Corporate Secretarial Services
Business Process Outsourcing
FAQ
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1. What are the various types of business entities?
Click here to refer to types of business entities.
2. What is the threshold of activities requiring foreign entities to register presence in Singapore?
Before a foreign company establishes a place of business or commences to carry on business in Singapore, it needs to register a branch or incorporate a subsidiary.
However, where a foreign company conducts an isolated transaction that is completed within a period of 31 days, but not being one of a number of similar transactions repeated from time to time, it is not regarded as carrying on business in Singapore. [Section 366(2)(h) of the Companies Act]
However, where a foreign company conducts an isolated transaction that is completed within a period of 31 days, but not being one of a number of similar transactions repeated from time to time, it is not regarded as carrying on business in Singapore. [Section 366(2)(h) of the Companies Act]
3. What are the implications of Subsidiary versus Branch?
Similarities
(a) Both are taxed at the same corporate income tax rate and generally subject to the same rules for Goods & Services Tax.
[Click here to go to Publication on the Singapore Budgets for rates of taxation.]
(b) There is no withholding tax on dividends or repatriation of branch profits.
(c) The accounts are required to be audited except where a branch has been granted (upon an annual application) a waiver to file audited accounts. The grounds for application are set out in the Companies Act and the waiver may be granted on a case-by-case basis.
Differences
(a) A company is a separate legal entity whereas a branch is an extension of the head office.
(b) Companies which are managed and controlled in Singapore are considered as tax resident in Singapore and can avail themselves to the network of tax treaties that Singapore has concluded with various countries. A branch is usually tax resident where the head office is.
(c) Upon cessation of business, a branch is only required to file a notice of cessation of business and apply to be de-registered. Thereafter, all tax matters must be settled within one year.
A company would need to apply to be struck off the register of companies if certain criteria are met. Otherwise, the company would need to enter into liquidation and appoint a liquidator to realize its assets and settle its liabilities before it can be wound up. This process is generally more complex compared to de-registration of a branch.
(a) Both are taxed at the same corporate income tax rate and generally subject to the same rules for Goods & Services Tax.
[Click here to go to Publication on the Singapore Budgets for rates of taxation.]
(b) There is no withholding tax on dividends or repatriation of branch profits.
(c) The accounts are required to be audited except where a branch has been granted (upon an annual application) a waiver to file audited accounts. The grounds for application are set out in the Companies Act and the waiver may be granted on a case-by-case basis.
Differences
(a) A company is a separate legal entity whereas a branch is an extension of the head office.
(b) Companies which are managed and controlled in Singapore are considered as tax resident in Singapore and can avail themselves to the network of tax treaties that Singapore has concluded with various countries. A branch is usually tax resident where the head office is.
(c) Upon cessation of business, a branch is only required to file a notice of cessation of business and apply to be de-registered. Thereafter, all tax matters must be settled within one year.
A company would need to apply to be struck off the register of companies if certain criteria are met. Otherwise, the company would need to enter into liquidation and appoint a liquidator to realize its assets and settle its liabilities before it can be wound up. This process is generally more complex compared to de-registration of a branch.
4. What are the Audit and Accounting Requirements?
All businesses are required to maintain proper books of account for
With effect from July 1, 2015, the accounts of a "small company" which is also part of a "small group" will qualify for audit exemption if it satisfies certain quantitative criteria.
“A company is a small company from a financial year if
(a) It is a private company throughout the financial year; and
(b) It satisfies any 2 of the following criteria for each of the 2 financial years immediately preceding the financial year:
(i) the revenue for each financial year does not exceed S$10 million;
(ii) the value of the company’s total assets at the end of the financial year does not exceed S$10 million;
(iii) it has at the end of each financial year not more than 50 employees."
“A group is a small group from a financial year if the group satisfies any 2 of the following criteria for each of the 2 consecutive financial years immediately preceding the financial year:
(a) the consolidated revenue of the group for each financial year does not exceed S$10 million;
(b) the value of the consolidated total assets of the group at the end of the each financial year does not exceed S$10 million;
(c) the group has at the end of each financial year an aggregate number of employees of not more than 50."
For representative offices, partnerships, sole proprietorships and limited liability partnerships, there is no requirement to have the accounts audited.
- Audit, if applicable;
- Taxation; and
- Accounting records retention under various statutes – Companies Act, Income Tax Act - not less than 5 years.
With effect from July 1, 2015, the accounts of a "small company" which is also part of a "small group" will qualify for audit exemption if it satisfies certain quantitative criteria.
“A company is a small company from a financial year if
(a) It is a private company throughout the financial year; and
(b) It satisfies any 2 of the following criteria for each of the 2 financial years immediately preceding the financial year:
(i) the revenue for each financial year does not exceed S$10 million;
(ii) the value of the company’s total assets at the end of the financial year does not exceed S$10 million;
(iii) it has at the end of each financial year not more than 50 employees."
“A group is a small group from a financial year if the group satisfies any 2 of the following criteria for each of the 2 consecutive financial years immediately preceding the financial year:
(a) the consolidated revenue of the group for each financial year does not exceed S$10 million;
(b) the value of the consolidated total assets of the group at the end of the each financial year does not exceed S$10 million;
(c) the group has at the end of each financial year an aggregate number of employees of not more than 50."
For representative offices, partnerships, sole proprietorships and limited liability partnerships, there is no requirement to have the accounts audited.
5. What are the corporate secretarial record keeping & filing requirements?
Company
Every company must keep at its registered office the following
(a) minute book
(b) Register of directors’ and chief executive officer’s shareholdings; and
(c) Register of mortgages or charges (including debentures)
It has to maintain with the Accounting and Corporate Regulatory Authority (“ACRA”) the following
(a) Register of members (including applications & allotment of shares and transfers); (b) Register of its directors, managers, secretaries and auditors.
The directors must hold the first annual general meeting (“AGM”) of the company within 6 months from its financial year end or within 18 months from the date of incorporation, whichever is the earlier.
Subsequent AGM must be held within 6 months from its financial year end and at least once every calendar year at intervals of not more than 15 months.
All companies (except for exempt private companies) are required to file with the ACRA the audited accounts and an Annual Return disclosing the date of the AGM, details of the capital structure of the company, a list of secured borrowings and information pertaining to its shareholders and directors.
Branch
All branches must lodge with ACRA annually the Singapore branch’s audited accounts and the audited accounts of the foreign company within two months from the date of the AGM of the foreign company. It may be possible to apply for a waiver to file the audited accounts of the branch under certain limited circumstances.
All LLPs are required to file an Annual Declaration regarding its solvency, within 15 months from the date of registration and thereafter once every calendar year with interval of not more than 15 months.
Every company must keep at its registered office the following
(a) minute book
(b) Register of directors’ and chief executive officer’s shareholdings; and
(c) Register of mortgages or charges (including debentures)
It has to maintain with the Accounting and Corporate Regulatory Authority (“ACRA”) the following
(a) Register of members (including applications & allotment of shares and transfers); (b) Register of its directors, managers, secretaries and auditors.
The directors must hold the first annual general meeting (“AGM”) of the company within 6 months from its financial year end or within 18 months from the date of incorporation, whichever is the earlier.
Subsequent AGM must be held within 6 months from its financial year end and at least once every calendar year at intervals of not more than 15 months.
All companies (except for exempt private companies) are required to file with the ACRA the audited accounts and an Annual Return disclosing the date of the AGM, details of the capital structure of the company, a list of secured borrowings and information pertaining to its shareholders and directors.
Branch
All branches must lodge with ACRA annually the Singapore branch’s audited accounts and the audited accounts of the foreign company within two months from the date of the AGM of the foreign company. It may be possible to apply for a waiver to file the audited accounts of the branch under certain limited circumstances.
All LLPs are required to file an Annual Declaration regarding its solvency, within 15 months from the date of registration and thereafter once every calendar year with interval of not more than 15 months.
6. What are the registration & filing obligations under Goods & Services Tax Act?
An entity is required by law to register for Goods and Services Tax (“GST”) where the revenue over a 12-month period exceeds or is expected to exceed the threshold of S$1million. Voluntary registration is also allowed although there may be additional requirements by the Comptroller of GST such as the need for a bankers’ guarantee.
Once registered, the entity is required to charge its customers output GST at the standard rate, currently at 7%. Certain supplies such as international services or export of goods are zero-rated (i.e. 0% GST). The entity is entitled to claim a credit for input GST paid on its qualifying purchases so that only the net amount is payable to / (refundable) by the Comptroller of GST. GST returns are due to be submitted on a quarterly basis.
Once registered, the entity is required to charge its customers output GST at the standard rate, currently at 7%. Certain supplies such as international services or export of goods are zero-rated (i.e. 0% GST). The entity is entitled to claim a credit for input GST paid on its qualifying purchases so that only the net amount is payable to / (refundable) by the Comptroller of GST. GST returns are due to be submitted on a quarterly basis.
7. What are the main employment-related regulations?
A foreigner who wishes to take up employment or engage in business in Singapore must obtain an employment pass ("EP") or entrepreneur pass ("Entrepass") issued by the Ministry of Manpower ("MOM"). The foreigner must hold specified recognized educational or technical qualification and earn a basic salary of stipulated amounts.
The minimum monthly basic salary:
(a) S$2,300 to S$2,400 for S pass (subject to ratio of S pass holder to local staff);
(b) S$3,600 (effective January 2017) for employment pass.
[The above are subject to changes and the updated rates are available on the www.mom.gov.sg.]
A director cum shareholder who holds at least 30% equity in the company must apply for an Entrepass instead of EP. The minimum investment is S$100,000, of which at least S$50,000 must be share capital. A business plan must be submitted together with the application for an Entrepass, amongst other conditions including any of the following - e.g. the company receives funding from the government under various schemes or it holds intellectual property that is registered with an approved national IP institution or it has research collaboration with a university or a government agency.
An EP or Entrepass holder may apply for dependants’ passes ("DP") for his or her spouse and for children below 21 years of age to enable them to stay in Singapore. DP holders must apply for EP / “consent to work” or student pass if they wish to work or study in Singapore.
The Employment Act sets out certain terms of employment and working conditions for employees earning up to S$2,600 a month and certain sections also apply to workmen or persons employed in a junior managerial/executive position earning salary not more than S$4,500 per month.
The Work Injury Compensation Act requires the employer to insure all non-manual workers (earning less than S$1,600 per month) and all manual workers regardless of salary. Other statutes dealing with workforce matters are the Industrial Relations Act and Trade Dispute Act.
No employee in Singapore may be employed without a contract of service, whether in writing or oral, express or implied, whereby one person agrees to employ another as an employee and that other agrees to serve his employer as an employee.
A contract of service may be terminated by either party based on the terms stated in the contract. The Employment Act provides that an employee may be terminated provided a minimum period of notice ranging from 1 day to 4 weeks is given. Termination without notice may occur in cases of pay in lieu of notice, or dismissal for wilful breach of contract terms or misconduct.
The minimum monthly basic salary:
(a) S$2,300 to S$2,400 for S pass (subject to ratio of S pass holder to local staff);
(b) S$3,600 (effective January 2017) for employment pass.
[The above are subject to changes and the updated rates are available on the www.mom.gov.sg.]
A director cum shareholder who holds at least 30% equity in the company must apply for an Entrepass instead of EP. The minimum investment is S$100,000, of which at least S$50,000 must be share capital. A business plan must be submitted together with the application for an Entrepass, amongst other conditions including any of the following - e.g. the company receives funding from the government under various schemes or it holds intellectual property that is registered with an approved national IP institution or it has research collaboration with a university or a government agency.
An EP or Entrepass holder may apply for dependants’ passes ("DP") for his or her spouse and for children below 21 years of age to enable them to stay in Singapore. DP holders must apply for EP / “consent to work” or student pass if they wish to work or study in Singapore.
The Employment Act sets out certain terms of employment and working conditions for employees earning up to S$2,600 a month and certain sections also apply to workmen or persons employed in a junior managerial/executive position earning salary not more than S$4,500 per month.
The Work Injury Compensation Act requires the employer to insure all non-manual workers (earning less than S$1,600 per month) and all manual workers regardless of salary. Other statutes dealing with workforce matters are the Industrial Relations Act and Trade Dispute Act.
No employee in Singapore may be employed without a contract of service, whether in writing or oral, express or implied, whereby one person agrees to employ another as an employee and that other agrees to serve his employer as an employee.
A contract of service may be terminated by either party based on the terms stated in the contract. The Employment Act provides that an employee may be terminated provided a minimum period of notice ranging from 1 day to 4 weeks is given. Termination without notice may occur in cases of pay in lieu of notice, or dismissal for wilful breach of contract terms or misconduct.
8. What is the labour environment like in Singapore?
In Singapore, trade unions must be registered under the Trade Union Act, which provides for the regulation of trade unions, their rights and liabilities, and the proper use of union funds. Most of the trade unions are affiliated with the federal body, the National Trade Union Congress ("NTUC").
An employee is not obliged to join a union in Singapore, although there is usually union representation in larger companies such as in the transport and manufacturing industries.
Singapore generally has harmonious labour relations and a strike-free environment.
An employee is not obliged to join a union in Singapore, although there is usually union representation in larger companies such as in the transport and manufacturing industries.
Singapore generally has harmonious labour relations and a strike-free environment.
9. What are the obligations to Social Security Contributions?
Singapore has a national social security scheme, the Central Provident fund (“CPF”). The scheme provides a lump sum payment upon retirement, comprising past contributions at prescribed rates by the employee and the employer plus interest accrued.
CPF can be withdrawn after the age of 55 after setting aside a prescribed minimum sum or upon leaving Singapore and West Malaysia permanently.
An EP holder does not have to contribute to CPF but he or she may make voluntary contributions to CPF, with the agreement of his or her employer. However, CPF contributions are mandatory when a person becomes a permanent resident or a Singapore citizen.
Contribution rates vary with salary scales and the band that is applicable to most employees below 55 years of age and earning a salary of more than S$1,500 per month are as follows:
(a) Employer contributes 17% of an employee’s monthly salary to CPF (subject to a salary ceiling of S$6,000).
(b) Employee contributes 20% of his/her monthly salary to CPF (subject to a salary ceiling of S$6,000).
[The above are subject to changes and the updated rates are available on the CPF website at www.cpf.gov.sg]
The CPF contribution rates are lower for employees who are above the age of 55 or those who are in the lower income bracket. Contributions on additional wages such as bonuses are subject to a maximum calculated on an annual basis.
CPF can be withdrawn after the age of 55 after setting aside a prescribed minimum sum or upon leaving Singapore and West Malaysia permanently.
An EP holder does not have to contribute to CPF but he or she may make voluntary contributions to CPF, with the agreement of his or her employer. However, CPF contributions are mandatory when a person becomes a permanent resident or a Singapore citizen.
Contribution rates vary with salary scales and the band that is applicable to most employees below 55 years of age and earning a salary of more than S$1,500 per month are as follows:
(a) Employer contributes 17% of an employee’s monthly salary to CPF (subject to a salary ceiling of S$6,000).
(b) Employee contributes 20% of his/her monthly salary to CPF (subject to a salary ceiling of S$6,000).
[The above are subject to changes and the updated rates are available on the CPF website at www.cpf.gov.sg]
The CPF contribution rates are lower for employees who are above the age of 55 or those who are in the lower income bracket. Contributions on additional wages such as bonuses are subject to a maximum calculated on an annual basis.
10. Any other employment related contributions?
Under the Skills Development Levy (“SDL”) Act, employers are required to contribute to SDL for all employees (casual, part-time, temporary, foreign workers and expatriates rendering services wholly or partly in Singapore) up to the first S$4,500 of gross monthly remuneration at a levy rate of 0.25%, subject to a minimum contribution of S$2 for remuneration less than S$800. This works out to be S$11.25 per employee per month. If the employer is registered for CPF, the amount will be collected by CPF Board on behalf of the SkillsFuture Singapore Agency (“SSG”), formerly known as Singapore Workforce Development Agency (“WDA”). Otherwise, payment will be made directly to SSG.