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Singapore

 
   

Executive Summary
The Republic of Singapore is an island state, located 137 km North of the equator at the Southern point of the Malay Peninsula. Its area covers 710.2 sq km. It is one of the smallest countries in the world and the smallest in Southeastern Asia. Singapore became independent in 1965 within the Commonwealth of Nations. Since then, the economy plan based on industry, education and urbanization has favored rapid economic growth and state modernization. Media, utilities and public transport are represented by government-linked companies. Singapore’s economy has been ranked as one of the least corrupted of the world.

Singapore is an international country, the population of which is approximately four and a half million people. English, Malay, Tamil and Chinese are its official languages. City of Singapore is the capital of the country. Singapore has one of the busiest ports in the world and it is the fourth largest foreign exchanges after London, New York and Tokyo. Singapore is one of the top financial centres, and has been rated as the most business-friendly environment.

Singapore is a parliamentary republic which follows a representative democracy political model. Unicameral parliament has legislative power, while executive power belongs to the Cabinet headed by the Prime Minister. The President of Singapore, in addition to ceremonial power, is granted several veto powers together with rights to make some key decisions, such as use of the national reserves and appointment of judiciary positions.

Singapore is a multi-religious country, main religions of which are Buddhism and Taoism. However, Christianity, Islam, Hinduism and Sikhism are also followed by a significant part of the population of Singapore. Although the laws of Singapore are based on English common law, inherited from British times, the country has decided not to follow some of liberal democratic values. For example, laws that restrict freedom of speech have been created and approved with the objective not to cause disharmony of the multicultural and multi-religious society of the state.

The Singapore Dollar (SGD) is the state currency.

Geography
The Republic of Singapore consists of Singapore mainland and other 62 smaller islands. Since 1960s the country lived significant urbanization processes on the major part of its territory. The variety of plant species is attentively preserved within the country, even though only 23% of Singapore’s territory is covered by the forest.

Singapore has tropical rainforest climate, there is not a strong difference between seasons. High humidity, rainfalls and uniform temperature averaging at 28 degrees C are characteristic to the country. The length of the day is almost constant all the year round due to a close location to the equator.

Map, Flag and Coat of Arm

 


Types of Company

The residence of a company is determined by the place of residence of the majority of directors from where they manage it.

Sole Proprietorship
If a person wants to register his own business under a chosen name and be fully liable for the debts of the company, he may register it with the Registrar as a Sole Proprietorship. No requirements for filing annual accounts exist, but the registration of a Sole Proprietorship must be periodically renewed. This type of structure is usually chosen for risk-free activities.

Partnership
Partners that decide to work together have to register the name of the partnership with the Registrar. No annual accounts must be filed. There are general and limited partnerships. Limited liability partnerships have been recently introduced in Singapore which are the most advanced business structures among partnerships.

Limited Liability Partnership
This type of organization unites elements of partnerships and limited companies. This is a suitable structure for specific professions such as lawyers, accountants and architects, who wish to cooperate under one single name, while this is not an appropriate structure for purely trading activities.

Private Limited Company
A private company can be limited by shares, guarantee or unlimited. The number of shareholders must not exceed fifty. This is the most widely used type of company, and the following traits are characteristic to it: it is a separate legal entity, it has a limited liability, a relative ease of raising capital, ease of ownership transfer, good image, incentives and tax benefits.

Public Limited Company
Shares of this company may be offered to a general public and the number of shareholders may exceed fifty.

Foreign Company
A company which is registered outside Singapore, but wishes to establish a branch in Singapore, may obtain a status of a foreign company. After having achieved approval of the company name and after having submitted all the necessary documents, a foreign company must have at least two representative agents in Singapore.

Holding Company
This type of company is attractive to establish in Singapore due to the jurisdiction’s good international reputation and advantageous taxation. In various cases Singapore holding company is not liable for taxes on income and dividends to its shareholders.

Taxation

Private
A tax year coincides with the calendar year, starting on1st January and ending on 31st December. Income tax is progressive, the rate of which varies from 0% to 20%,
depending on a person’s annual income. A resident is a person who spends at least 183 days in Singapore. Non-residents are taxed at a minimum rate of 15%, but cannot exceed 20%. Several tax reliefs are available only for residents.

If payments of a specific nature are made to non-residents from Singapore, a defined percentage is withheld by the authorities. In 2004 a new regulation was introduced, regarding income derived from different types of investments within Singapore which are not taxed; the list of exempted income is available on Singapore Ministry of Finance webpage.

Corporate
One-tier corporate tax system is implemented in Singapore, meaning that taxes paid by the company on chargeable income will not be applied to shareholders on dividends received from that income. Income tax rate for business activities conducted in Singapore ranges between 9% and 18%, while corporate tax is not levied on business income outside the jurisdiction.

Withholding tax is not levied on dividends. Rental equipment, interests and royalties payments to non-residents are taxed for the purposes of withholding tax at a rate of 15%. There is no capital gains tax in Singapore.

Social security contributions, property tax, road tax as well as value added tax and sales tax are payable.

 
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