There are many advantages to incorporating an offshore company in Singapore. Local entities, are identified as maintaining daily business operations within the jurisdiction of Singapore, they must pay a corporate tax rate of 17 percent. Offshore corporations, that are registered in Singapore, but whose business operations remain outside the BVI territories, remain exempt from taxation, even if their annual sales exceed one million dollars. This does not apply to exempt private companies, in order to receive the maximum tax benefits their annual sales are limited.
The biggest consideration for corporate partnerships is that they remain exempt from paying taxes; the status does not change with profit and loss. Primarily this works best for small to medium size corporation.
In order to capitalize on this major benefit, the companies must adhere to the following, before the application is initiated:
• One or more of the directors, must reside in or be a citizen of Singapore.
• Have a minimum of one shareholder (not to exceed the maximum number of 50 shareholders).
• At least one of the secretaries must be qualified to maintain and control the corporation’s documents.
Besides establishing intent to engage in business exclusively outside of Singapore, the responsible person or persons(s) must hire a professional firm for the express purposes of submitting the application. The business application cannot be rendered without a SingPass. SingPass stands for Singapore Personal Access. The Singaporean Accounting and Regulatory Authority, requires a SingPass, which is a password that is assigned along with a business registration number on all offshore applications.
A BVI company is considered tax exempt and it is classified as a limited liability partnership (LLP), with all the rights and flexibility, which exists for non-biased corporate financial responsibility. This simply means that in order to claim tax exempt, the corporation’s accumulated earnings, including annual profits should not be derived from business transactions conducted within Singapore.
The most significant feature of offshore corporation is that sole proprietorship is strongly encouraged, the director, shareholder and the secretary can be the same person. This makes Singapore an excellent place to incorporate an offshore business. The tax benefits can be claimed as long as the corporation does not actively engage in business operations in any BVI jurisdiction.
Singapore is considered one of the best countries to establish an offshore corporation. However, there are specific documents, which must be submitted before the application is considered complete. These include the names of the shareholders, the amount of company equity, the name, and address of the business owner, and the name of the BVI Company.
Reasons for registering an offshore company vary. However, BVI Companies that engage in global trading benefit the most from having a tax-exempt status, because of their “no Stamp Duty,” which entitles them to collect net profit, without being penalized for not selling shares to Singaporean citizens. Corporations that are established within the BVI territory can engage in business with other countries, but they cannot include the names and income in the application to register in Singapore.
Tom Ng writes on Singapore company formation and advantages of a BVI company. He also writes on corporate secretarial services available for new business registrations.