Singapore Corporate Compliance and Challenges
Singapore has a well-developed market, skilled workforce, and a robust corporate infrastructure that makes it an excellent place to expand your business. According to the World Bank, Singapore is the second easiest nation in which to conduct business (after New Zealand).
The business climate of Singapore has its foundation set in globalization, focusing on the principles of quality, reliability, productivity, and integrity. It is vital to gain basic knowledge of the local laws and regulations if you wish to form a company in Singapore. Here is a breakdown of the country’s corporate compliance requirements and the challenges associated with them:
Registering an Office
It is necessary for a company operating in Singapore to have a registered office address that can help facilitate instant communication. The office has to be a physical location inside Singapore which stays open to the public for a minimum of 3 business hours every day.
Make sure you gain the approval of the relevant government bodies to successfully register your office. Thoroughly research government organizations, such as the Land Transport Authority, Ministry of Environment, the Inland Revenue Authority, Urban Redevelopment Authority, and the PUB-Water Reclamation Network Department, before registering.
Appointing a Local Resident Director
Global expansion in most countries requires employing a local resident director. To form a company in Singapore, it must have at least one director who must be a Singaporean citizen, a Singapore permanent resident, or a holder of Employment Pass/Entrepreneur Pass/Dependent Pass.
The director must be above 18 years of age and be physically and mentally fit. Moreover, they must not have been declared bankrupt and must not be disqualified from acting as a director by any authoritative body.
Appointing a Company Secretary
A company operating in Singapore must appoint a company secretary who would ensure that the firm adheres to all regulatory and reporting requirements. By law, the position of a company secretary cannot be left vacant for more than 6 months.
The local company secretary must be a Singapore resident and be well-versed in the Companies’ Act in order to fulfill their duties correctly. Their responsibilities include communicating due dates and sharing information regarding meetings and other compliance-related matters with the directors and shareholders. A director can also be a company secretary if multiple directors are involved in the company.
Company Name and Unique Entity Number (UEN)
The Accounting and Corporate Regulatory Authority (ACRA) provides a Unique Entity Number (UEN) to a company after it is incorporated. This identification number is meant for fulfilling government requirements such as tax filing.
The company title and UEN must be displayed on the company’s official documents including business letters, official notices, publications, statements of accounts or invoices, and bills of exchange, indorsements, promissory notes, orders, cheques, receipts, and letters of credits.
Company Registers’ Maintenance
A Singaporean firm must maintain some company records and registers for corporate government and transparency purposes. These may include:
- Register of Directors, Chief Executive Officers, and Secretaries
- Register of Substantial Shareholders
- Register of Controllers
- Register of Nominee Directors
Appointing an Auditor
All companies, excluding the exempt private companies (EPC), must employ an auditor within 3 months of their registration. If your company falls under the category of a “small company” as per Singapore laws, you may be exempt from audit. These companies should meet the following requirements for the last 2 consecutive years:
- Total revenue less than or equal to $10 million
- Total assets less than or equal to $10 million
- Employees numbering less than or equal to 50
Obtaining a Work Pass
Global expansion often requires acquiring a work pass of the country you have chosen to operate in. If you are a non-national, you need to obtain a work pass to live and work in Singapore.
The applications are evaluated by the Ministry of Manpower on a case-to-case basis. The assessment focuses on your academic qualifications, experience, job suitability, and the analysis of the sector you aim to operate in. It is often easier for individuals and companies to outsource this procedure to a compliance regulatory agency within Singapore.
Acquiring a Business License
The nature of your company, along with the industries and activities it would interact with, will determine the kind of license it requires. It must be acquired before your firm performs any transaction or engages in any activity. Business activities generally include trading, manufacturing food and beverage, and operating a medical clinic. It is crucial to conduct thorough research to figure out which business license is suitable for your firm.
Filing Corporate Income Taxes
Singapore businesses are taxed on the income in the previous financial year. Two corporate income tax forms must be submitted to the Inland Revenue Authority (IRAS) each year:
- Estimated Chargeable Income
- Form C-S/C
However, some of these rules may be waived if your business meets certain conditions.
Preparing Employee Tax Forms
The law requires employers to prepare some forms for each employee, such as the Form IR8A, Appendix 8A, Appendix 8B or Form IR8S by March 1. Workers in your company would file their taxes according to the information in these forms.
Alternatively, you can choose to get your business registered for the Auto-Inclusion Scheme (AIS) that facilitates submitting your employees’ employment information to the IRAS electronically. When the time comes in March, all you would have to do is remind your employees of their duty to file.
Registering for GST
To form a company in Singapore, registering for the Goods and Services Tax (GST) is a vital early step. This is akin to the Value Added Tax (VAT) and is applied to certain goods, services and imports. It may be mandatory for your company to become a GST-registered entity.
After registering for GST, your business would need to file a tax return to the authorities according to your accounting cycle. While GST registration may be exempted under certain conditions, registering remains highly favorable for Singapore-based companies.
Your corporation in Singapore would be required to hold an Annual General Meeting (AGM) each year to display its financial statements and accounts to the shareholders. When you form a company in Singapore, make sure that you submit annual returns to the Accounting and Corporate Regulatory Authority (ACRA). For more insights on expanding your business to different markets around the globe, click here to explore our website.