What is the taxation rate in Singapore?
What’s the scope of registered address service?
What is the role and scope of company secretary service?
What is role and scope of resident local director service?
Will Sovereign handle annual filing requirements for our company?
What are the benefits of using a Trust as part of my structure?
I have heard Singapore offshore companies pay no tax. Is this correct?
Apparently Singapore companies need to be audited every year and the auditors’ costs in Singapore are astronomical. Is that correct?
Hong Kong and Singapore – which jurisdiction should I choose?


What is the taxation rate in Singapore?

Singapore’s tax system is based on the principals of source and remittance. Only profits that are derived from or arise in Singapore, or any foreign-sourced profits remitted back to Singapore are subject to tax in Singapore. The current rate of Singapore Income Tax (SIT) is 17% – one of the lowest rates in the region.

All companies in Singapore must be registered with the Accounting & Corporate Regulatory Authority (ACRA) and abide by the Companies Act, Chapter 50. While there are five different entities to choose from – sole proprietorship, partnership, company, limited liability partnership and limited partnership – the most common and flexible option is to set up a Singapore company.

If the number of shareholders exceeds 50, it is deemed to be a public company. If the company has more than 20 but fewer than 50 shareholders, it is deemed to be a private company. Finally, if the number of shareholders is 20 or less – with no corporation holding any beneficial interest in the company’s shares – and the company has a turnover of less than S$5 million, it is deemed to be an Exempt Private Company (EPC).

An EPC is exempt from tax from the first three years after incorporation for the first $100,000 of chargeable profits. The next $200,000 profit is 50% exempt from SIT, while any profits exceeding $300,000 are taxed at 17%.

Dividend income from other Singapore companies is not subject to tax. Foreign-sourced dividends remitted back to Singapore are generally taxable but they can be completely exempted from tax if the following conditions are satisfied:

  • The country from which the dividend was paid has a headline tax rate of 15% or higher;
  • The dividend has suffered taxation, either because it is paid out of taxed profits or has suffered withholding tax.

Capital gains are not subject to tax.

Singapore has entered into over 80 comprehensive agreements for the avoidance of double taxation (DTAs). It has one of the most comprehensive networks in the world and the list is still growing.

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What’s the scope of registered address service?

A Singapore company requires a local registered office where all official documents, notices and court papers can be sent and where all statutory records are kept for the company. The address must be a physical location, not just a post office box. This is because people have the right to visit this office to inspect certain registers and documents, and to deliver documents by hand. It must be open to public for at least 5 hours during business hours.

As Sovereign act as the company secretary and all statutory records of the company are kept in our office, our office address is typically used as the registered address.
Our registered address service consists of:

  • Providing our address as your company’s registered address with the Company Registrar
  • Receiving incoming mail for your company and forwarding it to you as per your instructions.

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What is the role and scope of company secretary service?

A Singapore company is required to appoint a qualified company secretary who is able to deal with Singapore company laws. A company secretary typically would normally provide you with the following services:

  • Help you understand and comply with Singapore Companies Act
  • Maintain the statutory registers
  • Remind you of statutory deadlines and assist you with statutory compliance
  • Provide members and directors with notice of meetings
  • Ensure that your company files statutory information is accurate and submitted punctually
  • Draft and file any corporate resolutions
  • Custody and use of the company seal
  • Ensure that any parties entitled to inspect your company records are able to do so

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What is role and scope of resident local director service?

A requirement in Singapore is that each company must appoint one Singapore resident director.
If you are based overseas and do not have a local director, you can utilise our Resident Local Director service to satisfy this statutory requirement. The service can be provided on a short-term or annual basis as below:

  • If you do not intend to relocate to Singapore, you would need our resident director service on an annual basis.
  • If you are relocating and intend to apply for an employment pass, you may only require our resident director service temporarily. When you eventually receive your employment pass, we can resign and you are able to take over as the local resident director.

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Will Sovereign handle annual filing requirements for our company?

We can help you to prepare and file the annual return with Company Registrar and annual tax return with Inland Revenue Authority.

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What are the benefits of using a Trust as part of my structure?

Using a trust to own the shares of an offshore company can result in very substantial tax and non-tax related advantages which will accrue both on death and during the lifetime of the trust settlor. These advantages may be summarised as follows:-

  1. SAVING ON INHERITANCE TAX: On death, the inheritance tax which would normally be assessed on the value of the shares would generally be eradicated.
  2. ASSET PROTECTION: Assets placed into trust are generally beyond the reach of creditors who might arise as a result of financial difficulties, divorce proceedings, litigation etc.
  3. AVOIDANCE OF PROBATE: A trust provides a means whereby assets can be smoothly passed on to the next generation without the disruption, delays, substantial costs or loss of confidentiality associated with the probate procedure which necessarily follows when assets are bequeathed by will.
  4. CONTINUITY: Trusts provide a means whereby assets can continue to be administered in accordance with the wishes of the settlor after his death so the weak can be protected from others and the spendthrift can be protected from himself.
  5. LIFETIME TAX SAVINGS: During lifetime, substantial income and capital gains tax advantages may result from setting up the trust.

Trust services can be provided by our licenced trust corporations in Gibraltar, Guernsey, the Isle of Man, Singapore and the Turks & Caicos Islands through our various Group offices. Fees for drafting the trust deed and for the provision of trustee services will be quoted on a case by case basis. Please contact your nearest Sovereign office for a copy of our brochure and/or an exploratory discussion.

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I have heard Singapore offshore companies pay no tax. Is this correct?

Not quite. Singapore operates a territorial and remittance-based tax system, which means that only those profits that are sourced within Singapore or foreign-sourced profits remitted back to Singapore are subject to Singapore tax. Profits derived offshore are not taxed in Singapore if these are kept outside Singapore.

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Apparently Singapore companies need to be audited every year and the auditors’ costs in Singapore are astronomical. Is that correct?

Not all Singapore companies are subject to an audit of their financial statements. Companies with an annual turnover of less than S$5million and less than 20 shareholders (who are all individuals) are not subject to audit. If audit is required, the fees are not exorbitant. Sovereign works with a range of auditors and is able to accommodate all clients – irrespective of their size.

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Hong Kong and Singapore – which jurisdiction should I choose?

Both jurisdictions boast excellent financial, legal, accounting and professional services standards and their banking infrastructure is world class. Singapore and HK are constantly vying for top spot amongst the world’s best financial centre – which means the high standards are maintained and fees remain competitive. Each offers something slightly different but both jurisdictions are good choices for someone wanting to carry on a business with a head office or base in Asia. It usually comes down to business focus and lifestyle choice. As a special administrative region (SAR) of the People’s Republic of China (PRC), Hong Kong may be better suited as a regional headquarters for firms that have predominantly China-related business, whereas Singapore is may be better suited to businesses operating in ASEAN countries and India.

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