Located at the heart of Asia, Singapore serves the fast-growing markets for the Asia-Pacific region, and as well as the rest of the world. It also offers world-class connectivity and well-developed infrastructure which enables easy access to global markets. No surprise to us, many foreign entrepreneurs have an eye to invest in. But, what are other essential things that you will get there? Thus, this article will provide you information about the considerations for expanding the business to the country!
Why Do Business in Singapore?
Singapore has a strong position as Asia’s risk management centre. Its global currency and derivative trading hub could enable international investors and traders to manage their investment, as well as trading portfolios efficiently from a single location. However, it makes Singapore consistently ranked as the world’s most active trading centre, besides London, New York, and Tokyo.
There are also some big industries in Singapore, and foreign entrepreneurs are interested in the country. The industries are financial services, electronics, chemicals, oil drilling equipment, petroleum refining, ship repair, tourism, manufacturing, and forth.
Based on the World Bank’s Doing Business Ranking 2020, Singapore has ranked second in Asia on a ranking of the simplest place doing business. In addition, Singapore has made dealing with construction permits to enhance its risk-based approach, to improve public access, and to streamline the process to obtain a construction permit.
Over the years, Singapore is well known as the world’s most business-friendly country. However, its economic freedom score is 89.4, making it the world’s freest economy in the 2020 Economic Freedom Index. The Singaporean government has also poured a budget to fund generous housing, transport, and healthcare programs.
Doing business in Singapore can save your money, as the costs of office rental here remain significantly lower than the rival financial centres, such as London, New York, Hong Kong, and Tokyo. In CBRE’s 2019 Global Prime Office Occupancy Costs, Singapore came on 14th places of the most expensive locations globally, but it’s much far behind Hong Kong Central (1st), London West End (2nd), Hong Kong Kowloon (3rd), New York Midtown Manhattan (4th), Tokyo Marunouchi / Otemachi (8th), and London City (9th).
Last but not least, Singaporean labor is more skillful and educated, especially in the IT industry and financial services industry. Singapore also has a globally competitive workforce, and it’s a plus point for foreign investors to expand the businesses there.
Essential Things You Should Know Before Expanding The Business There
Singaporean entrepreneurs have a desire to expand their businesses abroad, in order to do so they need to gain access to a larger consumer market. It means an increment in the overall revenue of the company is needed. Hence, there are many plus points that can be derived from international company expansion.
There are essential things that you should pay attention, before expanding your business to Singapore. And, they are:
1. The Easiness of Company Incorporation
As mentioned above, Singapore is an easy place to conduct a business by registering and incorporating a company there. As long as you have all necessary requirements, you can submit the application, and your company is eventually established in a suitable way. Both local and foreign entrepreneurs can be legally permitted to set up a company in the country.
The first step of processing to set up a foreign company is creating a representative office. An authorized representative office will assist a business owner with market research, compliance, and pricing schemes.
However, foreigners entering Singapore for business purposes have three options in which they can use to establish a business. They can set up a subsidiary company, set up a branch, or incorporate it with a local company to facilitate their business activities. This depends on your business needs.
2. Singapore’s Outstanding Tax System
Taxes are quite an interesting topic for any entrepreneur, and one of the key considerations for setting up a business in Singapore, or even anywhere in the world. One of Singapore’s unique advantages is its low effective personal and corporate tax rates. Personal income tax has a tier system that starts from 9% and goes up to 22% for income above S$320.000.
Then as well, corporate tax rate is capped at a flat rate of 17% on a company’s chargeable income. There are no capital gains taxes in Singapore, which follows a single-tier tax policy for income that has been taxed at the corporate level, but dividends can be distributed to its shareholders tax-free.
The government itself has adopted a more broad-based consumption tax called Goods and Service Tax (GST) in order to be a dependency on income taxes to make the country’s economy more competitive. In addition, Singapore maintains one of the world’s lowest GST rates at currently 7%, ranking below the global average VAT/GST rate of 16.4%, and the Asia-Pacific average of 10.5%.
3. Flexible Immigration Policies
Singapore has an open immigration policy that facilitates the relocation of foreign nationals for those who want to set up business there. If you are an entrepreneur who wants to expand or run your business there, the government has prepared for your needs and made appropriate Singapore work visa provisions.
In order to help value-adding individuals settle permanently, Singapore has a flexible immigration policy, making it easier for foreign business owners to gain Singapore Permanent Residence (PR) status.
4. Trade Agreements
Singapore is part of many trade agreements that have been offered to facilitate business activity across the country. The first trade agreement whichever included Singapore was regarding the ASEAN Free Trade Area (AFTA).
The trade agreement first came into force in 1993, and until today, Singapore becomes a part of a great many trade agreements with countries all over the world. The country also continues to be involved in trade agreement negotiations with other countries.
Singapore’s many free trade agreements facilitate the conduction of business and trade activities with other countries. Thus, it’s allowing foreign businesses to be able to expand business operations to Singapore.
In conclusion, many foreign investors definitely have an eye on Singapore as an emerging market to expand their businesses. All these reasons can convince foreign investors to invest and open a business in Singapore. Furthermore, the investors have to prepare everything before venturing into the country, such as prepare the related documents in advance as well as be aware of all the regulations. If you need help to expand your business, you can contact us below. Viettonkin will always be here to assist you anytime!