Most local and foreign businessmen and investors in Singapore agree that corporation is the most ideal business entity especially in terms of tax advantages, limited liability, and bankruptcy protection.
The same belief is also held by Singapore-based business registration specialist AsiaBiz Services.
“A corporation has always been associated with financial success because of the limited liability protection it offers which means that all the personal assets of shareholders, including their cars, houses, and properties, cannot be used or liquidated to pay off for the company’s debts, losses, and liabilities,” the company said.
In addition with limited liability protection, AsiaBiz added that a Singapore corporation has more advantages to offer especially in terms of tax incentives and exemptions.
“In an effort to encourage and attract local and foreign businessmen, investors, and companies, the Singapore government has lowered the corporate tax rate to 17 percent from 18 percent,” the business registration specialist added.
Aside from a lower corporate tax rate, newly incorporated companies, regardless if these are owned by local or foreign businessmen, may also enjoy tax exemption within three years of incorporation.
To qualify for this tax exemption, a startup company should have at least one individual shareholder who owns a minimum of 10 percent shares, and the control and management of a company is exercised in Singapore.
According to AsiaBiz, companies that meet these requirements can enjoy complete tax exemptions on its first S$100,000 chargeable income and another 50 percent tax break on the succeeding S$200,000.
Meanwhile, some startup companies which fail to meet the qualifying conditions may still be eligible for partial tax exemption.
For foreign company owners who want to enjoy the advantages of Singapore corporation, consultants from AsiaBiz usually advise them to register a Singapore subsidiary company, a business entity that is basically a private limited company with majority of its shares owned by a foreign company.
The good thing about a subsidiary company is that it is eligible for local tax benefits and exemptions even if this is 100 percent owned by its foreign parent company.
“This is because a subsidiary company, which is incorporated locally, is still treated as a local resident business,” the registration firm added.
However, AsiaBiz said that it is a legal requirement for any foreign company to hire a professional Singapore company registration firm that will process its business application.
“Under the Singapore Companies Act, foreign companies and businessmen are prohibited to self-register their business which means they should get the service of a professional firm,” AsiaBiz added.
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