Singapore Breakdown for forming a company

[Kakarot]

Singapore corporate tax is 17% -- however, apparently if you have your clients and suppliers all entirely OUTSIDE of singapore, the tax will only apply to you if you remit your revenue into and through singapore.

So essentially, you don't want to bank in singapore if you open a singapore company -- and as long as you don't bank in singapore -- you should not have to pay any corporate taxes.

Is my understanding correct?

the jurisdiction is considered very reputable. You should be able to get bank accounts in malaysia or other places for it more easily than some jurisdiction with worse stigmas attached like caribbean places etc.

The fee to form a company in singapore isn't too bad, and you need a local director.

So what's the drawbacks? Why aren't more people using singapore?

Is that tax exemption hard to get? Like in HK nowadays you have to apply for that 0% tax exemption, and it's hard to get and can take years to be approved.

Can someone who is an expert on singapore share the pros and cons of this jurisdiction?

Youtube has very little info about it surprisingly.

 

[Sols]

Singapore is usually attractive because of it's stable banks with generally good service. But if you can find a good, stable bank outside of Singapore that will take you on, then that's less of an issue.

Singapore requires a local resident director, which tends to cost at least 2,000 SGD. For most people (who really shouldn't be setting up offshore companies to begin with in that case), that's a lot of money.

There are also accounting and filing requirements that exceed those of less reputable jurisdictions. This adds costs and disclosure, which many may find objectionable.

Now, for those seeking reputability and find the costs for setting up in Singapore manageable, another drawback is that paying 0% tax isn't what it once was. Unless you can leverage the director in Singapore to for sure establish tax residence (which does work, at times), the company may end up tax resident where you are based. Paying tax in Singapore can be a way establish that Singapore is the company's home.

This is all very vague and a rather roundabout way of saying that paying some tax in Singapore is probably a good idea. In addition to keeping some funds outside of Singapore, there are various incentives for smaller businesses (under 10 million SGD, IIRC) to pay significantly less than the max tax rate.

As for qualifying for tax exemption, my understanding is that it's doable and generally won't be a problem but there is extra paperwork to be done to ensure the income does qualify for it. One problem with is that it essentially sets aside a portion of your income as untaxed, which — again — for international tax compliance purposes may not be that attractive.

 

[manukahoney]

From what I was told when exploring SG option:

1) more expensive than other offshore jurisdictions (considering all the costs including accounting etc)
2) non-SG banks will require substance in Singapore to open an account which in turn make you "local" company with corporate tax to be paid
3) SG-based banks don't open accounts remotely

If you can solve the issue with banking - it's a very reputable jurisdiction.

 

[Kakarot]

maybe just pay the tax there, if your profit is like 150,000 usd annually, this video shows your effective tax rate would only be about 6% -- and there's no personal income tax levied on your dividends, so you're only going to get taxed once, at 6%, if you run a business there with that kind of profits.

6% total taxation isn't bad. All that's left is accounting and company maintenance fees each year.

Sounds better than a HK company actually to me, all things factored in.

I'm leaning towards singapore or UAE freezone to make my next company. Tough to decide though in the end.

 

[BlueMist]

I wrote some fees breakdown here.

@Kakarot the profit mentioned on YT is in SGD not in USD. Also the exemption rates are only valid in the first 3 years.