Singapore Companies and Singapore Limited Partnerships

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General Introductory and Offshore Tax Information

As a rapidly emerging market, Singapore has become a leading offshore jurisdiction for incorporating offshore business entities. Singapore is not only characterized by high-end infrastructure, advanced ICT and a cosmopolitan business climate, but a fiscal regime which is highly appealing to investors.

Similar to Hong Kong, Singapore levies taxes on companies based on residency which is assessed depending on the country in which the Singapore company is controlled and managed. Singapore companies can freely determine whether operations are undertaken in Singapore or in another jurisdiction and can be owned by non residents as equally as local nationals and citizens. Singapore companies which operate offshore and are not resident are therefore not subject to Singapore taxation and in this way is totally capable of operating as an offshore company. On the other hand, resident Singapore companies including branches of foreign companies and subsidiaries are subject to a corporate tax rate which was lowered to 17% in 2010. Prior to this, resident Singapore companies paid 18%.

Singapore’s economic predominance as an international trading and financial center has made the issue of double taxation a major concern. Overseas based and Singapore companies require relief from double taxation for trading activities as well as the remission of income, funds and dividends from one country to another. Due to this, Singapore has extensive anti double tax provisions which are applicable in numerous circumstances. Singapore has thus built an extensive network of tax agreements which generally aim to avoid double taxation of persons and corporations, while concessionary fiscal regimes and tax credits are provided as alternatives which address and avoid double taxation as well.

Generally, Singapore offshore business entities stand to benefit from DTA’s enable incoming and outgoing dividends to be relieved from onerous withholding tax charges, corporate income tax on dividends and from capital gains tax on the sale of shares. As such, Singapore offshore companies and entities are not exposed to their dividends being subject to withholding tax in Singapore if tax was already paid in a country with which Singapore has a DTA in the process of remitting the dividends. Plus, if a Singapore holding company receives dividends in Singapore from a subsidiary which is based in a country with which Singapore has signed a DTA, full exemption from corporate tax may be granted according to the provisions of the double tax agreement and the category in which the income is placed, or a tax credit may be given. In the event that dividend was remitted to Singapore from a subsidiary country with which Singapore has no DTA’s, a tax credit is extended only if no less than 25% of the foreign company’s shares are held by the Singapore company. On the other hand, dividends sent out of Singapore to overseas parent companies do not necessarily suffer withholding tax if income tax was already paid on the funds.

Singapore Offshore Business Entities

Singapore Offshore Company

  • Regulation — Companies Act, Cap 50
  • Companies incorporated or registered in Singapore are free to do business in or outside Singapore
  • Registered office in Singapore required at all times for correspondence and receiving notices
  • At least one director must be an ordinary resident of Singapore
  • If there is a sole member, such member is able to be the sole director as well
  • Singapore companies are required to keep a Register of Members
  • The Register of Members must state the date that each person was entered on the register, the date on which anyone terminated membership of the company and the number of shares held by and allotted to each member
  • A Register of Shares of the majority shareholders is to be maintained at the registered office at all times
  • A Singapore company may decide to have a Reserve Liability by special resolution, whereby the company’s share capital can only be called up under special circumstances
  • Capable of amending share capital in accordance with Articles by consolidating or dividing share capital; by subdividing the amount between the paid-up and outstanding shares; by converting or reconverting paid-up shares into stock; and by cancellation of shares by resolution
  • Any company amendments must be submitted to the Registrar within 14 days
  • Minutes of meeting must be prepared for all meetings held by directors and managers of the company

Singapore Subsidiary and Holding Company

  • A corporation whose board of directors is controlled by another corporation
  • Over half the voting power is controlled by another corporation
  • Over half the issued share capital is held by another corporation

Singapore Ultimate Holding Company

  • Refers to the controlling company of a subsidiary
  • Is not a subsidiary of any corporation

Singapore Wholly Owned Subsidiary

  • A subsidiary is considered wholly owned if controlled solely by the holding corporation, or if operating as the nominee of the holding

Singapore Limited Liability Partnership (LLP)

  • Regulation — Limited Liability Partnerships Act (Chapter 163A)
  • Singapore LLP’s are legal entities distinct from the partners
  • To be formed with no less than 2 partners
  • At least one manager must be ordinarily resident in Singapore
  • All managers must be 18 and above and legally capable of fulfilling duties as manager
  • Has perpetual succession
  • Existence, liabilities and powers of Singapore limited liability partnership unaffected by change of partners
  • Partners can be natural or legal persons of any nationality
  • All obligations are tied to the LLP and not the partners whether incurred in tort or by contract
  • Partners are not personally responsible for liabilities simply based on the fact of being partners
  • Firms and private companies are allowed to be converted into LLP’s pursuant to the necessary rules
  • Singapore based a registered office required for correspondence and receiving notices
  • Any amendments to the partnership must be submitted to the Registrar within 14 days

Singapore Limited Partnership (LP)

Main Features:

  • Regulation — Limited Partnership Act, 37 of 2008
  • Required to have both limited and general partners
  • At least one general partner and one limited partner
  • Limited partners assume liability equal to their contribution made
  • Limited partners unable to manage in the manner of a general partner
  • Natural persons and bodies corporate can be partners of a Singapore limited partnership
  • Every amendment must be submitted to the Registrar
  • Contributions made by a limited partner can be reduced or increased
  • Accounts and records must be kept and be a true reflection of the partnership’s financial for the given financial year
  • All records and accounts to be retained for no less than 5 years
  • Partnership name must end with expression ‘Limited Partnership’ or ‘LP’
  • Registration application must contain all relevant details including the names, nationality and residential addresses of partners, address of business place and registered office, names and particulars of managers

Singapore Sole Proprietorship

Main Features:

  • Formed by a single individual or single company
  • All decisions are taken solely by the sole proprietor
  • Individual is personally responsible for liabilities incurred by the business
  • Types of businesses that the sole proprietor can engage are defined in the Business Registration Act, Cap 32
  • To register a sole proprietorship a foreigner who is not ordinarily resident in
  • Singapore is required to submit an application for an EntrePass or appoint a resident manager (citizen of Singapore) in Singapore
  • Homeowners are able to engage in small-scale commercial activity from their residence as allowed for in compliance with the Home Office Scheme
  • The business address of a sole proprietor must be physical and not a P.O Box address
  • Details of the business address must be submitted to the Registrar
  • Very quick registration process that can be completed within fifteen minutes following payment of registration fee and provided that no further referral to the authorities is necessary
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