At the outset, there are several reasons why UK companies may consider setting up their headquarters or regional offices in Singapore. Singapore is known for its business-friendly environment and often highly ranked in the Ease of Doing Business index.
What is the process of a company set up and why does the costs of company set up vary so much in Singapore?
Setting up a business is fast and easily done via a Corporate Secretarial firm based in the country. They follow a standard process; however, the costs for setting up a business in Singapore varies highly. The costs paid to Corporate authorities (ACRA is the equivalent of Companies House in Singapore and IRAS is the equivalent of HMRC here), are standard.
But “setting up” or the “incorporation process” is not the most challenging part. There has to be a firm understanding of a few things before you actually incorporate the company.
Some things we talk through with clients before they think of hopping to the island are,
Are there very specific advantages of having the company in Singapore? For e.g specialist skills at reasonable prices that are crucial to your industry.
How do you structure your company? Do you expect to work yourself as a founder or main tech driver out of Singapore?
What facilities do you need for your Singapore company? At the minimum you’ll need a bank account. Is your company structure and the activity you need to pursue optimised for a smooth opening process?
It’s imperative that you discuss these matters with a well rounded corporate provider before you actually take the plunge. It’s easier to make these decisions ahead of you incorporating. We agree that some changes are inevitable but we can mitigate the avoidable ones with a little bit of early prep work.
What does the corporate regulatory framework of Singapore look like and how does it differ from the UK?
The ACRA (Accounting an Corporate Regulatory Authority) of Singapore is the regulatory body for private companies like the Companies House in the UK. Things are accessible online but you need a Company Secretary based in Singapore for ease of working through this.
The IRAS (Inland Revenue Authority of Singapore) is the tax authority, like our HMRC here. Again, information and services are available online. Corporation taxes work similar to the UK system in as much as you have income and deductible expenses and taxes are due on profits you make. There are myriad levels of deductions and concessions available for new formed companies which you can take advantage of.
The DTAA between Singapore and UK
We think it’s prudent to touch upon the subject, we aren’t providing a detailed analysis here. Broadly the Double Taxation Avoidance Agreement (DTAA) between Singapore and the United Kingdom (UK) aims to prevent individuals and companies from being taxed twice on the same income in both countries.
The DTAA covers taxes on business profits, taxation of dividends, taxes on interest and royalties and capital gains taxation apart from more administrative areas such as mutual sharing of agreements etc.
Immigration in Singapore
The immigration scenario in Singapore is complex and subject to approvals from the Ministry of Manpower (MOM). As with any other nation, Singapore's focus is on citizens and residents when it comes to creating and maintaining jobs. Foreign employees have two main routes to Singapore's work system. One is the Entre Pass and other the Employment Pass.
Entre Pass
According to the Ministry's website, this is meant to be used for entrepreneurs who are keen to operate a business in Singapore that is venture-backed or possesses innovative technologies.
Directly borrowing the eligibility criteria as explained by MOM,
Which companies are considered venture-backed or own innovative technologies?
A company is considered venture-backed or owns innovative technologies if it has:
Raised funding from capital providers including government investment vehicles, venture capitalists, corporates, family offices, and business angels.
Developed, produced or commercialised tech products, services or platforms.
Registered patents with an approved national IP institution.
Ongoing research collaboration with a research institution.
Employment Pass
The employment pass criteria in Singapore is highly stringent. It's not to say people don't land up with these, but it requires careful consideration. Professionals need to earn at least SG $5,000, circa £3k a month. This range increases progressively with age, up to $10,500 (approx £6.2 k) for those in the mid-40s. While this may reasonable for UK companies, there are many other factors that determine whether you'd end up getting an Employment Pass (called EP for short) in Singapore.
If you think you're eligible for either of these, please reach out to us and we can help gauge the likelihood of you being able to get this in place with a first try.
Notes, Comments, Disclaimers
All pictures used are from pexels.com are are licensed for commercial use
The blog is only intended for informational purposes and is not meant as individual / corporate advice.
To the extent possible, we've remained true to the intend of Singapore's compliance and immigration authorities in relaying information related to specific subjects. We are not affiliated to the government and our article is based on our own working experience.