According to an article by Channel News Asia (CNA), nearly 103,600 company incorporations were formed between March 2020 and September 2021. The data indicates that the COVID-19 pandemic has indeed catalysed the birth of entrepreneurs in this modern digital age.
Why does Singapore attract so many new company incorporations? That is because it has one of the lowest corporate tax rates in the world. Additionally, it has also been considered by many as the gateway to the ASEAN region and is known for its business friendly policies. Furthermore, Singapore is being ranked in the top 10 host economies for FDI (foreign direct investment) inflows.
There are several reasons why Singapore is the preferred country for new company incorporation be it local or foreign business owners and here are 3 of the top reasons:
Why Choose Company Incorporation In Singapore
1. Attractive tax regime
Singapore’s tax system is simple and rational. It does not levy taxes on capital gains or dividends and the highest corporate tax rate is capped at 17%. This alone, makes it a strong reason why many entrepreneurs prefer Singapore for new company incorporation.
A tiered system is used for both personal and corporate taxes. New companies receive significant tax breaks during their first 3 years, reducing their tax rate to 0% for the first $100,000 of income.
A similar scheme applies to personal taxes. The personal tax rate starts at 0% and rises gradually to a maximum of 20% for income above S$320, 000. Furthermore, corporate profits are not double taxed when they are passed to shareholders as dividends.
2. Strategic location with solid infrastructure
Strategically located at the crossroads of the main trade and shipping routes of the world, Singapore is well known as a transportation hub and for its sophisticated seaport infrastructure. Changi Airport has been consistently ranked as the world’s best airport and its port is also consistently awarded the “Best Seaport in Asia”.
Singapore’s stable political environment, accessibility and convenience of public and digital services as well as cosmopolitan ambience are an attractive force for business owners and investors. It is one of the most stable and prosperous countries in Asia.
With a solid infrastructure and rich variety of entertainment, hotels, attractions and internally recognised schools, it is a good place to live, work and study, making it highly desirable for company incorporation. The high quality of living in Singapore has been validated by a global human resource consultancy, Mercer.
3. Efficient legal system and excellent IP protection
Singapore’s legal system is a combination of the common law and best practices from other mature legal systems. Being the least bureaucratic country in Asia, it has received global recognition for its efficiency and integrity.
CPIB has reported that Singapore has retained its high score of 85 for the Transparency International (TI) Corruption Perceptions Index (CPI) for 2021. Out of 180 countries, Singapore is ranked the 4th least corrupt nation in the world, tied with Sweden and Norway.
Businesses do not need to worry about red tape or slowing down of operations due to bribery or slow legal processes because Singapore’s legal system is renowned for its fairness and impartiality, making it the natural location of choice for dispute resolution in Asia.
Singapore also provides a robust intellectual property (IP) rights regime, backed by its trusted, fair legal system and strong IP infrastructure. The IP policy is aligned accordingly with the objectives of encouraging innovation, creativity and growth of industry and commerce in the country.
Besides the 3 top reasons, there is another important element why new business owners or entrepreneurs prefer Singapore for company incorporation and that is due to the government’s strong support to businesses under the Singapore Budget.
The Government Provides Strong Support To Businesses
Started in 1959, the Singapore Budget includes the revised government revenue and expenditure projections for the current financial year, as well as the planned government revenue and expenditure in the coming financial year. It is prepared for each financial year, which begins on 1 April of every calendar year and ends on 31 March of the next calendar year.
The Singapore Budget 2022 provides targeted help where needed, for workers, businesses and households. Investing in enterprises and people, the government helps businesses to transform, encourage the development of new capabilities in employees, renew and strengthen social impact by preparing for future healthcare as well as uplifting lower wage workers etc.
Support measures are revised according to the country’s needs every year and several initiatives are available to help businesses. They are:
1. Immediate Support For Businesses
*Information is taken from https://www.mof.gov.sg/
- $500 million Jobs and Business Support Package
- New Small Business Recovery Grant
- $1,000 payout per local employee (up to $10,000 per firm) for SMEs in sectors most affected by COVID-19 restrictions
- $1,000 payout to local sole proprietors and partnerships in eligible sectors, and SFA-licensed hawkers, market as well as coffeeshop stall holders who do not hire local employees
- New Small Business Recovery Grant
- Extend Jobs Growth Incentive to September 2022 to encourage hiring of workers who face greater difficulties in finding jobs
- Extend Temporary Bridging Loan Programme and Enterprise Financing Scheme (EFS) – Trade Loan to 30 September 2022, with revised parameters
- Extend enhanced EFS – Project Loan to 31 March 2023 to support domestic construction projects
- Aviation Support Package to preserve core capabilities and enhance status as an international aviation hub
2. Digitalisation And Innovation
- Additional $200 million for building digital capabilities
- Increase capacity of centres that engage in technology, innovation and enterprise activities in Polytechnics and ITEs over the next 5 years
3. Strengthen Local Enterprises
- $600 million to scale up Productivity Solutions Grant (PSG) to support more than 100,000 PSG projects over the next 4 years
- New Singapore Global Enterprises initiative for larger local enterprises to innovate and internationalise
- New Singapore Global Executive Programme to attract more young local talent to join Singapore global enterprises
4. Enterprise Financing Scheme
- Enhance Merger & Acquisition (M&A) loan to include domestic M&A activities from 1 April 2022 to 31 March 2026
- Maintain 70% risk-share under enhanced Trade Loan beyond 30 September 2022 for enterprises trading in nascent markets
In summary, Singapore is the perfect country for new company incorporation due to its sound governance and support via various initiatives etc. The pandemic has only served to help in building a more resilient and inclusive country.