With Singapore’s position as the global business capital, it’s understandable why many entrepreneurs across the world would want to start up a company in one of Singapore's numerous, buzzing business districts. But can a foreigner start a business in Singapore?
The good news is, foreign individuals can indeed register a company in Singapore. As a matter of fact, thousands from various countries have already set up different types of companies, which continue to enjoy all the business benefits the city-state offers.
However, the whole process of starting a business in Singapore may not be that simple for foreign individuals. The Accounting and Corporate Regulatory Authority (ACRA), along with other government bodies, have enacted stricter conditions for foreign applicants.
In this article, we feature a guide on starting a business in Singapore for foreigners, as well as setting up company registration and company incorporation. Read along as we reveal not only the types of businesses available, but also the accompanying registration requirements and costs.
Foreign Individuals vs. Foreign Companies
Singapore offers foreign individuals multiple corporate structures. It’s worth noting, however, that your specific range of options depends on how you choose to register the Singapore business. The type of business entity will determine the requirements and documents you need to file, as well as the limitations of your company to operate within the country.
If you intend to start the business or Singapore company from scratch, you will need to abide by the regulations set by the country's government agencies. The Singapore’s Companies Act allows you to choose between the following core categories:
- Sole Proprietorship.
- Private Limited Company.
- Limited Liability Partnership.
But, on the other hand, if you seek to expand an already existing foreign company into Singapore, you get to choose between the following types of overseas establishments:
- Subsidiary Company.
- Branch Office.
- Representative Office.
Foreign entrepreneurs must secure an employment pass to be able to legally work in Singapore. The employment pass may be acquired through your employer, who will assist you in filing the requirements needed. That said, let’s now explore the main features you should expect from each corporate structure.
Corporate Structures For Foreigners Starting a New Business In Singapore
Sole Proprietorship
- The business is not recognized as a separate legal entity from its owner.
- The business is managed and administered directly by a single proprietor.
- The proprietor is entirely responsible for all the liabilities, losses, and debts that arise from the business.
- Revenue from the Singapore business is considered part of the owner’s personal income.
- The Singapore business doesn’t pay corporate income tax. Instead, the Inland Revenue Authority of Singapore (IRAS) charges its owner personal income tax that encompasses profits from the business.
- The personal income tax rate after starting such a business in Singapore for foreign nationals ranges between 0% and 22%.
Private Limited Company (Pte Ltd)
- The business is recognized as a distinct entity that exists separately from its owners.
- The business equity is divided into shares, with 1-50 shareholders getting their rightful ownership stakes.
- Starting such a business in Singapore for foreign nationals requires a paid-up capital of at least S$1.
- The business itself assumes the rights of a natural person, meaning it can acquire, sell, and register property in its name.
- The owners’ personal assets are protected from the losses, debts, and liabilities arising from the business.
- The company must have a local or nominee director that is a Singapore citizen.
- The net business revenue is charged a corporate income tax rate of 0%-17%.
- The business is required to file its taxes, financial statements, and AGM reports every year.
- The Singapore company is free to set up and run a corporate bank account.
Read more: Private Limited Company Registration Guide
Limited Liability Partnership (LLP)
- Can be registered in Singapore by two or more foreign nationals, with the maximum number being 20.
- The Singapore business is more of a partnership that happens to exist and run as a separate entity from its owners.
- Thanks to its limited liabilities, starting such a business in Singapore allows foreign nationals to keep their personal assets safe from any business debts, losses, or risks.
- IRAS considers revenue made from the business revenue as part of its owners’ personal incomes.
- The partners end up paying personal income tax on the business revenue at a rate of 0%-22%.
- LLPs are particularly preferred by professional agencies.
Read more: Limited Liability Partnership Registration Guide
Corporate Structures In Singapore For Foreign Companies
Unlike individual foreign nationals, foreign companies can start their own specialized forms of business structure- which include:
Subsidiary Company
- The subsidiary Singapore company is incorporated as a limited liability entity that exists and runs separately from the parent foreign company.
- While the business is allowed to have multiple shareholders, its parent foreign company can choose to proceed as a sole shareholder, with 100% of the shares.
- The Singapore company can acquire, sell, and register property (including real estate) in its name.
- Revenue from the business is charged a corporate income tax rate of between 0% and 17%.
- Losses, debts, and liabilities arising from the subsidiary Singapore company cannot be extended to the foreign parent company’s assets.
- To register such a company in Singapore, a foreign company requires a minimum paid-up capital of S$1.
- The parent foreign company is required to relocate one of its employees to Singapore (under an Employment Pass) to manage the subsidiary Singapore company.
Read more: Subsidiary Company Registration Guide
Branch Office
- A branch office does not exist as a separate entity from its parent foreign company. Instead, it’s treated as a local extension of the parent foreign company.
- It comes with unlimited liabilities- meaning the parent company assumes full responsibility for all the losses, debts, and liabilities.
- Creditors can go ahead and legally recover any unpaid debts from the parent company’s assets.
- A branch office is required to hire at least one local Singapore resident.
Read more: Branch Office Registration Guide
Representative Office
- A representative office is only a temporary establishment for conducting market research and feasibility studies in Singapore.
- The Singapore company is not recognized as a separate legal entity from its parent foreign company. Rather, the two are essentially one and the same entity.
- Such an establishment does not have the privilege of engaging in any profit-making activities.
- It comes with unlimited liabilities.
- It can only hire a maximum of 5 employees.
- To register are presentative office company in Singapore, the parent foreign company should have a company history that spans more than 3 years, along with a corresponding annual turnover of at least S$250,000.
Key Requirements for Foreign Nationals Setting Up a Company in Singapore
The Singapore company registration requirements across various business entities are quite different, even for foreigners. So, as you compare the company options based on their corporate features, you might want to consider their corresponding incorporation requirements as well.
And to help you with that, here’s a breakdown of the registration requirements in Singapore for foreigners in each of the categories; sole proprietorship, Pte Ltd company, and Partnership.
Sole Proprietorship Registration Requirements For Foreigners In Singapore
- The foreigner must be at least 18 years of age.
- You should not have a bankruptcy or criminal history.
- The application process is conducted on ACRA’s BizFile+ portal, with the help of a registered incorporation services provider.
- The foreigner should be a permanent resident of Singapore, with a valid resident’s pass such as EntrePass, Employment Pass, or Dependant’s Pass.
- If the foreigner happens not to be a permanent resident of Singapore, they should appoint a local representative who resides in Singapore.
- In that case, the local representative assumes full responsibility for the company’s operations and liabilities.
- The Singapore business should have a local residential address.
- An approved business name should accompany the application.
- ACRA Singapore further requires applicants to submit an explicit description of the business activities.
- A foreigner must appoint at least one local or resident director of at least 21 years of age, and who should be a local resident in Singapore. Otherwise, the owner is automatically assumed to be the business manager.
Limited Liability Partnership (LLP) Registration Requirements For Foreigners In Singapore
- Starting an LLP business in Singapore is open to foreigners of at least 18 years of age.
- The application should include a minimum of 2 partners and a maximum of 20, who can be individuals or Singapore company entities.
- As a foreigner, you’re required to appoint a local manager who resides in Singapore. This gives you the chance to administrate the company without relocating to Singapore.
- If you intend to run the LLP Singapore company yourself, you should first secure a valid resident’s pass from the Ministry of Manpower (MOM) before proceeding with the application.
- The LLP business should have a registered residential address in Singapore.
- While all LLP incorporation applications are submitted via ACRA’s BizFile+, foreigners cannot proceed directly. They are, instead, required to hire a registered filing agent to handle everything on their behalf.
- Each application should be accompanied by an approved and unique business name.
- Other required documentation includes; Consent to Act as Manager, Statement for Non-Disqualification to Act as Manager, Declaration of Compliance, plus the personal details and proof of the residential address of each partner.
Private Limited Company (Pte Ltd) Registration Requirements For Foreigners in Singapore
- To register a private limited company in Singapore, you first need to be at least 18 years of age.
- The application should be filed on ACRA’s BizFile by a registered incorporation service provider based in Singapore.
- The Pte Ltd company in Singapore should have at least one shareholder.
- Should have at least one company director, who could double up as a shareholder. And although you’re free to include multiple foreigners, at least one of the directors should be a permanent resident in Singapore.
- A foreigner can only qualify as the company’s resident director after securing a valid resident’s pass like EntrePass. Alternatively, foreigners can go ahead and appoint a local representative based in Singapore.
- The application should state a paid-up capital of at least S$1. But, if you intend to manage the business from Singapore, you need a paid-up capital of at least S$50,000 to boost your chances of securing an Employment Pass from the MOM.
- The business entity should have a local registered address.
- The application should include the personal details of all the company’s shareholders and directors- in the form of copies of your identification documents and foreign passports.
- You should attach a comprehensive company constitution, complete with its Memorandum of Association and Articles of Association.
- You need to appoint an auditor and a company secretary, and then submit their details to ACRA.
- Attach a unique business name, fully approved by ACRA.
How Much Does It Cost to Incorporate a Company in Singapore?
Well, the truth is, it depends.
The cheapest it can cost you is $315- $15 for reserving a unique business name, and $300 for company registration. But, get this- that only applies to locals in Singapore. If you’re looking to start a business in Singapore as a foreigner, you can expect a much costlier incorporation process.
ACRA, for starters, tends to charge foreigners higher company registration fees. And then there’s the issue of hiring a filing agent to submit your BizFile applications. The costs don’t end there, though.
You might also be required to apply for a resident’s pass or entrepreneur pass like EntrePass or Employment Pass- whichever you choose, the Ministry of Manpower will charge you an application fee at the very least. You may also incur additional indirect expenses from buying or renting business premises, hiring local representatives, and filing business license applications.
Next Steps After Setting Up a Business in Singapore
Once you register a company in Singapore as a foreign national, you should proceed to:
- Open a corporate bank account with one of the local or international banks in Singapore.
- Apply for relevant business licenses from Singapore’s GoBusiness platform.
- Apply for Employment Passes to manage your business from Singapore.
- File your taxes before the 15th of December every year.
- Enroll with relevant government business schemes for foreigners.
- Hold your company’s Annual General Meetings along with other shareholders and directors every year, within 6 months from the close of the financial year.
- File your company’s annual returns within 30 days after the AGM.
Where To Start - Singapore Company Incorporation
We know what you might be thinking at this point. While it’s a relief that foreigners can indeed start fully-fledged companies in Singapore, this whole process can be a bit technical and cumbersome.
We understand. That’s why our corporate experts are willing to make everything easier and much cheaper for you. So, go ahead and talk to us today for essential corporate services like Singapore company incorporation, incorporation filing, compliance filing, payroll management, and accounting.