Company and Jurisdictions
|Companies Act, Cap 50||SGD 100,000 is the standard incorporation capital.|
|Annual government fees:||Corporate Taxation:|
|SGD 50.||Zero, with appropriate structuring.|
|Time to incorporate:||Ready-made companies:|
|About two weeks. Initial incorporation can be achieved and confirmed within 48-72 hours with computer-generated verification whilst awaiting formal certification. Delays may occur where permissions from Singapore statutory authorities are required.||No.|
|Minimum members:||Registered office required:|
|Two at incorporation, individual or corporate. Single shareholder permitted after incorporation.||Yes, must be maintained in Singapore.|
|Local registered agent:||Minimum number directors:|
|Yes.||Minimum two, individuals only. One director must be resident in Singapore. A register of directors must be filed with the Registrar and is open to public inspection.|
|Officer to be locally resident:||AGM required:|
|A local secretary and at least one local director are necessary.||Yes.|
|Annual return required:||Financial statements to be prepared and/or audited:|
|Non-exempt Singapore companies must prepare full audited accounts and must keep a copy of such accounts at the registered office address. All except exempt private companies must file accounts on the public register. For financial years commencing on or after 15 May 2003, the audit requirement is also removed for Exempt Private Companies.||Companies are required to keep financial records reflecting financial position of the company.|
|Balance sheets to be filed:||Share register required:|
|Yes.||Yes, at registered office|
|To be filed with Registrar:||Open to public inspection:|
|Exchange controls:||Redomiciliation permitted:|
|No.||Yes, inwards by registration as a foreign company in Singapore, and outwards by deregistering as a foreign company in Singapore.|
|Language of incorporation:||Confidentiality:|
|English.||Section 47 of the Singapore Banking Act provides for banking secrecy and makes unauthorised disclosure in Singapore, or elsewhere, an offence, except as provided for by the Monetary Authority of Singapore’s anti-money laundering regulations.|
|Bearer shares permitted:|
- Not a member of the OECD.
- Not affected by EU savings directive.
- Good banking secrecy and ease of bank opening with wide range of international banks in Singapore.
- Range of tax treaties.
- English legal system.
- Good range of professional services.
- Quite slow and bureaucratic.
- Directors personally liable for statutory compliance.
OECD Harmful Tax Practices
Singapore is not a member of the OECD, nor was it one of the 35 jurisdictions identified by the OECD in June 2000 as meeting the technical criteria for being a tax haven. However, at its global forum on harmful tax competition on 4 June 2004 in Berlin, the OECD listed Singapore as one of 11 additional financial centres that it intends to target as part of its drive to achieve a level playing field.
Tax Information Exchange Agreement (TIEA)
EU Savings Tax Directive
Financial Action Task Force (FATF)
Singapore is a member of the FATF, the Asia/Pacific Group on Money Laundering, the Egmont Group, and the Offshore Group of Banking Supervisors Singapore will host the June 2005 Plenary meeting of the FATF, marking the first time an FATF Plenary will take place in Southeast Asia.
Mutual Legal Assistance Treaties (MLATs)
Singapore signed its first MLAT, with the USA, on 3 November 2000. It followed the passage of the Mutual Assistance in Criminal Matters Act, which sets out the legal basis for Singapore to enter into mutual legal assistance treaties. Singapore concluded a mutual legal assistance agreement with Hong Kong in 2003.
Singapore signed a Mutual Legal Assistance Treaty in Criminal Matters with other ASEAN member states – Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, the Philippines, and Vietnam on 29 November 2004. The Treaty will come into effect after ratification by the respective governments.
Singapore is party to the 1988 UN Drug Convention and the UN International Convention for the Suppression of the Financing of Terrorism and has signed, but has not yet ratified, the UN Convention against Transnational Organised Crime.
Singapore currently has 50 tax treaties in force. It also has in force tax treaties with seven other countries for reciprocal tax exemption on income derived from international shipping and/or air services.
The tax treaties in force are with the following countries:
|Full Country Name:||Republic of Singapore|
|Area:||692.7 sq km|
|People:||Chinese (77%), Malay (14%), Indians (8%), Others (1%)|
|Languages:||Chinese (official), Malay (official and national), Tamil (official), English (official)|
|Currency:||Singapore dollar (SGD) – SGD 1.6338 per USD (2004)|
|Legal system:||based on English common law; has not accepted compulsory ICJ jurisdiction|
|Head of State:||President S R Nathan|
The Republic of Singapore lies in south-eastern Asia, to the south of the Malay peninsula, to which it is joined by a causeway, 1.2 km long, carrying a road, railway and water pipeline across the Straits of Johor, and a separate link bridge. Situated 1.5 degrees north of the Equator, Singapore occupies a focal position at the turning point of the shortest sea route from the Indian Ocean to the South China Sea. The climate is hot and humid, with no clearly defined seasons although December and January are the wettest months.
In 1819, Sir Stamford Raffles, seeking a base from which to extend British influence in South-East Asia, obtained permission from local rulers to establish a trading post at Singapore, and in 1824 the island was ceded in perpetuity. It was Raffles who laid the foundations of modern Singapore.
In 1826, Singapore joined Penang and Malacca to form the Straits Settlements. Singapore soon became Britain's most important trading centre in the area. In 1867, the connection with India was dissolved and Singapore became a Crown Colony. Singapore prospered throughout the 19th century, boosted by the opening of the Suez Canal and the gradual extension of British influence throughout the Malay peninsula, to become the commercial and financial hub of South-East Asia. Its naval base was one of a chain of British bases from Gibraltar to the Far East. Singapore's population rapidly expanded with the arrival of thousands of Chinese settlers.
Singapore's reputation as a British stronghold did not deter the Japanese from attacking Malaya in 1941 and then Singapore itself, which fell in 1942. British rule was restored in 1945.
In 1946, Singapore became a separate Crown Colony and in 1959, was granted internal self-government. The first general election was held that year and the PAP led by Lee Kuan Yew won an outright majority. The PAP has been in power ever since. In 1963, Singapore together with the Crown Colonies of Sabah and Sarawak joined the recently independent Federation of Malaya to form Malaysia. Singapore left the Federation in 1965, achieving full independence.
Government and Politics
|Head of State:||President Sellapan Rama (S. R.) NATHAN (since 1 September 1999)|
|Head of Government:||Prime Minister LEE Hsien Loong (since 12 August 2004); Senior Minister GOH Chok Tong (since 12 August 2004); Minister Mentor LEE Kuan Yew (since 12 August 2004).|
|Cabinet:||Appointed by the president, responsible to Parliament.|
|Elections:||President elected by popular vote for a six-year term; election last held 28 August 1999 (next to be held by August 2005); following legislative elections, the leader of the majority party or the leader of a majority coalition is usually appointed prime minister by the president; deputy prime ministers appointed by the president.|
|Election results:||Sellapan Rama (S. R.) NATHAN elected president unopposed.|
Unicameral Parliament (84 seats; members elected by popular vote to serve five-year terms); note - in addition, there are up to nine nominated members; the losing opposition candidate who came closest to winning a seat may be appointed as a "non-constituency" member
Elections: last held 3 November 2001 (next to be held not later than 25 June 2007)
Election results:seats by party - PAP 82, WP 1, SPP 1
Judicial power is vested in the High Court and the Court of Appeal. The High Court exercises original criminal and civil jurisdiction in serious cases as well as appellate jurisdiction from subordinate courts. The president appoints its chief justice, senior judge, and six judges. The Court of Appeal hears appeals from the High Court. The right of appeal to the Privy Council in London was abolished effective April 1994.
Political parties and leaders
Governing party: People's Action Party or PAP (LEE Hsien Loong); opposition parties: Singapore People's Party or SPP (CHIAM See Tong); Workers' Party or WP (Sylvia Lim Swee LIAN)
According to the constitution, as amended in 1965, Singapore is a republic with a parliamentary system of government. Political authority rests with the prime minister and the cabinet. The prime minister is the leader of the political party or coalition of parties having the majority of seats in Parliament. The president, who is head of state, previously exercised only ceremonial duties. As a result of 1991 constitutional changes, the president is now elected and exercises expanded powers over legislative appointments, government budgetary affairs, and internal security matters.
In 1990, Lee Kuan Yew (LKY) stepped down as Prime Minister in favour of Goh Chok Tong, but remained in PM Goh’s cabinet as Senior Minister. In 1991, the constitution was amended to provide for an elected president. Although largely ceremonial, the President has a role in safeguarding the national reserves, the so-called 'dual-key' policy. The parliamentary system has also been adjusted to provide for nominated MPs and grouped constituencies.
Lee Hsien Loong (LKY’s son) succeeded Goh Chok Tong as PM on 12 August 2004. LKY is still synonymous with Singapore and as a serving member of the Cabinet continues to exert influence from his position as ‘Minister Mentor’ in the Prime Minister's Office.
Basis economic facts
GDP (2002): USD 120.9 billion
Growth rate (2002): 8.1%
Per capita GDP (2002):USD 27,800
Main industries: Manufacturing (particularly electronics, engineering, biomedical sciences, and chemicals), financial and business services, and commerce.
Singapore is a model of economic development. From independence in 1965, it achieved almost uninterrupted growth of nearly 8% per annum for over three decades. By the 1990s, it had GDP a per capita level similar to many OECD countries and it was acknowledged widely as one of Asia’s “tigers”. The contrast between Singapore and some of its regional neighbours is all the more striking given its size and lack of natural resources.
Until recently, Singapore had experienced few periods of economic difficulty. However, Singapore was hit hard in 2001 by a downturn in its key global markets (particularly the US) and a collapse in demand for electronics goods. As a result, Singapore experienced in 2001 its worst recession since independence: GDP fell 1.9% after growing almost 10% in 2000. Although the economy grew again by 2.2% in 2002, Singapore was hit hard again in 2003 by SARS (Severe Acute Respiratory Syndrome). The Singapore government handled the outbreak better than most, but the economic fallout was significant, particularly in the retail, tourism and consumer-services sectors, and GDP grew by only 1.1% in 2003. Nevertheless, Singapore's economy remains fundamentally sound and has made a strong recovery.
Singapore is a significant international financial and investment centre, and in particular as a major offshore financial centre. In 2004, there were 111 commercial banks in Singapore, of which 47 were offshore banks, down slightly from 50 in December 2003. There are also 23 full banks and 36 wholesale banks in Singapore. All offshore banks are branches of foreign banks. Singapore does not permit shell banks, either in the domestic or offshore sectors. The Monetary Authority of Singapore (MAS), a semi-autonomous entity under the Ministry of Finance, serves as Singapore’s Central Bank and financial sector regulator. There are no offshore trusts, although banks may open trust, nominee, and fiduciary accounts. All banks in Singapore, whether domestic or offshore, are subject to the same regulation, record keeping, and reporting requirements, including regarding money laundering and suspicious transactions.
Any person who wishes to engage in business, whether local or foreign, must register under the Companies Act. Every Singapore-incorporated company must have at least two directors, one of whom must be a resident in Singapore, and one or more company secretaries, who must be resident in Singapore. There is no nationality requirement. A company incorporated in Singapore has the same status and powers as a natural person. Bearer shares are not permitted.
In 2000, MAS first issued a series of regulatory guidelines ("Notices") requiring banks to apply "know your customer" standards, adopt internal policies for staff compliance, and cooperate with Singapore enforcement agencies on money laundering cases. These Notices are regulatory in nature and are enforceable by prosecution. Similar guidelines exist for securities dealers and other financial service providers. Banks must obtain documentation, such as passports or identity cards, from all personal customers, so that the bank can verify their names, permanent contact addresses, dates of birth, and nationalities, and conduct inquiries into the bona fides of company customers. The regulations specifically require that financial institutions obtain evidence of the identity of the beneficial owners of offshore companies or trusts. The guidelines also mandate specific record keeping and reporting requirements, outline examples of suspicious transactions that should prompt reporting, and establish mandatory intra-company point-of-contact and staff training requirements. Similar guidelines and notices exist for finance companies, merchant banks, life insurers, brokers, securities dealers, investment advisors, and futures brokers and advisors.
A company incorporated in Singapore may be exempt or non-exempt, depending upon its turnover and shareholders. Where a private limited company has a turnover of less than S$5million and all shareholders (not exceeding 20 in number) are not themselves incorporated (i.e. natural persons, whether or not acting as nominees, whether or not resident in Singapore), then the company would be exempted from audit and statutory filing of accounts. A directors’ statement would instead be filed, and an appropriate income tax return made to the Inland Revenue Authority of Singapore.
A Singapore incorporated company may be resident or non-resident depending on its place of central management and control and the origin of its trading income. Where a company has the majority of its directors resident outside Singapore (there must always be one Singapore-resident director) and does not carrying on business in, or derive profits from, Singapore it will generally only be taxable on income remitted to Singapore. Although the law is uncertain in this regard, the utilisation of Singapore’s network of tax treaties is probably restricted to those companies that are resident in Singapore. Properly structured arrangements can therefore gain access to these treaties.
Incorporating a company in Singapore, in addition to the taxation benefits referred to below, has various other advantages. These include the ease with which bank account opening occurs, the fact that beneficial ownership of companies need not be disclosed to any authority and Singapore does not appear on the blacklist of most onshore jurisdictions.
The 2004 budget reduced the current rate of corporation tax to 20%, with a remission of 75% for taxable profits below S$100,000 in any given year of assessment. A Singapore resident company is only taxed on Singapore source income and foreign income that is remitted to Singapore. Where all income is derived extra territorially, a Singapore company substantially controlled from overseas will be taxable on an amount of 5% over the operating costs arising in Singapore. Where a company seeks to access Singapore’s network of double taxation treaties, management and control in Singapore would probably be a fundamental requirement.
Singapore is a member of the UN, the Commonwealth, ASEAN, APEC, and the WTO. Singapore served for the first time on the UN Security Council in 2001 and 2002. Prime Minister Goh was the driving force behind biennial Asia Europe Meetings (ASEM). In keeping with Singapore’s position as a trading nation, Singapore is a strong supporter of free trade and uses its membership of APEC and the WTO to press for progress in this area.