DOING BUSINESS IN SINGAPORE - PWC
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This publication is a joint project with Doing business in Singapore
Contents
Disclaimer
Executive summary 4
This document is issued by The
Foreword 6 Hongkong and Shanghai Banking
Corporation Limited (the ‘Bank’)
Introduction – Doing business in Singapore 8 in Singapore in partnership
with PricewaterhouseCoopers
Conducting business in Singapore 12 (PwC). It is not intended as an
offer or solicitation for business
to anyone in any jurisdiction.
Taxation in Singapore 16
It is not intended for distribution
to anyone located in or
Audit and accountancy 26
resident in jurisdictions which
restrict the distribution of this
Human Resources and Employment Law 27 document. It shall not be copied,
reproduced, transmitted or further
Trade 28 distributed by any recipient.
Banking in Singapore 29 The information contained in this
document is of a general nature only.
HSBC in Singapore 30 It is not meant to be comprehensive
and does not constitute financial,
Country overview 32 legal, tax or other professional
advice. You should not act upon
Contacts 34 the information contained in this
publication without obtaining specific
professional advice. This document
is produced by the Bank together
with PricewaterhouseCoopers
(‘PwC’). Whilst every care has been
taken in preparing this document,
neither the Bank nor PwC makes
any guarantee, representation or
warranty (express or implied) as
to its accuracy or completeness,
and under no circumstances will
the Bank or PwC be liable for any
loss caused by reliance on any
opinion or statement made in this
document. Except as specifically
indicated, the expressions of opinion
are those of the Bank and/or PwC
only and are subject to change
without notice. This document
is not a ‘Financial Promotion’.
The materials contained in this
publication were assembled in
May 2012 and were based on the
law enforceable and information
available at that time.
Executive summary
For the sixth year running, • Excellent infrastructure • Skilled workforce and • Robust legal system • Accounting standards
Singapore is ranked top in the Businesses can tap into harmonious industrial relations The legal and judicial system The Singapore Financial
world in terms of ease of doing Singapore’s excellent Singapore offers a highly-rated here is robust and efficient Reporting Standards are
business (Doing Business 2012 shipping and air links, human capital base, recognised and Singapore is reputed closely modelled after the
Report, World Bank). Global as well as its first-class for its skills. There are virtually for its tough stance against International Financial Reporting
businesses will benefit from telecommunications and no labour disputes as the trade corruption. Singapore is rated Standards. This consistency
locating their headquarters banking facilities to manage unions work closely with the top in Asia and second in the facilitates comparison of
and operations in Singapore their global operations government and business world for intellectual property financial performance of
(ranked the most competitive from Singapore. sectors to ensure that the rights protection in the Global firms across territories and
Asian country by the Global collective interests of business Competitiveness Report promotes transparency.
Competitiveness Report • Extensive trade links and employees are met. 2011-2012, World Economic
2011-2012, World Economic Investors can leverage on Forum. Thus, businesses • Ease of doing business
Forum). This is made possible Singapore’s trade network • Well-developed can count on Singapore’s The procedures to set up a
by the following competitive with its 18 regional and financial system rigorous enforcement of its business are straightforward.
factors which set Singapore bilateral free trade agreements Singapore, a country with a strong intellectual property Together with a set of
apart from other locations: with 24 trading partners ‘AAA’ rating, is one of the top laws to protect their ideas streamlined reporting
and the 39 investment international financial centres. and innovations. requirements, investors
• Pro-business and guarantee agreements. Its financial system is well- can expect minimal
stable government regulated and offers a broad • World-class living standard compliance cost and
Singapore offers political • Competitive tax system range of services. Businesses Besides being one of the bureaucracy in running
stability that is vital to foreign Singapore offers a very can also tap into its developed cleanest cities in the world, a business in Singapore.
investments. Government competitive tax regime with capital markets as an alternative the city-state is safe and
agencies, which have a its low tax rate and a wide source of financing. orderly. Coupled with its world-
pro-business attitude, work range of tax incentives. class transport system and
closely with the business sector Businesses based here can healthcare services, Singapore
to promote economic growth. also benefit from its network offers one of the best living
of nearly 70 comprehensive environments in the world.
double taxation agreements.
4
Foreword
The shift in the world’s In Singapore, HSBC is Mr Guy Harvey-Samuel,
centre of economic gravity focused on strengthening our Group General Manager,
from West to East plays capabilities as an international Chief Executive Officer,
to Singapore’s competitive hub for trade, financial markets HSBC Singapore
advantage, with its strategic and wealth management.
location at the crossroads of
global trade and its growing We have the global connectivity,
appeal as an international financial strength and the people
hub for wealth management to deliver for our customers
and financial services. and help them connect to the
opportunities Singapore has to
Its population of some 5.1 million offer. Our role as the hub for
is the world’s third wealthiest HSBC Private Bank in South
in terms of per capita GDP. Asia is evidence of Singapore’s
Singapore’s sustained GDP increasing importance as a
growth of 4.9% in 2011 was wealth management centre.
the result of continued success
in attracting inward investment We seek to be your trusted
driven by its ease of doing partner to help you and
business and openness. your business make the
most of opportunities and
HSBC shares many characteristics fulfil your potential.
with Singapore. We both make
it our business to connect We hope that this guidebook,
companies and people to Doing Business in Singapore,
opportunities across the world. produced in collaboration with
We are equally determined PricewaterhouseCoopers, will
to set the highest standards help you to discover Singapore
in order to earn the trust of and its potential to connect
stakeholders and counterparties. your business to the world.
6
Introduction
Doing business in Singapore
Geography Singapore is widely
acknowledged as being
Singapore is situated at the tip one of the best places to
of the Malayan peninsula, at the do business in the world,
south-eastern end of the Straits having won numerous
of Malacca. Due to its strategic accolades including:
location, Singapore is often
seen as a gateway to markets – the world’s easiest place to
in the South East Asian do business (Doing Business
countries, China and India. Report 2012, World Bank);
Economic environment – best business environment
in Asia Pacific and
Singapore has one of the most worldwide (Country
open economies in the world. Forecasts, December
The government plays a critical 2011, Economist
role in directing economic Intelligence Unit); and
policies as well as in promoting
a pro-business and pro-foreign – among the top three
investment climate. in the world for having
the best protection of
intellectual property
(Global Competitiveness
Report 2011-2012, World
Economic Forum).
8
Sector (2011 % share of GDP) Singapore’s top ten trading partners (2012)
25 N.B. The European
Manufacturing 20.9% Union (EU) comprises:
Austria, Belgium,
20
Wholesale and Retail Trade 17.4% Bulgaria, Cyprus,
Czech Rep, Denmark,
Estonia, Finland, France,
Financial Services 11.9% 15
Germany, Greece,
% Hungary, Ireland,
Business Services 14.1% Italy, Latvia, Lithuania,
10
Luxembourg, Malta,
Netherlands, Poland,
Others 35.7% Portugal, Romania,
5
Slovak Rep, Slovenia,
Spain, Sweden and the
0 United Kingdom
EU
China
Hong Kong
USA
Indonesia
Malaysia
Japan
Taiwan
South Korea
Thailand
Other
Source: Main indicators
Source: Singapore in Brief 2012, the Ministry of Trade and Industry of the Singapore
economy (Q2 2012)
Below are some of (ii) Foreign investments There is generally no restriction (iii) Physical and economic (v) Workforce Language
the key attributes of The government policy of on foreign ownership of infrastructure A key pillar of Singapore’s
Singapore’s economy: encouraging private enterprise businesses. However, certain Singapore has capitalised on its success is its skilled workforce. Singapore has four official
and foreign investment, industries that are of national excellent shipping and air links With a literacy rate of more languages – English, Chinese,
(i) Gross Domestic Product together with a well-developed interest are not generally with key economies to become than 90%, employers have a Malay and Tamil. English is the
(GDP) and major sectors infrastructure, a highly open to private enterprise, a top global transportation hub. vast pool of resources to tap preferred language for business
Singapore’s GDP stands at skilled workforce, political for example, the manufacture Together with its excellent into. Furthermore, a cordial and and in public administration.
S$327 billion in 2011 while its stability and harmonious of arms and ammunition, telecommunications infrastructure cooperative relationship exists
per capita GDP is S$63,050. labour relations, has made newspaper publishing and and access to banking facilities, between the government, Living and working
Singapore a popular choice public transport. There is businesses situated here are businesses and unions. in Singapore
Singapore’s open and for global investors. Investors no requirement to register well placed to run their regional
trade-oriented economy also appreciate the country’s or report the investment and global operations using (vi) Legal system Singapore is a cosmopolitan
depends heavily on exports, efficient and transparent of foreign capital, loans or Singapore as a hub. Singapore’s legal system is country with an open immigration
particularly in consumer bureaucracy and extensive technology agreements. generally modelled on the policy that makes it easy for
electronics, information preferential trade links. Companies situated in Singapore English legal system, reflecting foreigners to enter Singapore.
technology products and The availability of incentives can benefit from its network of its heritage as a British colony. The city-state is recognised as
pharmaceuticals. At the The amount of foreign direct in targeted segments of nearly 70 comprehensive double The legal and judicial system one of the cleanest cities in the
same time, Singapore is a investment in Singapore as the economy has been taxation agreements (DTAs), here is robust and efficient world. It has an efficient and
leading provider of services at the end of 2010 stood at instrumental to Singapore’s 18 regional and bilateral free and Singapore is reputed affordable public transport
in international banking, S$618 billion. The top two success in attracting foreign trade agreements (FTAs) with for its tough stance against system, and its healthcare
trade finance, maritime investor countries were the investments. These schemes 24 trading partners and the corruption. Businesses can services are world-class.
finance, insurance, treasury Netherlands and the United are available in two forms – 39 investment guarantee also count on Singapore’s
operations, and asset and States. Other countries with financial incentives and tax agreements. rigorous enforcement of its All these factors contribute to a
wealth management significant investment in incentives. Financial incentives strong intellectual property living environment that results in
within the region. Singapore include Japan provided by the Singapore (iv) Financial system laws to protect their Singapore being ranked highly in
and the United Kingdom. government include grants Singapore, a country with a ideas and innovations. many surveys, including:
To boost the tourism sector, and subsidies. Seed funding ‘AAA’ rating, is acknowledged
in April 2005 the government from the government may as one of the top international (vii) Imports/Exports – Foreign talent rank Singapore
approved the development also be available to promote financial centres. Its financial As an international trading as Asia’s best country to work
of two integrated resorts growth in certain sectors. system is well-regulated and centre, Singapore operates in (World Competitiveness
and casinos that resulted in Tax incentives are largely offers a broad range of services a free port with virtually no Yearbook 2011, International
investments of more than industry-driven and take the including banking, insurance, import or export duties on Institute for Management
US$5 billion. These resorts, form of tax holidays, reduced asset management and treasury raw materials, equipment or Development)
commenced business in 2010 income and withholding services. Businesses here can products. Only certain imports
and are expected to make tax rates, accelerated tax easily tap into its deep and liquid are controlled for health, – Singapore is the first choice for
a significant contribution depreciation enhanced capital markets as an alternative safety and security reasons. Asian expatriates (ECA Location
to the Singapore economy deductions/allowances and source to raise funds. Ratings Survey, 17 April 2012,
and position Singapore as investment allowances. ECA International)
a key entertainment and There is no foreign exchange
tourism hub in Asia. control and no restriction on – Singapore is the best place in
repatriation of investment capital Asia for personal safety (Personal
and profits from Singapore. safety worldwide city rankings,
June 2011, Mercer Survey)
10
Conducting business in Singapore
Forms of business
The available business structures All new applications of a foreign • A company is a legal entity,
in Singapore are companies, commercial entity must fulfil separate and distinct from
branches, sole-proprietorships the following criteria: its owners/shareholders. It
and partnerships (including can incur obligations and hold
limited liability partnerships and • Sales turnover of the foreign property in its own name.
limited partnerships). entity must be more than Consequently, it can sue and
US$250,000 be sued in its own name,
A foreign entity can also it has perpetual existence
establish a representative • Number of years of establishment and it can contract with its
office in Singapore. However, of the foreign entity must controlling members.
a representative office can be at least three years
only carry out market research, • There must be at least one
feasibility studies and liaison • Proposed number of staff for shareholder and one director
work on behalf of parent the representative office should in the company. The director
company. It cannot trade in be fewer than five people of the company must be
goods/services (including above 18 years old and be
import and export), lease The following are the key any of the following:
warehousing facilities, lease features and requirements for
offices to others for a fee, each business structure: – a Singapore citizen
conclude contracts, provide – a Singapore permanent resident
services for a fee, issue Company – an employment pass holder
invoices/receipts, or open – an approval-in-principle
or negotiate any letter of • There are three types of employment pass holder
credit directly or on behalf company in Singapore, namely – a dependant pass holder
of its parent company. private/public companies
limited by shares (with not Directors cannot be bankrupts or
With effect from 1 January more than 50 shareholders for persons convicted of dishonesty.
2012, a representative office private companies limited by
of a foreign commercial entity shares, but public companies
may operate in Singapore for limited by shares can have
a maximum of three years more than 50 shareholders),
from its commencement date, public companies limited by
provided that the representative guarantee (non-profit making
office status is evaluated and activities with some basis of
renewed. A representative national or public interest) and
office that decides to continue unlimited companies.
its presence in Singapore
thereafter should register its
operations with the Accounting
and Corporate Regulatory
Authority of Singapore.
12
Setting up a business
Branch of foreign • If the owner of the sole- Limited Liability Registration Singapore has no foreign
corporations proprietorship is not ordinarily Partnership (LLP) exchange controls on
resident in Singapore, he must All businesses in Singapore repatriation of profits. However,
• A foreign incorporated company appoint a local manager who is • The LLP was introduced in 2005. must be registered with the banks are required to observe
which intends to carry on a above 18 years old and who It has the limited liability of a Accounting and Corporate banking regulations regarding
business in Singapore is required should be one of the following: company and the operational Regulatory Authority (ACRA). the internationalisation of
to register a branch in Singapore, flexibility of a partnership. Both self-registration on the Singapore dollars when they
prior to its commencing – a Singapore citizen website and registration grant credit facilities to non-
business here. – a Singapore permanent resident • It requires a minimum of two through a professional service resident financial institutions.
– an employment pass holder partners but there is no cap on the firm are acceptable. For self-
• To set up a branch in Singapore, – an approval-in-principle maximum number of partners incorporation of a company, Annual Filing
two local agents must be employment pass holder allowed for an LLP. Partners can all directors, company
appointed. These agents must – a dependant pass holder be individuals or companies. secretaries and shareholders Singapore companies are
be above 18 years old and one must be Singaporeans, required to file an annual
of the following: To qualify as ordinarily resident, • Unlike partnership, an LLP is a employment pass holders or return within one month
a person must have a local legal entity, separate and distinct dependant pass holders. from the date of their Annual
– a Singapore citizen address and be permitted to from its owners/partners. General Meeting (AGM)/
– a Singapore permanent resident reside in Singapore. Licensing special resolution in lieu of
– an employment pass holder • It is compulsory for all LLPs to the AGM. The return should
– an approval-in-principle Partnership appoint at least one local manager. Licensing requirements may be accompanied by a set of
employment pass holder apply, depending on the industry audited financial statements
– a dependant pass holder • A partnership is a form of Limited Partnership (LP) and business concerned. unless the company qualifies
unincorporated business owned For instance, financial institutions as an exempt private company.
Sole-proprietorship by a minimum of two partners • The LP was introduced in 2009 must be licensed by the Monetary
and a maximum of 20. and provides limited personal Authority of Singapore and For LLPs, the manager is
• The term ‘sole-proprietorship’ liability for partners who do not firms intending to manufacture required to make an Annual
refers to an individual who • A partnership is not a legal manage the LP. or sell certain restricted goods Declaration to ACRA stating
carries on a business by himself. entity separate from its owners/ will need appropriate licenses whether the business is
partners. Each partner is jointly • It requires a minimum of two from the regulatory bodies able to pay its debts as they
• A sole-proprietorship is therefore and severally liable for all debts partners, with at least one responsible for the industry. fall due. The first Annual
not a legal entity that is separate of the partnership. general partner and one limited Declaration must be made
and distinct from its owner. partner. There is no cap on the within 15 months of the
• Like sole-proprietorship, a local maximum number of partners Other controls date of registration.
manager must be appointed allowed for an LP.
if none of the partners is It is generally quite easy
ordinarily resident in Singapore. • A LP is not a separate legal entity, for foreigners to set up a
in that it does not have a separate business in Singapore due
legal personality apart from its to the general lack of foreign
owners/partners. ownership restrictions (except
for national security reasons and
• It is compulsory for all LPs to in areas such as air transport,
appoint at least one local manager newspaper publishing, etc).
if all general partners do not
originally reside in Singapore.
14
Taxation in Singapore
Corporation Income Tax
Scope of corporate Residency Filing of an incorrect return could
income tax result in penalties of one to
A company is regarded as a three times the tax underpaid,
Singapore asserts its jurisdiction resident of Singapore if the plus fines and/or imprisonment.
to tax primarily on the basis of management and control of its In cases involving serious
source. Tax is imposed on income business is exercised in fraudulent tax evasion, the
sourced in Singapore, as well Singapore. It is generally penalty can be up to four times
as foreign sourced income accepted that the place of the tax undercharged.
received in Singapore, unless management and control is
specified exemptions apply. where the board of directors’
meetings are held. (ii) Tax assessment and payment
Singapore does not have a Taxes can be collected by way
capital gains tax regime. Tax compliance and of a direct assessment or
Only revenue gains are administration withholding tax.
taxable. The determination of
whether a gain is of revenue The administration of the tax For direct assessment, the tax
(taxable) or capital (not system and collection of taxes is payable within one month
taxable) nature is based on are the responsibility of the from the date of the notice of
the facts and circumstances Inland Revenue Authority of assessment. Late payment
of each case. Singapore (IRAS). will attract a penalty of up to
17% of the outstanding tax.
It was announced during (i) Filing requirements With effect from YA 2008, the
the 2012 Budget that The tax year is known as the statutory time limit to raise
gains on disposal of equity year of assessment (YA) and an assessment or additional
investments by companies tax is charged on a preceding assessment has been reduced
will not be taxed if: year basis (e.g. income earned to four years after the expiration
in 2011 will only be assessed of the YA concerned. There is
• the divesting company holds a to tax in YA 2012). All taxpayers no time-bar in cases of fraud.
minimum shareholding of 20% must file an estimate of their
in the company whose shares chargeable income with the For withholding tax, it is the
are being disposed of; and IRAS within three months from responsibility of the person
the end of their financial year. For paying the non-resident to
• the divesting company YA 2012 the income tax return withhold and pay the taxes to
maintains the minimum 20% should be filed by 30 November the Comptroller. With effect
shareholding for a minimum 2012 (i.e. for income derived in from 1 July 2012, the tax
period of 24 months just the financial year ended 2011). withheld must be paid to the
prior to the disposal. Comptroller by the 15th of the
Failure to file the return on second month following the
time will attract fines and/or date of the payment to the non-
imprisonment. The Comptroller of resident. Failure to do so will
Income Tax may compound the attract penalties of up to 20%
offence in lieu of court proceedings. of the withholding tax unpaid.
16
Taxable income Exempt amount Form Basis of Assessment
First S$10,000 @ 75% = S$7,500
Next S$290,000 @ 50% = S$145,000 Company Profits arising from a company are taxed at the corporate tax rate.
figure 1 Total S$300,000 S$152,500 Branch of foreign The tax treatment applicable to a company and a branch is largely
corporation similar. As branches are usually non-resident for tax purpose,
they are not entitled to claim Singapore treaty benefits or certain
tax exemptions.
Taxable income Exempt amount
First S$100,000 @ 100% = S$100,000
Sole-proprietorship Profits are taxed at personal income tax rates.
Next S$200,000 @ 50% = S$100,000
figure 2 Total S$300,000 S$200,000 Partnership Each partner is assessed separately on his share of the divisible
income of the partnership at the rate applicable to the status of
the partner.
Tax rates and tax prevailing corporate tax rate They are used both for the
Limited Liability Although a separate legal entity under general law, it is treated
exemption schemes for its first three consecutive promotion of new investments
YAs, as shown in figure 2. in preferred industries and for Partnership as fiscally transparent for tax purpose, i.e. like a partnership.
With effect from the YA encouraging existing businesses However, there are restrictions imposed on the share of losses
2010, the corporate tax rate is These exemptions do not to upgrade their operations, or and unabsorbed tax depreciation by reference to the amount
reduced to 17%. This applies to apply to: to provide new products and of capital invested. Tax will be imposed based on the rate applicable
both resident and non-resident services that will be beneficial to to each partner.
entities. The corporate tax rate – income that is subject to tax the Singapore economy.
may be further reduced if tax at concessionary tax rates; and Limited Partnership Each partner is assessed separately on his share of the divisible
incentives apply. The tax incentives are income of the partnership at the rate applicable to the status of the
– income earned by a non- administered by various partner. However, there are restrictions imposed on limited partners
Effective from YA 2008, a resident company that is subject government agencies, including on the share of losses and unabsorbed tax depreciation
taxpayer can enjoy partial to a final withholding tax. the Economic Development by reference to the amount of capital invested.
tax exemption for the first Board, International Enterprise
S$300,000 of income taxable Tax Incentives Singapore, the Monetary
at the prevailing corporate tax Authority of Singapore
rate, as shown in figure 1. Tax concessions, such as tax and the Maritime Port
holidays, enhanced deductions/ Authority of Singapore. Calculation of Taxable income – Any other gains or profits Main categories of non-
Subject to satisfying certain allowances and reduced tax The broad categories of of an income nature. deductible expenses include:
conditions, a new company rates, play a pivotal role in activities that could qualify The starting point is usually
can enjoy partial tax exemption shaping the development of for tax concessions are the profit or loss before It should be noted that – Domestic and private expenses.
for the first S$300,000 Singapore’s economy. summarised below: taxation figure reflected in the Singapore dividends are
of income taxable at the audited accounts. Thereafter, exempt in the hands of the – Income or similar taxes.
adjustments are made for shareholders. In addition,
capital gains, tax-exempt with effect from 1 June – Expenses associated with
income, non-deductible 2003, certain foreign sourced the cessation of business.
Category Targeted business activities Possible tax benefits expenses, and differences income, namely dividends,
between book and tax branch profits and income – Capital employed
Manufacturing/Services – New products or processes – Tax holidays or reduced tax depreciation to arrive at the from the provision of services in improvements.
– Investments in productive rates or tax incentives chargeable (taxable) income. rendered through a fixed place
equipment – Investment allowance on of business outside Singapore, Productivity and Innovation
Gross taxable income usually may be exempt from tax when Credit Scheme
– Headquarter activities fixed assets
includes the following items: received by a resident, provided
– Shipping – Enhanced deductions/allowances certain conditions are met. The Productivity and Innovation
– Intellectual property management – Withholding tax exemption – Trade or business income. Credit (PIC) scheme was
Deductions are allowed for introduced in 2010 to encourage
– Reduced tax rates
Trade – Trading in commodities – Dividends, interest all outgoings and expenses investments in the following six
– Enhanced deductions /allowances and discounts. wholly and exclusively incurred activities along the innovation
Finance – Banking – Reduced tax rates and in the production of taxable value chain:
– Insurance withholding tax exemption – Rents, royalties, premiums, income, provided they are not
– Treasury – Enhanced deductions/allowances and other profits arising specifically disallowed under
from property. the Income Tax Act.
– Fund management – Tax exemption for fund and
reduced tax rate for fund manager
18• Acquisition or leasing of against future taxable income, in Singapore, have the same
prescribed automation provided that there is no accounting year end and they Nature of income Tax rate
equipment; substantial change in ownership must be members of the same
of the loss-making company on group (very broadly, there must Interest, commission, fee or other payment in connection with any loan
15%1
• Training of employees; the relevant comparison dates be a Singapore holding company or indebtedness
(the ‘continuity of ownership test’). and there should be at least
• Acquisition of intellectual The continuity of ownership test 75% common ownership as Royalty or other lump sum payments for the use of movable properties 10%1
property rights; requires that the same ultimate well as entitlement to at least
shareholders of the company 75% of residual profits and Payment for the use of or the right to use scientific, technical, industrial
• Registration of patents, must own at least 50% of the assets of the other company). 10%1
or commercial knowledge or information
trademarks, designs company’s total issued shares
and plants varieties; on the relevant dates. In addition, Withholding tax
the carry forward of unabsorbed Rent or other payments for the use of movable properties 15%1
• Research and development tax depreciation is subject to the Certain payments made by
activities; and same trade test. a person resident in Singapore Technical assistance and service fees (for services rendered in Singapore) 17%
or a permanent establishment
• Investment in approved Taxpayers are allowed to carry (PE) in Singapore are deemed Management fees (for services rendered in Singapore) 17%
design projects. back unabsorbed tax depreciation to be derived from Singapore.
and unabsorbed trade losses of When such payments are made
For YA 2011 to YA 2015, all up to S$100,000 for up to one to non-residents they will be
businesses can enjoy deduction/ YA. The relief is subject to the subject to withholding tax. out at arm’s length. It has issued intends to review taxpayers’
allowance at 400% on up to abovementioned same trade test guidance on how the arm’s compliance with the arm’s
S$400,000 of their expenditure and continuity of ownership test. The withholding tax rate is based length principle is to be applied length standard for their
per annum on each of the six on the prevailing corporate tax in practice and the documentation related-party transactions.
qualifying activities. Group relief rate (currently 17%) but may be taxpayers need to maintain to Although it has been spelt out
reduced to 10% or 15% for certain comply with this principle. The as a consultative process, the
To enable businesses to enjoy Since YA 2003, a group relief types of income under domestic Singapore transfer pricing rules review contains an element of
maximum PIC benefits, the regime has been in effect in law. The withholding tax rate may apply where at least one related a field audit and represents a
expenditure cap has been pooled Singapore. As a result, a qualifying be further reduced under specific party is subject to tax in Singapore step-up by the IRAS in ensuring
to give a combined cap of company may transfer its current concessions introduced to promote and it applies to all transactions adherence to the Singapore
S$800,000 for YA 2011 and 2012 year loss items (i.e. unutilised the economic or technological (both local and cross-border) transfer pricing guidelines.
and S$1,200,000 for YA 2013 to capital allowances, trade losses development of Singapore, or between a Singapore taxpayer
2015 for each qualifying activity. and approved donations) to where the recipient of the payment and its related parties. Under Thin capitalisation
another company within the is a tax resident of a country with the legislation, the IRAS is
1
Unabsorbed losses same group to set-off against which Singapore has made a DTA. empowered to make pricing Singapore does not have These withholding tax rates apply
and tax depreciation the latter’s taxable income. adjustments to transactions that thin capitalisation rules. when the income is not derived by
Transfer pricing are not in compliance with the the non-resident person through its
Unabsorbed losses and tax To qualify for the group relief, arm’s length standard. Controlled Foreign operations carried out in Singapore.
depreciation can be carried the transferor and claimant The IRAS expects all related- Companies (CFC) They are to be applied on the gross
forward indefinitely and offset companies must be incorporated party transactions to be carried The IRAS has also issued a payment and the resultant tax payable
circular on transfer pricing Singapore does not is a final tax. For operations carried
consultation. The circular have CFC rules. out in Singapore, the prevailing tax
outlines how the IRAS rates (stated below) will apply:
Non-resident persons (other than
individuals): 17%
20 Non-resident individuals: 20%Personal Income Tax
Scope of personal income tax Taxable income Tax rates Not Ordinarily Resident Administration and Employer’s obligations
(NOR) Scheme compliance
An individual is a Singapore An individual’s taxable income Resident individuals are taxed Employers are required to
tax resident for a YA if he: would normally include some, at progressive rates ranging A Singaporean, Singapore An individual is required to file compile a return showing the
or all of the following: from 2% to 20% (see YA 2012 permanent resident (SPR) his Singapore tax return (Form total remuneration paid to each
– resides in Singapore, except tax rate table below): or foreigner may qualify for B1 – for employed individuals; employee during the year to
for temporary absences; or – gains or profits from a trade NOR status for a five-year Form B for self-employed the IRAS. The tax liability of the
or profession; Non-resident individuals (other period if he: individuals; and Form M– for employees will be determined
– is physically present or than a director) are taxed on non-resident individuals) in based on the information
employed in Singapore (other – earnings from employment employment income at the higher – has not been a Singapore respect of income derived in provided by the employers
than as a director of a company) (including benefits-in-kind); of a flat rate of 15% (without tax resident in the three YAs a year by 15 April (for paper and the information on other
for 183 days or more during the any deduction of personal reliefs preceding the year in which returns) or 18 April (for electronic sources of income compiled by
basis year. – pension, charge or annuity; and allowances) and resident he first qualifies for the NOR filing) of the following year. the employees and reported in
tax rates. All other Singapore- scheme; and their individual tax returns.
As a concession, an individual – rents, royalties, premiums sourced income derived Late filing of tax returns will
may also be treated as resident and other profits arising by non-resident individuals – is a Singapore tax resident for attract penalty of up to S$1,000 Employers are required to
in Singapore if he: from property; (including director fees) is the YA in which he wishes to or may result in a summons give notice to the IRAS within
taxed at a flat rate of 20%. qualify for the scheme. to attend court, a warrant of a stipulated timeframe and
– stays in Singapore for a – any gains or profits of an arrest, or other legal actions. withhold all monies payable
consecutive period spanning income nature not covered Non-resident individuals (other A NOR will enjoy the following Furthermore, the penalties to employees who are not
three calendar years; or by the above. than directors and public benefits (subject to prescribed for filing an incorrect tax Singapore citizens prior to
entertainers) engaged in short- conditions and capping limits): return apply to individuals cessation of employment or
– enters Singapore on or after Depending on his personal term employment in Singapore and companies alike. are leaving Singapore for more
1 January 2007 and stays circumstances, a resident for not more than 60 days in a – time apportionment of income than 3 months. The money
or works in Singapore for individual can utilise a range year may be exempt from tax from Singapore employment Income tax is payable within withheld by the employer will
a continuous period of at of reliefs to be set off against in Singapore. (with effect from YA 2009, one month from the date of the be returned to the employees
least 183 days spanning his taxable income. this includes home leave and Notice of Assessment, unless after all outstanding tax has
two calendar years. benefits-in-kind, but excludes the individual opted for payment been paid and tax clearance
directors’ fees) by reference to through an instalment plan. has been obtained.
Both resident and non- Chargeable Income (S$) Rate (%) Gross Tax Payable (S$) time spent outside Singapore
resident individuals are on business; and Employers are obliged to
subject to Singapore income First 20,000 0 0 make monthly contributions
Next 10,000 2.0 200 – exemption of employer’s
tax on income derived from to the Central Provident
Singapore, unless specific First 30,000 – 200 contributions to non-mandatory Fund for Singaporeans
exemptions apply. Most Next 10,000 3.50 350 overseas social security and Singapore permanent
types of investment income First 40,000 – 550 schemes/pension funds (only residents (see the Human
are exempt from tax. Generally Next 40,000 7.0 2,800 available to non-Singapore Resource and Employment
speaking, foreign-sourced First 80,000 – 3,350 citizens/non-SPRs). section for more details).
income received in Singapore Next 40,000 11.5 4,600
by an individual is exempt from First 120,000 – 7,950
Singapore income tax. Next 40,000 15 6,000
First 160,000 – 13,950
Next 40,000 17 6,800
First 200,000 – 20,750
Next 120,000 18 21,600
First 320,000 – 42,350
22 Above 320,000 20Rate of SSD Where holding period is
More than More than More than
Up to 1 year 2 years 3 years
On consideration 1 year and up and up to and up to
or market value, to 2 years 3 years 4 years
whichever is the
higher
16% 12% 8% 4%
Goods and Services Tax Other taxes
A goods and services tax GST returns Stamp duty Under the measures residential properties which – Foreigners2 and
(GST), which is a tax on introduced to curb speculation were acquired on or after non-individuals – 10%
domestic consumption, was The business is required Stamp duties are chargeable of residential properties in 30 August 2010 and sold
implemented on 1 April 1994. to file periodic GST returns on instruments that effect Singapore, certain additional within three years of – Singapore permanent residents
(usually quarterly) within one transactions in immovable duties apply to sellers and acquisition, depending on who already own one or more
Scope of GST month after the end of the property situated in Singapore, buyers of residential properties, the holding period. These are residential properties, whether
prescribed accounting period. as well as stocks and shares depending on the periods in detailed in the table above. owned wholly, partially,
As a basic rule, a supply of The net GST payable is similarly of Singapore companies. which such properties are or jointly with others; and
goods or services made in due within one month after the transacted. These are set out • Higher varying SSD rates Singapore citizens who already
Singapore by a taxable person end of the prescribed accounting (i) Stocks and shares as follows: will be further imposed on own two or more residential
in the course or furtherance period (unless the business is For the sale of stocks and residential properties which are properties, whether owned
of any business carried on by under a GIRO arrangement). shares, duty is charged at the • Properties acquired before acquired on or after 14 January wholly, partially, or jointly with
him is subject to GST at the rate of 0.2% on the amount 20 February 2010 will not be 2011 and sold within four years others – 3%
standard rate of 7%, unless GST on purchases or value of consideration, subject to a seller’s stamp of acquisition, depending on
the supply qualifies for zero- whichever is the higher. It is duty (SSD). the holding period. These are Property Tax
rating or is an exempt supply. If the business is registered usually borne by the purchaser detailed as follows:
for GST, the input GST on unless otherwise agreed • An SSD was imposed on In Singapore, property tax is
The main exemptions are purchases that are used or to between the relevant parties. sellers who bought residential – Additionally, the following a tax on immovable properties,
financial services and the be used for the business can properties on or after affected buyers on and after including houses, buildings
sale or lease of residential generally be offset against Transactions in shares of 20 February 2010 and sold them 8 December 2011 would and land. The tax payable is
properties. Zero-rating is the output GST collected companies incorporated within one year of acquisition. have to pay additional buyer’s calculated based on the tax rate
generally applicable to the on sales (subject to the outside Singapore do not The SSD was calculated in stamp duty (ABSD) at the (currently 10%) of the annual
supply of international services input tax recovery rules). attract Singapore stamp duty, accordance with the BSD. corresponding rates on the value of the property. Reduced
and export of goods. unless the share register is total amount of consideration rates apply for owner-occupied
Import of goods kept in Singapore. • Varying SSD rates will be or value of the property, residential properties.
GST registration subsequently imposed for whichever is the higher:
GST is payable on the import of (ii) Immovable property
A person who is making goods into Singapore, and this For the sale of immovable
taxable supplies of goods and/ is collected by the Singapore property, stamp duty of up to
or services in Singapore with Customs. The GST is based on 3% is charged on the amount
Rate of SSD Where holding period is
an annual turnover exceeding the import value (cost, insurance or value of consideration,
(or expected to exceed) S$1 and freight) and includes any whichever is the higher. As
million is required to register for Customs duty due. There are noted above, this is usually More than More than
GST. The business has to notify a number of import GST relief borne by the purchaser (i.e. a Up to 1 year 1 year and up 2 years and up
On consideration to 2 years to 3 years
the IRAS of its obligation to schemes (e.g. Major Exporter buyer’s stamp duty or ‘BSD’)
or market value,
register for GST within 30 days Scheme) to ease the cash unless otherwise agreed whichever is the
of when the obligation arises. flow of the business as GST between the relevant parties. higher
is suspended on the import Same as BSD 2/3 of BSD 1/3 of BSD
of goods into Singapore.
2
Foreigners of certain nationalities
who fall within the scope of
respective Free Trade Agreements
will be accorded same treatment as
Singapore citizens.
24Audit and Human Resources
accountancy and Employment Law
Requirement to audit Public-listed companies are Employees’ rights Given the large pool of skilled – two weeks’ notice if the
subject to additional financial and obligations labour available in Singapore, it employee has been employed
Businesses, including private statement and disclosure is generally easy to hire unless for two years or more but less
and public companies and requirements promulgated The Employment Act covers the business is looking for people than five years; and
branches of foreign companies, by the Singapore Exchange. every employee who is under a with very specialised skills.
are required to be audited contract of service, except for: – four weeks’ notice if the
by independent certified Record-keeping Further, Singapore maintains employee has been employed
public accountants, unless a. any person employed in an open-door policy for foreign for five years or more.
they are sole proprietorships, Every company incorporated a managerial or talents. Applications for
partnerships and representative in Singapore must keep executive position; foreign workers would Pension
offices. Under the Companies accounting records and these normally be directed to
Act, dormant private companies records can be kept outside b. any seaman; the Foreign Manpower The Central Provident Fund
and exempt private companies3 Singapore. However, records Employment Division of (CPF) is a statutory saving
with annual revenue that is sufficient to enable a profit and c. any domestic worker; and the Ministry of Manpower. scheme in Singapore to
S$5 million or less are loss account and balance sheet provide retirement and medical
exempted from audits. to be prepared should be sent d. any person employed by Role of Unions benefits for employees who
and kept in Singapore. a Statutory Board or are Singapore citizens or
Businesses can choose their the Government. Collective bargaining is Singapore permanent residents.
financial year end. These The accounting records must covered under the Industrial Employees are required to
audited accounts should be be kept for five years from The Employment Act governs Relations Act and can be contribute to this fund at a rate
prepared and filed with ACRA the end of the financial year the rights of employees in applied to all employees in of up to 20%. For employers,
on an annual basis and they are in which the transactions or certain areas, including: a firm. However, the employer the rate of CPF contribution
available to the public (except operations to which they relate may object, based on specific can be up to 16%, depending
for private exempt companies). are completed. – rest days and hours of work; grounds, to the trade union’s on the employee’s citizenship
representation of an employee status, age and wage band.
Reporting standards – leave and holidays; who is employed in a
managerial or an executive Foreign employees and
The Accounting Standards – salary; position for the purpose of their employers are not
Council (ASC) is empowered collective bargaining. required to participate in
to prescribe accounting – retrenchment; and the contribution of CPF.
standards in Singapore. It Termination of employment
also reviews and recommends – retirement. Skills Development Levy (SDF)
corporate governance and The Employment Act states the
disclosure practices on Although Singapore has no following minimum notice to be Employers are required
a continuing basis. Most statutory minimum wage, the given prior to the termination of to contribute 0.25% on
businesses apply the Singapore National Wage Council does a contract of service: the first S$4,500 of the
Financial Reporting Standards recommend guidelines for gross remuneration of all
(SFRS) which are closely annual wage adjustments. – one day’s notice if the employees. The SDF is used
modelled on International 3
employee has been employed to provide grants to Singapore-
Exempt private companies refer to
Financial Reporting Standards Recruitment matters for less than 26 weeks; incorporated companies to
companies with not more than 20
issued by the International provide training to employees.
shareholders, none of which is a
Accounting Standards Board. Recruitment is commonly done – one week’s notice if the
corporation. A private company which
through engaging a recruitment employee has been employed
is wholly owned by the government
agency and advertising in for 26 weeks or more but less
may also be gazetted as an exempt
newspapers or job websites. than two years;
private company by the Minister if it
is in the nation’s interest.
26Trade Banking in Singapore
Singapore has a highly To give local companies Singapore’s banking system
developed market-based added safeguards and is among the strongest in the
economy. While the state incentives to expand world and it has strict banking
plays a key role in formulating overseas, Singapore has secrecy laws. As the regulator
the economic strategies of concluded 18 regional and of Singapore’s financial
the country, it does not bilateral FTAs with 24 trading services sector, the Monetary
intervene in the commercial partners. These FTAs have Authority of Singapore has
decisions of firms. strengthened Singapore’s prudential oversight over the
cross-border trade by banking, securities, futures and
The Singapore government eliminating or reducing insurance industries, including
does not tolerate anti- import tariff rates in the administering the various
competitive practices. The country of destination, statutes pertaining to money,
Competition Act prohibits providing preferential access banking, insurance, securities
agreements or concerted to service sectors, easing and the financial sector
practices that lead to the investment rules, improving in general.
prevention, restriction or intellectual property regulations,
distortion of competition. and opening government There are generally no
Any conduct constituting the procurement opportunities. restrictions imposed on both
abuse of a dominant position resident and non-resident
in any market is also prohibited. companies in holding bank
accounts. Savings accounts are,
There are no tariffs or quota however, generally not offered
restrictions for imports. Certain in Singapore to companies.
goods are dutiable or controlled
for revenue, safety and security Opening a bank account is a
reasons. As Singapore is a relatively simple and straight-
member of the Association forward process. The extent
of South East Asian Nations of paperwork required largely
(ASEAN), goods originating depends on each bank’s Know
in and consigned from Your Client requirements.
Singapore are entitled to
preferential tariffs in the Investors with good credit
other ASEAN countries. standing should generally be
able to utilise a myriad range
of credit facilities in Singapore.
These credit facilities include
overdrafts, and short-term
advances to medium and long-
term loans, import and export
financing facilities etc.
28HSBC in Singapore
Overview
One of the earliest banks to Corporate Sustainability Initiatives in Singapore include
establish in Singapore, The the HSBC Youth Excellence
Hongkong and Shanghai For HSBC, Corporate Initiative which recognises
Banking Corporation Limited Sustainability is about and supports Singapore’s
first opened its doors in bringing social and best and brightest in the HSBC’s contribution has
December 1877. Today, environmental issues arts, environment, leadership been recognised with a host
HSBC is a prominent player together with financial and community service, of national and international
in Singapore’s banking sector performance to maintain and provides them with awards, including:
and aims to be the leading and grow a successful opportunities to develop and
international trade bank here business for the benefit realise their immense potential • 2011, 2010, & 2007 ComChest
and across the region. The of our stakeholders. to serve the community; and Corporate Platinum Award
Bank offers a comprehensive the Bank’s Care-for-Nature
range of banking and financial • We apply clear policies Programme launched in • 2011 & past consecutive
services that meet the needs of and processes to manage 1989 as a long-term effort years NAC Patron of
customers, from those of multi- potential social and to promote environmental the Arts Award
national corporations to local environmental risk in our awareness, research and
businesses and individuals. lending and other financial conservation. • 2009, 2008 & 2003
activities in sensitive sectors. ComChest Special Events
As a Qualifying Full Bank, Its Corporate Responsibility Platinum Award
HSBC Singapore has a network • We help our clients to Challenge is an annual bank-
of nine branches and over seize the opportunities wide staff volunteering initiative • 2007 British Business
10 locations providing self- presented by the shift to that delivers a significant Awards for Corporate Social
service terminals as well as a low carbon economy. impact and makes a tangible Responsibility
advanced electronic banking difference to the lives of the
channels. The Bank provides • We try to reduce our own needy and underprivileged. • 2005 NVPC Corporate
a range of financial and environmental footprint and Citizen Award
wealth management services share good practice on this These initiatives are
including retail, commercial, with our clients and other underpinned by its Volunteers • 2004 NVPC Outstanding
corporate, investment and stakeholders. @HSBC programme, which Corporate Volunteer
private banking, insurance, provides staff with an organised of the Year Award
forfaiting and trustee services, • We focus our community platform to contribute – in a
securities and capital markets investment (philanthropic sustainable and consistent • 2002 United Way
services. HSBC is an approved activities) on education manner – their time and International Outstanding
Primary Dealer in the Singapore and the environment. services to those in need in Global Community-Building
Government Securities Market the community as well as to Project Award
and an Approved Bond the environment.
Intermediary (ABI), with more • 2001 President’s Social
than 100 staff operating Service Award
one of the largest integrated
dealing rooms in Singapore. • 2001 Singapore Children’s
Society Gopal Haridas Award
• 1998 NCSS Outstanding
Corporate Citizen Award
30Country overview
Capital city Singapore
Area and population Area of 712.4 sq km and population size of 5.077 million
Language English, Chinese, Malay and Tamil
Currency Singapore dollars
International dialling code 65
National Holidays Scheduled Public Holidays for 2013
New Year’s Day 1 January
Chinese New Year 11 February
Good Friday 29 March
Labour Day 1 May
Vesak Day 24 May
Hari Raya Puasa 8 August
National Day 9 August
Hari Raya Haji 15 October
Deepavali 3 November
Christmas Day 25 December
Business and banking hours Generally from 8.30 am to 6 pm (Mondays to Fridays)
Banks are generally open from 9.30 am to 3 pm (Mondays to Fridays)
and up to 1 pm on Saturdays
Stock exchange Singapore Exchange
Political structure Parliamentary system of government based on Westminster model
Economic statistics Singapore’s GDP stands at S$327 billion in 2011 while its per capita
GDP is S$63,050
The amount of foreign direct investments in Singapore as at end 2010
stood at S$619 billion
Useful links to get started Singapore Economic Development Board edb.gov.sg
Accounting and Corporate Regulatory Authority acra.gov.sg
Inland Revenue of Authority of Singapore iras.gov.sg
Ministry of Manpower mom.gov.sg
32Contacts
Paul Lau
Tel: +65 6236 3733
Email: paul.st.lau@sg.pwc.com
http://www.pwc.com/gx/en/
worldwide-tax-summaries
Contact HSBC Commercial Banking
Customer Service Centre:
1800 216 9008 (Singapore)
(65) 6216 9008 (overseas)
Website: hsbc.com.sg/commercial
Email: contact@hsbc.com.sg
Main branch: HSBC Building
21 Collyer Quay #01-00
Singapore, 049320
3rd Edition: November 2012
Copyright
Copyright 2013. All rights reserved.
‘PwC’ and ‘PricewaterhouseCoopers’
refer to the network of member firms of
PricewaterhouseCoopers International
Limited (PwCIL), or, as the context requires,
individual member firms of the PwC network.
Each member firm is a separate legal entity
and does not act as agent of PwCIL or any
other member firm. PwCIL does not provide
any services to clients. PwCIL is
not responsible or liable for the acts or
omissions of any of its member firms
nor can it control the exercise of their
professional judgment or bind them in
any way. No member firm is responsible
or liable for the acts or omissions of any
141TP_Singapore_100712_3
other member firm nor can it control the
exercise of another member firm’s
professional judgment or bind another
member firm or PwCIL in any way.
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