditors Services
Risk Advisory Services
Valuation & Transaction Services
M&A Advisory
Financial Advisory, Insolvency & Restructuring
Accounting, Outsourcing & Corporate Services
Forensic & Litigation Support Services
Cybersecurity & Technology Advisory Services
Data Analytics Services
Sustainability Reporting
Business Advisory in China, Iskandar Malaysia & Myanmar
Disclaimer
We have taken great care to ensure the accuracy of this publication. However, Professional advice should
be obtained before acting or refraining from acting on the contents of this publication. No responsibility
can be taken for any loss arising from action taken or refrained from on the basis of this publication.
Readers are advised to seek professional advice before acting on any of the above.
All rights reserved. No part of this work may be reproduced or copied in any form or by any means without
the written permission of Nexia TS. © Nexia TS Singapore 2018
4Doing Business in Singapore
Nexia International
Nexia TS is a member of the “Nexia International” network (Nexia). Nexia is a leading global network of
independent accounting and consulting firms. When you choose a Nexia firm, you get a more responsive,
more personal, partner-led service, across the world. Nexia is a highly active network that drives quality
and facilitates collaboration to enable its member firms to provide effective local and global solutions.
Nexia member firms deliver a partner-led service to clients which ensures continuity, expertise and a
deep understanding of the client’s business. They are characterised by people who have an
entrepreneurial spirit and who can relate closely to the SME and owner-managed businesses. Nexia firms
are focused on supporting local businesses as they grow and through the Nexia network, they can also
help their clients confidently venture into new international markets.
Nexia International Limited, a company registered in the Isle of Man which operates the Nexia
International network, does not deliver services in its own name or otherwise. Nexia International Limited
and the member firms of the Nexia International network (including those members which trade under
a name which includes the word NEXIA) are not part of a worldwide partnership. Nexia International
Limited does not accept any responsibility for the commission of any act, or omission to act by, or the
liabilities of, any of its members. Each member firm within the Nexia International network is a separate
legal entity. The trademarks NEXIA INTERNATIONAL, NEXIA and the NEXIA logo are owned by Nexia
International Limited and used under licence.
References to Nexia or Nexia International are to Nexia International Limited or to the “Nexia
International” network of firms, as the context may dictate. For more information, visit www.nexia.com.
5Doing Business in Singapore
Chapter 1 - Introducing Singapore
Geography and Climate
The Republic of Singapore consists of one main island and 63 offshore islands. It has a total land area of
719.9 square kilometers. Singapore is located in the heart of South East Asia and at the crossroads of
main international trade routes. Being approximately 137 kilometers north of the equator, Singapore’s
climate throughout the year is warm and humid, moderated by sea breezes. The temperature ranges
between 25°C and 31°C. The cooler months are December and January during the Northeast Monsoon
season. This period records the heaviest rainfall.
Political System
Singapore political system takes the form of a parliamentary representative democratic republic where
the President of Singapore is the head of state, the Prime Minister is the head of government and of a
multi-party system. Executive power is exercised by the cabinet from the parliament, and to a lesser
extent, the President. The Cabinet has the general direction and control of the Government and is
accountable to the Parliament. There are three separate branches of government: the
legislature/parliament, executive and judiciary.
Legal System
Singapore is a republic with a parliamentary system of Government. Singapore sources of law are derived
from their Constitution, Legislation and subsidiary legislation and judge-made law 1. The Constitution lays
down the basic framework for the three organs of state, namely, the Executive, the Legislature, and the
Judiciary. The Executive includes the Elected President, the Cabinet and the Attorney General. The
Legislature consists of the President and Parliament while the Judiciary comprises of the Supreme Court
and the State of Courts.
Population
Singapore’s multi-racial population of approximately 5.6 million people comprises of four major ethnic
groups - Chinese (74.3%), Malays (13.4%), Indians (9.1%) and Others (3.2%). As people are its richest
resource, Singapore invests heavily on education. The Singapore government allocates more than 20% of
its annual expenditure to education. Singapore’s literacy rate is among the highest in Asia. The general
literacy rate of the population aged 15 years and above is 97% as of 2016.
Language
Singapore’s four official languages are Malay, Chinese (Mandarin), Tamil and English. English is the
language of administration and commerce while Malay is the national language.
1
https://www.mlaw.gov.sg/our-legal-system.html
6Doing Business in Singapore
Economy
Singapore has a highly developed free-market economy. In 2017, Singapore recorded a Gross Domestic
Profit (GDP) of S$422,679 million. Singapore’s GDP growth, at an average of 7.7%, has been amongst the
world’s highest. Singapore’s strong economic success can be attributed to the corruption-free business
environment, prudent monetary and fiscal policies and transparent legal framework. Trade plays an
important role to the Singapore economy. The Republic is amongst the top two most competitive
countries in the world according to The Global Competitiveness Report 2016-2017, World
Economic Forum.
Singapore’s Gross Domestic Profits, At 2010 Market Prices, By Industry
Variables
2012 2013 2014 2015 2016 2017
(in millions of dollars)
Gross Domestic Product (GDP) 356,832.1 375,070.1 389,637.4 398,369.4 407,918.4 422,679.1
Goods Producing Industries 92,162.5 93,965.9 97,308.8 94,671.8 97,717.7 103,312
Manufacturing 70,342.3 71,517.4 73,436.8 69,671.2 72,249.4 79,525.9
Construction 16,655.2 17,162.7 18,462.2 19,536.5 19,914.5 18,241.7
Utilities 5,039.7 5,154.9 5,269.4 5,333.5 5,425.1 5,426.5
Other Goods Industries 125.3 130.9 140.4 130.6 128.7 117.9
Services Producing Industries 234,729.1 251,965.4 262,770.8 272,029.5 275,973.4 283,683.9
Wholesale & Retail Trade 66,402.3 70,998.4 73,112.6 75,775.9 76,514.3 78,288.5
Transportation & Storage 28,016.2 29,156.6 30,058.9 30,627.1 31,022.9 32,498.3
Accommodation & Food
Services 6,722.8 6,949.3 7,141.8 7,151.4 7,423.4 7,513.8
Information & Communications 12,987.7 14,027.5 15,087.6 14,906 15,444.9 15,961.7
Finance & Insurance 38,209.3 44,934.3 49,124.1 51,735.4 52,557.1 55,053.9
Business Services 47,491.8 50,245 51,230.6 54,019.2 53,861.4 54,203.7
Other Services Industries 34,899 35,654.3 37,015.2 37,814.5 39,149.4 40,164
Ownership Of Dwellings 11,928.5 12,229.9 12,680 13,300.7 14,009.6 14,683.9
Gross Value Added At Basic
Prices 338,820.1 358,161.2 372,759.6 380,002 387,700.7 401,679.8
Add: Taxes On Products 18,012 16,908.9 16,877.8 18,367.4 20,217.7 20,999.3
7Doing Business in Singapore
Singapore’s GDP Composition by Industry
Singapore’s core industries
Singapore’s core industries lie in electronics, chemicals, financial services, oil drilling equipment,
petroleum refining, rubber processing and products, processed food and beverages, ship repair, offshore
platform construction, life sciences, and entrepôt trade.
Free trade and other agreements
Singapore has extensive trade links, providing companies with greater market connectivity. Singapore
currently has the most extensive network of free trade agreements (FTAs) in Asia. FTAs have been signed
with key economies such as the United States of America, Japan, Australia, New Zealand, members of the
European Free Trade Association, Jordan, China, Chile, South Korea, India and Panama. In addition,
Singapore has signed 36 investment guarantee agreements (IGAs), designed to help protect investments
made by Singapore-based companies in other countries against non-commercial risks.
Currency
The official currency of Singapore is the Singapore Dollar (S$). The Central Bank of Singapore, Monetary
Authority of Singapore (MAS) issues all Singapore dollar notes and coins. All notes and coins are backed
8Doing Business in Singapore
by MAS’ assets. 2 As of 2017, the Singapore dollar traded at S$1.3467 against the US dollar. To find out
how the Singapore Dollar stacks up against major international and regional currencies, please visit MAS
website.
Business Hours
Business hours are generally between 8.30am and 6.00pm. Most major retail banks in Singapore operate
from 9.30am to 3.00pm on Mondays to Fridays and up to 1.00pm on Saturdays.
Public Holidays
According to the Ministry of Manpower (MOM), there are 11 gazetted holidays including New Year’s Day,
Chinese New Year, National Day, Hari Raya Haji, Deepavali and Christmas Day etc 3. For a full list of public
holidays, please visit MOM’s website.
Additional Information: Singapore’s History
Singapore was founded in 1819 by Sir Stamford Raffles. In 1826, Singapore, Malacca and Penang
combined to form the Straits Settlements which subsequently became a British colony in 1867. In 1946,
the Straits Settlements was dissolved and Singapore became a separate Crown Colony. Self-government
was granted in 1959. Four years later, Singapore joined Malaysia and two states of Borneo to form the
Federation of Malaysia, with virtual freedom from colonial rule. On 9 August 1965, Singapore separated
from Malaysia by mutual agreement and became a republic. With her independence in 1965, Singapore
assumed full sovereignty over her territory with complete political, administrative and financial
responsibility for public affairs.
Additional Information: Infrastructure
Through careful planning and an emphasis on excellence, Singapore has grown from small trading post
to an international hub. The country’s top-class airport, port, roads and telecommunications networks
are among the best in the region. From its strategic location, the Republic offers market access to 4 billion
people within a 7 hour flight radius.
Airport
Connecting people since its maiden flight took off 36 years ago, the Changi International Airport has
grown to become a major global air hub welcoming over 70 million passengers a year. Its robust
infrastructure serves over 100 airlines connecting Singapore to 400 cities in 100 countries and territories.
It has won many awards over the years and been consistently voted one of the best airports in the world.
2
http://www.mas.gov.sg/Currency/Circulation-Currency.aspx
3
http://www.mom.gov.sg/newsroom/press-releases/2017/0405-singapore-public-holidays-2018
9Doing Business in Singapore
The Changi Airfreight Centre, located at the northern end of the airport, is operating as a Free Trade Zone.
It handled 2.13 million tonnes of cargo in 2017.
Port
In terms of services, Singapore’s port, comparable to the world’s best, is highly efficient and competitive.
It has ample modern facilities to handle all types of vessels. The Republic also possesses one of the most
advance port attracting 130,000 vessel calls annually. More than 626 million tonnes of sea cargo were
handled in 2017.
Roads
Singapore has an extensive network of paved roads. Six-lane expressways link the public housing estates
with the Central Business District, relieving traffic congestion on other roads and reducing travelling time
for commuters. Singapore’s efficient public transport network of the Mass Rapid Transit (MRT) and Light
Rapid Transit (LRT) systems and bus and taxi services provides a relatively inexpensive means of moving
around the country.
Telecommunications
Singapore offers a world-class telecommunications infrastructure and according to the World Economic
Forum’s Global Information Technology Report 2014, Singapore is Asia’s most “network ready” country.
Mobile penetration rate is high standing at 151%. Households with internet access are at 91% and
internet users at 85% as of 2017. International and regional connectivity now stands at 27.6 Tbps to more
than 100 countries.
10Doing Business in Singapore
Chapter 2 - Government Policies and Business Regulatory
Environment
Introduction
With its political stability, a modern infrastructure, strong legal and regulatory framework and
favourable tax conditions, Singapore is an attractive place for doing business. Singapore’s pro-
enterprise environment also makes it one of the easiest countries to set up a business according to
World Bank.
Business Regulations
The Accounting Corporation and Regulatory Authority (ACRA) is the government body that regulates
business entities and public accountants in Singapore. It oversees the incorporation of businesses and
companies in Singapore. Any person who wishes to set up a business in Singapore must register with
ACRA. Special licenses are needed for some businesses. Banks, travel agencies, liquor distributors,
private schools and childcare centres are some examples.
Practitioners in businesses offering certifiable professional services need to get occupational licences.
Some examples are contact lens fitters, dentists, doctors, financial planners, pilots and commodity
futures traders.
Government assistance & incentives
The Singapore government has a comprehensive programme of incentives to help companies improve
efficiency, strengthen capabilities and explore new opportunities in their business. Some programmes
cater to the needs of start-ups and local enterprises, while others are designed for global companies
with large-scale needs such as the set-up of regional headquarters in Singapore. Assistance from the
government ranges from tax incentives to non-tax incentives such as loans, grants, equity financing
and non-financial assistance.
Some of the tax incentives schemes available and their tax relief / concession are:
Regional Headquarters (RHQ)/ International Headquarters (IHQ) incentive - concessionary
tax rate of 15% for RHQ and 10% or lower for IHQ on incremental qualifying income. Tax
incentive period of 3 years with a provision for extension of 2 years.
Pioneer incentive - tax exemption on qualifying profits derived from the pioneer product /
pioneer services.
Development and expansion incentive (DEI) - concessionary tax rate of not less than 5% on
expansion income.
Investment allowance incentive - allowance of 30% or 50% of approved fixed capital
expenditure on top of normal capital allowance.
Approved International Shipping Enterprise scheme (AIS) - tax exemption on qualifying
income from the operation of ships outside the port limits of Singapore. Companies under
11Doing Business in Singapore
the AIS scheme can also apply for exemption from withholding tax on certain charter fees
paid to non-residents.
Global Trader Programme (GTP) - concessionary tax rate of 10% or 5% on qualifying
income.
Approved royalties incentive - exemption or concessionary rate of withholding tax on
approved royalties.
Financial Sector Incentive Scheme (FSI) - concessionary tax rates of 5% or 10%.
Government agencies
Some of the main government agencies that provide assistance to support businesses’ growth in
Singapore are
Economic Development Board (EDB) - The EDB is the lead government agency responsible
for planning and implementing strategies to grow Singapore’s economy and enhance its
position as a global hub for business, investment and talent. EDB’s responsibility also
includes the administration of many of the tax incentives, grants and financing incentives
for businesses.
Enterprise Singapore – Enterprise Singapore is the government body that promotes
enterprise development. They help companies build capabilities, innovate and
internationalise. They support the growth of Singapore as a hub for global trading and start-
ups. Enterprise Singapore is also the national standards and accreditation body.
Accounting and Corporate Regulatory Authority (ACRA) - ACRA oversees the registration
and regulation of business entities and public accountants. It also provides information on
new business structures, compliance requirements, and corporate governance practices.
SMEPortal.sg – The SMEPortal.sg (formerly known as the EnterpriseOne portal) is a one-
stop site for enterprises looking to start, sustain and grow their businesses. It features links
to government information and services, as well as industry help and how-to guides.
International Enterprise (IE) Singapore - IE Singapore spearheads the development of
Singapore’s external economic wing. It helps Singapore-based companies grow and
internationalise. At the same time, IE Singapore works to position Singapore as a base for
foreign businesses to expand into the region, in partnership with local companies.
Bank Accounts
Opening a corporate bank account is a relatively simple and straight forward process. There are many
options available for corporate bank accounts. Banks in Singapore offer attractive features including,
internet banking, corporate credit cards, trade financing, multi-currency and freedom to move funds
across countries etc. When opening a business bank account, it is important to compare corporate
account features so that the account being opened is the closest to your business’ needs.
12Doing Business in Singapore
There are 4 local banks including: Development Bank of Singapore (DBS), Oversea-Chinese Banking
Corporation (OCBC), Bank of Singapore and United Overseas Bank (UOB). International banks include
but are not limited to: Maybank, Standard Chartered, Citibank etc. Most major banks in the world
have their presence in Singapore. In general, banks will allow businesses to open a corporate bank
account as long as the necessary paperwork is submitted and the banks are satisfied with the
information provided.
Copyright and Intellectual property (IP)
Intellectual property includes patents, trademarks, copyright, designs and trade secrets. These are
valuable assets and there are various laws in Singapore to protect them from theft and infringement.
The main laws in Singapore protecting intellectual property are the Patents Act, Trade Marks Act 1999,
Registered Designs Act and Copyright Act.
Trademarks
Businesses that wish to register for trademarks may do so with the Intellectual Property Office of
Singapore. Trademark can be registered either at IPOS office or via its e-portal. It takes approximately
9 months for a trade mark to be registered. The registration of a trademark is valid for 10 years from
the date of application. It can be renewed indefinitely for 10 years at one time by paying the applicable
renewal fee.
Privacy
Personal data in Singapore is protected under the Personal Data Protection Act (PDPA) 2012, and must
observe the provisions under the Do Not Call registry. In accordance to the PDPA, companies are
responsible for the proper collection, use and disclosure of personal data. The PDPA also governs the
transfer of personal data out of Singapore. Companies that fail to comply with Data Protection
Obligations may be subjected to an investigation by the Personal Data Protection Commission (PDPC)
and may need to pay a financial penalty of up to S$1,000,000. In addition, if a company is in breach of
the Do Not Call registry requirements, each offence can attract a maximum liability of S$10,000.
Mergers and Monopolies
Mergers and acquisition are sometimes necessary in business. The Competition Act prohibits mergers
that may lead to a substantial lessening of competition in Singapore. The Competition Commission of
Singapore (CCS) is authorised to investigate any merger, or anticipated merger, that it suspects to be
anti-competitive in nature.
Import and Export Controls
Singapore adopts a policy of free trade and most goods can be imported without special licences and
quota restrictions. More than 99% of goods imported into the country are duty-free. To import or
13Doing Business in Singapore
export goods into Singapore, companies are required to make a declaration to Singapore Customs.
For social and environmental reasons, high import duties are imposed on four broad categories of
goods - intoxicating liquors, tobacco products, motor vehicles and petroleum products.
Consumer Protection
The Competition Act
The Competition Act promotes healthy competitive markets by prohibiting certain business practices
that restrict competition in the market. For example, businesses must not engage in price fixing, bid
rigging, predatory pricing and other acts that restrict or distort competition. The Consumer Protection
(Fair Trading) Act defines what actions are considered “unfair practices” and the legal remedies for
the consumer.
The Consumer Protection (Fair Trading) Act
The Consumer Protection (Fair Trading) Act or CPFTA was developed to empower consumers to seek
civil redress against unfair trade practices in Singapore. Under the CPFTA, the Consumers Association
of Singapore (CASE) remains the first point of contact for local consumers to handle complaints. CASE
will assist consumers to obtain redress, and in some cases, compensation through negotiation and/or
mediation 4.
Environment, Pollution and Waste Management
Carbon taxes
From 2018 onwards, industrial companies will have to use internationally recognised methodologies
and standards to measure and report greenhouse gas emissions. And from 2019, Singapore will be
imposing tax on all facilities that produce 25,000 tonnes or more greenhouse gas emissions a year.
The carbon tax which applies to all sectors will be set at S$5 per tonne of carbon emissions from 2019
to 2023. By 2023, Singapore will revise the tax level to a value between S$ 10 – 15 per tonne of carbon
emissions.
E-waste disposal
By 2021, companies that produce electrical and electronics equipment, including manufacturers and
importers, will be required to ensure that their products are properly collected, recycled and disposed
of when products reach the end of their life cycle.
4
https://www.cccs.gov.sg/
14Doing Business in Singapore
Chapter 3 - Banking and Finance
Introduction
Singapore has established itself as a global financial centre on the back of a strong regulatory
framework, a pro-business environment, and sound economic fundamentals. Exchange controls were
abolished in 1978, which gave the country a wider field for participation in international transactions.
Singapore's financial centre offers a broad range of financial services including banking, insurance,
investment banking and treasury services. According to the 2018 Global Financial Centres Index
survey, Singapore ranks forth as a financial centre in the world after London, New York and Hong Kong
in terms of competitiveness.
In the latest survey by the Bank for International Settlements (BIS), Singapore is the third largest
foreign exchange (FX) centre globally and the largest FX centre in Asia, overtaking Tokyo in 2013.
Average daily FX turnover volume in Singapore was US$ 484 billion in October 2017.
The Banking System
Monetary Authority of Singapore (MAS)
MAS is the central bank of Singapore. Its mission as stated on its website is “to promote sustained
non-inflationary economic growth through appropriate monetary policy formulation and close
macroeconomic surveillance of emerging trends and potential vulnerabilities.”
Its functions include setting of monetary policy, issuance of currency, oversight of payment systems
and serving as banker and financial agent to the Singapore government. It also conducts integrated
supervision of financial services and financial stability surveillance and manages the official foreign
reserves of Singapore.
Commercial banks
Commercial banks in Singapore are licensed under and governed by the Banking Act, which is
administered by MAS. Presently, there are three types of commercial banks:
Full banks – Provide a comprehensive range of banking business approved under the
Banking Act. There are currently 19 full banks in Singapore.
Wholesale banks – Wholesale banks may engage in the same range of banking business as
full banks, except that they do not carry out Singapore dollar retail banking activities. There
are currently 94 wholesale banks.
Offshore banks – Offshore banks can engage in the same activities as full and wholesale
banks for businesses transacted through their Asian Currency Units (ACUs). The banks'
15Doing Business in Singapore
Singapore dollar transactions are separately booked in the Domestic Banking Unit (DBU).
The scope of business transacted in offshore banks' DBU has slightly more restrictions on
dealings with residents as compared with wholesale banks and their Singapore dollar
lending limit is S$ 500 million. There is currently 1 offshore bank.
Merchant banks
The typical activities of merchant banks include corporate finance, underwriting of share and bond
issues, mergers and acquisitions, portfolio investment management, management consultancy and
other fee-based activities. Most merchant banks have ACUs to carry out activities in the Asian dollar
market. In their DBU, merchant banks may not accept deposits or borrow from the public. However
they may accept deposits or borrow from banks, finance companies, shareholders and companies
controlled by their shareholders. Currently, there are 29 merchant banks in Singapore.
Sources of Funds for Businesses
Sources of funds in Singapore include: Angel Investing Networks, venture capital firms, private equity
firms, government schemes. Angel investors invest in companies despite having no proven success of
the company’s business model. Venture capital firms are suitable for start-ups or late stage businesses
need large capital investment. Private equity firms invest in profitable companies which are in a high-
growth stage.
In addition, the Asian Dollar Market has been critical to Singapore’s role in financing regional growth.
Banks in Singapore draw in non-SGD deposits globally, and deploy these funds to serve the financing
and treasury needs of individuals, corporates and institutions in Singapore and the region.
Currency Exchange Control
There are no significant restrictions on remittances, foreign exchange transactions, capital
movements, reinvestment or repatriation of earnings and capital.
Other Financial and Investment Institutions
Finance companies
Finance companies are licensed under and governed by the Finance Companies Act. They may not
offer deposit accounts which are repayable on demand by cheque, draft or order. Generally, finance
companies are not allowed to grant unsecured credit facilities exceeding S$5,000 to any person or
deal in any foreign currency, gold or other precious metals or acquire foreign currency denominated
stocks, shares or debt securities. There are 3 finance companies in Singapore namely Hong Leong
Finance Limited, Sing Investments & Finance Limited and Singapura Finance Ltd.
Insurance companies
Insurers may conduct insurance activities in Singapore as registered insurers, authorised reinsurers or
foreign insurers. Registered insurers may conduct life and/or general insurance business in Singapore.
16Doing Business in Singapore
They can be registered as direct insurers, reinsurers or captive insurers. In addition, reinsurers without
an operating presence in Singapore can apply for authorisation to carry out life and/or general
reinsurance business in Singapore. Foreign insurers operate in Singapore under a foreign insurer
scheme established under the Insurance Act. Currently the Lloyd’s Asia scheme is the only foreign
insurer scheme in Singapore.
Singapore Exchange Limited (SGX)
SGX was inaugurated on 1 December 1999, following the merger of two established and well
respected financial institutions – the Stock Exchange of Singapore (SES) and the Singapore
International Monetary Exchange (SIMEX). Its operation is governed by the Security Industry Act 1973.
On 23 November 2000, SGX became the first exchange in Asia-Pacific to be listed via a public offer and
a private placement. On 26 November 2007, SGX unveiled a new sponsor-supervised board called
Catalist aimed at providing a conducive listing platform for fast-growing companies in the region. In
August 2009, SGX formed a joint venture with Chi-X Global, called Chi-East. At the beginning of
October 2010, this joint venture received approval from the Monetary Authority of Singapore to
operate a dark pool trading platform.
Home to Singapore's leading listed companies, SGX is also at the forefront of exchanges globally in
attracting international issuers and is rapidly emerging as Asia's offshore risk management centre for
international derivatives. In recognition of the positive effects of exchange networks, SGX pro-actively
forges alliances with like-minded institutions to augment its position as one of Asia's leading
exchanges. These alliances are aimed at enhancing the attractiveness of the exchange's markets,
increasing its market depth and liquidity, and extending the global reach of the exchange's products.
17Doing Business in Singapore
Additional Information: Asian Dollar Market
Singapore is a major centre of the Asian dollar market. More than 180 financial institutions have been
licensed to operate Asian Currency Units (ACU). The government has taken various steps to stimulate
the Asian dollar market in Singapore. These steps included the removal of foreign exchange controls,
the abolition of withholding tax on interest on foreign owned deposits, the reduction of corporate tax
on interest from offshore loans, the abolition of stamp duty on negotiable certificates of deposits and
bills of exchange and the relaxation of rules to enable Singapore companies to borrow from the Asian
dollar market and maintain accounts in foreign currencies.
In 2015, Singapore announced that banks in the city state will no longer be required to segregate their
domestic and offshore operations for accounting purposes. Previously, they were required to register
their DBU and ACU as separate accounting entities. The DBU of a bank holds its domestically focused
operations denominated in Singapore dollars, while the ACU holds its offshore operations entirely
denominated in foreign currency. The divide was intended to safeguard Singapore’s domestic market
without unduly affecting regional activity of banks in the city state. Banks book their domestically
focused operations, primarily denominated in Singapore dollars, in the DBU. The divide served
Singapore well for decades but is losing its relevance given major regulatory developments in the last
five years that have resulted in banks’ offshore activities being subject to rules which are broadly
similar to those governing domestic banking in Singapore.
18Doing Business in Singapore
Chapter 4 - Business Entities
Introduction
Any person intending to carry on business or maintain a place of business in Singapore must register
a business entity with the Accounting Corporation and Regulatory Authority (ACRA). The type of
business entities operating in Singapore can be broadly categorised into:
• Sole-proprietorships and general partnerships
• Limited partnerships
• Companies
• Foreign branches
• Representative offices
Sole proprietorships
A sole-proprietorship is a business owned by one person or one locally incorporated company. The
owner has unlimited liability. If the owner is not a resident in Singapore, a local resident manager must
be appointed. A local resident is defined as a Singaporean, a Singapore permanent resident or an
EntrePass holder.
General partnerships
A partnership is a business firm owned by two or more partners carrying on a business with a common
view to profit. If the number of partners exceeds twenty, it must be incorporated as a company under
the Singapore Companies Act, Chapter 50 (the “Act”). Partnership may consist of individuals or
companies. It is not a separate legal entity and the owners have unlimited liability. The partners are
jointly and severally liable for all liabilities.
Limited liability partnership (LLP)
A LLP offers the flexibility of operating as a partnership while having a separate legal identity like a
private limited company. It has perpetual succession and may consist of individuals or companies or
other LLP. The minimum number of partners required is two and there is no maximum limit. The
partners are personally liable for the debts and losses resulting from their own careless actions but
not those incurred by other partners.
Limited partnership (LP)
A LP is a partnership consisting of a minimum of two partners, with at least one general partner and
at least one limited partner. There is no maximum limit. It is not a separate legal entity, i.e. it cannot
sue or be sued or own property in its own name. A general partner is responsible for the actions of
the LP and liable for all debts and obligations of the LP whereas a limited partner is not liable for debts
and obligations of the LP beyond his agreed contribution, provided he does not take part in the
management of the LP.
19Doing Business in Singapore
Companies
The types of companies that can be incorporated under the Act are as follows:
Private company limited by shares
This is a locally incorporated company where the maximum number of shareholders is limited to fifty.
A private limited company is the most flexible and advanced business structure in Singapore. It is also
the preferred business vehicle for doing business in Singapore. A private company with no more than
twenty shareholders and none of the shareholders is a corporation is known as exempt private
company (“EPC”).
Public company limited by shares
A public company limited by shares is one where the number of shareholders can be more than fifty.
The company may raise capital by offering shares and debentures to the public. Majority of the public
companies are listed on a stock exchange.
Public company limited by guarantee
A public company limited by guarantee is one which carries out non-profit making activities that have
some basis of national or public interest, such as for promoting art, charity, etc. It has no share capital.
Branch of foreign company
One of the options for foreign companies to conduct business in Singapore is to set up a branch office.
A branch is not a separate legal entity. It is merely an extension of the parent company. The Act
requires a foreign company to appoint at least one authorized representative who must be an
ordinarily resident in Singapore. This means he must be either a Singapore citizen, Singapore
permanent resident or an EntrePass holder.
Representative offices (RO)
Foreign companies that are keen on exploring the viability of doing business in Singapore or interested
in using Singapore as a launching pad into the Asia Pacific may wish to set up an RO.
An RO has no legal corporate status. It is not allowed to engage in any profit making or trading
activities nor is it permitted to conclude contracts or open and receive letters of credit. Its activities
should be confined to market research, feasibility studies, liaison and co-ordination activities done on
behalf of its head office.
Business Trusts
A business trust is a trust that runs and operates a business enterprise. It has a trustee-manager whose
role is to safeguard the interests of beneficiaries of the trust and to manage the business. A business
trust is created using a trust deed which sets out the terms of the trust and its management,
investment policy and the rights of the beneficiaries.
20Doing Business in Singapore
Chapter 5 - Company Formations and Administration
Forming a Company
The first step in incorporating a company is to apply for and reserve the company name. This can be
done by submitting the application online through BizFile+ which is an electronic filing and information
retrieval system of the Registrar - The Accounting and Corporate Regulatory Authority (“ACRA”). The
cost is S$15.00 per application and the processing time is one working day. However, if the application
needs to be referred to Regulatory Authorities for comments due to various reasons, the process may
take between 14 days to 2 months. Once the name is approved, the incorporation registration could
be performed within one working day and the cost of registration payable to ACRA is S$300.00.
The company can commence business upon incorporation. Certain business activities require a
business license, such as, employment agency, travel agency, tuition center, etc. In such case, the
company can only commence business after it obtains the requisite license.
Shares and capital structures
There is no concept of authorized capital in Singapore. The standard initial paid-up capital is 1 share
at S$1.00 and the shares can be issued in any currency and any class with the rights set out in the
constitution of the company. The minimum number of shareholder is one and it could be an individual
or a corporation. There is no residency requirement on this.
Directors
The minimum number of director required of a company is one and all directors must be individuals.
There should be at least one director in the company who is an ordinarily resident in Singapore, i.e. a
Singapore citizen, Singapore permanent resident or an EntrePass holder or an Employment Pass
holder under the company. The minimum age of a director is 18 years old.
Directors may be appointed by the board of directors or the shareholders of the company. However,
removal of directors can only be approved by shareholders. Retirement and re-election of directors
are governed by the constitution of the company.
Type of Directors
A director is defined under the Act as to include any person occupying the position of director of a
corporation by whatever name called and includes a person in accordance with whose directions or
instructions the directors or the majority of the directors of a corporation are accustomed to act and
alternate or substitute director. The types of directors can be broadly categorized as follows:
21Doing Business in Singapore
Executive director
An executive director takes an active role in the management of the company. The executive director
generally works full time in the company and is paid salary and the terms of his appointment is usually
contained in a service agreement. This function is in addition to his role as director of the board of
directors.
Non-executive director
A non-executive director is an independent director who does not engage in the daily management of
the company but is involved in policy making and planning activities.
Alternate director
No alternate director can be appointed unless the authority to make such appointments is provided
for in the constitution of the company. The right to appoint an alternate director is not statutory
provided for. The manners of appointment of alternate director is regulated by the constitution and
the appointment could be for a specific period until the alternate director resigns or until his
appointment is terminated by his principal director who appoints him or until the appointment of his
principal director ceased.
Duties of Directors
Primary duties of directors include:
• Duty to exercise power in good faith for the company’s interests. The directors must act bona
fide and in the best interests of the company instead of for personal gain and they must ensure
transactions are commercially justifiable and not for improper purposes.
• Duties of skill, care and diligence. It is a mandatory duty under the Act for a director to act
honestly and use reasonable diligence in the discharge of his duties at all times. He shall not
make improper use of his position as an officer or agent of the company or any information
acquired by virtues of his position in the company to gain, directly or indirectly, an advantage
for himself or for any other person or to cause detriment to the company.
• Duty to avoid conflicts of interest and duty to disclose. A director should avoid being in a
situation where other interests or duties conflict with his duties to the company. Conflicts of
interest arise in several situations, such as interests in transactions, properties and offices and
also holding shares, debentures, rights or options in the company or related corporation and
he should familiarize himself with the disclosure requirements under the Act.
• Other statutory duties, such as, duty to maintain proper records, prepare financial reports,
comply with the reporting requirements under the Act, to appoint company secretary and etc.
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