Why form an offshore company in Singapore?
A Singapore Offshore Company is a multitool when it comes to international tax planning. A Singapore Company can be used as a tax exempt entity by being classified as a non tax resident, be classified as a tax resident company with access to Singapore Tax Treaty Network, can also benefit from an exemption on foreign earned income for tax resident companies that do not remit their foreign sourced income to Singapore, it can be used as a tax resident company with tax exemptions, as a holding company, and among other tax strategies.
Companies in Singapore do not only offer from tax benefits, they also offer a business friendly legislation, being a popular jurisdiction for family offices, crypto related businesses, payment institutions, and much more.
Singapore Companies are not subject to Economic Substance Requirements.
In adittion, Singapore companies benefit from an excellent international reputation in tax and business, stable banking system, low level of corruption, etc.
Singapore Private Limited Company Formation
Shareholders: 1 shareholder minimum required. The shareholder(s) can be foreigners and/or non residents.
Director: one local director is required (Singaporean Citizen or Permanent Resident). A nominee director is often appointed to comply with this formation requirement. The other directors can be non resident foreigners.
Corporate Tax Residency: Corporate Tax Residency in Singapore in determined by where the company is controlled and managed. So a company can be incorporated in Singapore but not be a tax resident in Singapore if the control and managed is exercised outside of Singapore
Corporate Tax Rate (for residents): 17%.
Foreign Earned Income: Foreign Earned Income of a tax resident company will not be taxed as long as such is not remitted to Singapore.
Dividends: there is no withholding tax on dividends.
Taxation in Singapore
For tax purposes, a Singapore Company can be used in several ways for your benefit
17% Corporate Tax Rate with access to tax treaty network:
Tax residents companies in Singapore are subject to a 17% Income Tax Rate, but have access to tax exemptions scheme.
Access to double tax treaties
Singapore has signed many tax treaties which allows you to move your earnings to Singapore and be taxed at a lower rate than if you were to be taxed somewhere else. For this, the company has to be a tax resident in Singapore.
0% Tax Rate in Singapore if money is not remitted to Singapore:
If the company is a tax resident in Singapore, it can elect to not taxes in Singapore provided that the income was not remitted to Singapore, and provided that the Company paid taxes somewhere else.
0% Tax Rate for Company formed in Singapore, but managed outside of Singapore:
Corporate Tax Residency in Singapore is based on Place of Management, not on place of incorporation. So if the company is managed outside of Singapore, it will not pay taxes in Singapore, but it will not have access to the tax treaty network Singapore has signed. Income cannot be remitted to Singapore
Capital Gains Tax Exemption:
Singapore exempts Capital Gain from taxes, but these gains might get taxed by IRAS in case the capital gain is considered to be motivated by profit seeking or that you trade properties.
IRAS takes the frequency of transactions, the reason for buying/selling property, financial means to hold the property for long term, and holding period to assess wether you are trading in properties. If IRAS after its evaluation considers that this was not a capital gain but from trading activities, the gain would be added to your taxable tax base and be subject to the corporate income tax rate.
Investment holding company
If most of the company’s income is from passive income sources like dividends, interests, royalties, gains from the disposal of shares, properties, etc., then it would be considered as an Investment Holding Company, and its income would be subject to Corporate Income Tax without the possibility to benefit from tax exemption scheme for new start-up companies, but can benefit from the partial tax exemption Scheme
Minimum Yearly Compliance for Private Limited Companies
Private Limited Company Annual Return before ACRA
The Annual Return, submitted to ACRA, contains the particulars of the company such as the name of the directors, secretary, its members, and the date to which the financial statements of the company are made up to.
Company details:
-
Company type.
-
Registered office address,
-
The particulars of the company officers,
-
The details of registered charges are up to date. If the information has changed or is incorrect, you must update the details.
-
Confirm whether there are any changes to your company’s primary and secondary business activities.
Shares:
-
Verify your company’s shares details, such as the number of shares held, issued share capital, and amount of paid up share capital.
Financial Statement:
The company must attach its Audited Financial Statement to the Annual Report.
Non-Audited Finanancial Statement: If the company classifies as a small company (a company whose revenue and total assets for the current financial year do not exceed S$500,000and S$500,000, respectively.), it will be exempt from filling the Audited Financial Statement.
Tax Returns before IRA
Estimated Chargeable Income (ECI)
ECI is an estimate of your company's taxable profits (after deducting tax-allowable expenses) for a Year of Assessment (YA).
Deadline: Your company has to file ECI within 3 months from the end of your financial year
ECI Filing Waiver: Your company does not need to file ECI in any Year of Assessment (YA) when both criteria are met:
-
Annual revenue is $5 million or below for the financial year; and
-
ECI is nil for the YA. The ECI should be the amount before deducting the exempt amount under the partial tax exemption scheme or the tax exemption scheme for new start-up companies.
Form C-S
Form C-S is a simplified Corporate Income Tax Return for qualifying small companies to report their income to IRAS. There are fewer fields in Form C-S than Form C.
Form C-S is comprised of:
-
A declaration statement of the company's eligibility
-
Information on tax adjustments
-
Information from the financial statements
If your company qualifies to file Form C-S, it is not required to file its financial statements and tax computation together with Form C-S. However, your company should prepare these documents and be ready to submit them upon IRAS’ request.
Who Can File Form C-S
Your company qualifies to file Form C-S if it:
-
Is incorporated in Singapore;
-
Has an annual revenue1 of $5 million or below
-
Only derives income taxable at the prevailing Corporate Income Tax rate of 17%2; and
-
Is not claiming any of the following in the YA:
-
Investment Allowance
-
Foreign Tax Credit and Tax Deducted at Source
Form C-S Lite
If the company qualifies to file Form C-S and has an annual revenue of $200,000 or below, the company can opt to file Form C-S, which is a simplified version of Form C-S that requires only 6 essential fields to be completed by companies with straight-forward tax matters. Similar to Form C-S, the company is not required to file its financial statements and tax computation. However, the company should prepare these documents and be ready to submit them upon IRAS’ request.
Form C
If the company does not qualify to file Form C-S or Form C-S (Lite), the must file Form C.
The company is required to file its financial statements, tax computation and other supporting documents together with Form C.
Services we Provide
-
Singapore Company Formation.
-
Corporate Secretary.
-
Registered Address.
-
Yearly Nominee Director (No Deposit Required).
-
Introduction to Banking Partner.
-
Accounting and Tax.
-
Employment Pass.
Pricing: Since each client's needs are different, please send us an email to jffc@offshoreaffairs.com to get a pricing quote, we reply in less than 24 hours.
