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Time to expand your business in Asia: what to consider to set-up your business in Singapore

Singapore, the gateway to Asia. With a land area of 721 kmq, Singapore is one of the smallest nations of the world yet consistently ranked among one of the easiest places to doing business.



Strategically located at the very heart of Asia, the City-State has established itself as global gateway into other emerging markets in the region and many global international enterprises and private investors have chosen to set up their bases here: whether you are a foreign individual, a small and medium company or a multinational, Singapore may benefit your business with its ease of doing business, attractive tax system and respect for intellectual property rights. Developed infrastructures, skilled workforce and political stability further reassure any foreign investor that he may plan his expansion in the region on a long-term basis.

The most common structures for doing business in Singapore are the following:

a.      Representative office (‘RO’): RO is a preferred short-term arrangement for a foreign corporation willing to assess the Singapore business environment. A RO is not allowed to generate profits, and it may operate for a maximum of three years, thereafter the foreign corporation must either set-up a permanent business structure or terminate its presence in Singapore. 

b.     Branch Office: Branch Office is an extension (and not a subsidiary) of a foreign corporation: as such it is not a separate legal entity and its debts and liabilities are part of the debts and liabilities of the foreign corporation. It is taxed as non-resident entity without inheriting any tax benefit in Singapore.

c.     Private company limited by shares: this entity has separate legal personality in Singapore. It can benefit from any tax incentives and scheme granted by the Singapore Government.

In comparison all the mentioned business models, private company limited by shares is normally preferred for foreign investors since it is (i) a separate legal entity, (ii) suitable with the scale of most business activities; and (iii) limited liability for shareholder.

Singapore is also very attractive from a tax perspective, offering extended tax exemption schemes for new start-up and SMEs to support entrepreneurship and help local enterprises grow.

From 2020, new Start-Up Companies will be able to benefit from 75% exemption on the first $100,000 of normal chargeable income and further 50% exemption on the next $100,000 of normal chargeable income.

Companies planning to expand overseas can also benefit from the Double Tax Deduction Scheme for Internationalization (DTDi), with a 200% tax deduction on eligible expenses for international market expansion and investment development activities.

Additional tax schemes are offered to companies working within the E-commerce Industry, companies adopting digital productivity solutions, to Finance and Treasury Centres (FTC) and Headquarters.

For a free preliminary consultation concerning a company set-up in Singapore do not hesitate to contact our local partners at patrick.heimann@fidinam.com.hk.

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