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Should you Start a Business in Singapore?
For many companies looking to expand their operations internationally, start a business in Singapore is a top choice. This small country offers access to the South East Asia market with a strong connection to the Western ones.
Combining a strong business culture, strategic geographic location, advanced infrastructure, skilled and educated workforce, an attractive tax system, and an efficient and transparent bureaucracy, start a business in Singapore is for sure a very attractive option for companies that are seeking an ideal setup for regional or overseas expansion opportunities.
But before you make the move into this dynamic country, it’s important to know what differentiates Singapore from other business friendly countries around the world – both advantages and disadvantages.
History of Singapore as a business destination
Singapore has long been a popular destination for both businesses and travelers alike. The city-state has long been established as a thriving business destination, with a history of success that can be traced back to the early 19th century when the British East India Company first began trading in this strategically-located port city. With its strategic geographic location at the crossroads of Asia, boasting the world’s largest sea-crossing (the 35km Johor–Singapore Causeway), Singapore blossomed into one of the most desirable trade hubs in Southeast Asia—a place where goods, services, and ideas could quickly spread throughout the region. Continuous economic growth since then has only established Singapore further as one of the most important business destinations in the world today.
The country has no shortage of businesses seeking to capitalize on its advantageous geographic position, bustling cultural experience, and supportive regulatory environment. Its six international airports – including Changi Airport, ranked among the busiest airports worldwide – and some of Asia’s most modern infrastructure, Singapore continues to provide businesses with an unrivaled international business hub that encourages growth and global opportunities.
Overview of the Benefits of Starting a Business in Singapore
There are a range of benefits to businesses considering to start their business in Singapore. It is one of the most business-friendly countries in the world with generous government incentives, competitive tax policies, a low-cost and high quality workforce, and world-renowned infrastructure capabilities. Furthermore the business environment is very stable and the diversity of talent available makes it possible to find employees who are capable of taking your company global. With all these advantages, it is no wonder that Singapore has become an ideal destination for entrepreneurs looking to make their mark on the world.
Advantages of Incorporating a Company in Singapore
Strategic Location and Connectivity
Singapore is recognized globally for its strategic geographic location and modern connectivity. Located at the nexus of Asia Pacific’s trade routes, the city-state has the world’s busiest port, with an interconnected transport network reaching out to over 600 cargo and passenger destinations around the globe. With excellent air and sea links connecting it to other major cities in Southeast Asia, this makes it easy for a business to access international markets. As a hub of international commerce and transportation, Singapore has leveraged its advantageous location in the region to become one of the biggest trade players worldwide. Furthermore, Singapore is one of only eight countries to have held a double “A” credit rating from all three major credit rating agencies for more than a decade, further highlighting its strong economic position and international standing.
Low Tax Regime and Incentives
One of the main advantages of start a business in Singapore is its competitive tax regime. In addition to zero capital gains tax, goods & services tax, and dividend withholding tax, the country boasts one of the most attractive corporate tax systems in Asia, with a headline corporate tax rate of only 17%, which is significantly lower than many other countries, and a Corporate Tax Exemption Scheme which provides full or partial exemption to newly incorporated companies meeting specific criteria. Furthermore, businesses are also eligible for various government incentives and grants such as the Productivity and Innovation Credit scheme, which provides tax deductions for businesses investing in research and development, innovation or technology. Furthermore, the country offers several investment-specific incentives such as Start-up Tax Exemption and Double Tax Deduction for Internationalization scheme that give businesses greater control over their finances. Singapore is a signatory to over 80 double taxation agreements with other countries and territories, allowing companies to enjoy tax relief when doing business abroad. This is an invaluable benefit for businesses looking to expand into new markets and it is not surprising that a large number of foreign investors continue to flock to this evergreen nation.
Robust and Transparent Regulatory Environment
Singapore is widely recognized as having one of the most business-friendly regulatory regimes in the world. It has a transparent and well-rounded set of laws that provide investors and companies with legal certainty and protection. The country also has an independent judiciary, rigorous accounting standards and anti-corruption measures, making it a safe place to do business. Additionally, Singapore’s strong legal system provides speedy resolution of disputes and protection of property rights which encourages an investment-friendly environment in the country.
Moreover, the simplicity of its business registration process, streamlined incorporation procedures and robust intellectual property protection laws make it easier for investors to start a business in Singapore and to operate there. The government has also been proactive in introducing new rules and regulations that make Singapore a more attractive destination for global investors.
Friendly Business Climate
Singapore is a beacon of innovation and dynamism, thanks to its open capital market, world-class infrastructure, competitive policies conducive for investment opportunities as well as business development. As Singapore continues to build ties with global partners and technology at the forefront of progress in this modern era; it remains an ideal destination for investors seeking new markets while celebrating diversity within its multicultural society.
The city-state has consistently been one of the top ranked countries in the World Bank’s Doing Business report, with a highly supportive regulatory environment that encourages businesses to incorporate and operate within its borders. Favorable tax rates, transparent and efficient regulations, low bureaucracy and a strong legal framework makes Singapore an attractive option for global investors and businesses.
Access to Talent Pool
Singapore has a well-developed education system with top universities and world class research institutions. This allows businesses to access a talented pool of professionals who are highly educated in specialized fields such as finance, engineering, law and IT. Furthermore, the country’s low unemployment rate makes it easier for businesses to hire experienced employees from abroad as well as to retain and train local talent.
The Singaporean workforce is highly motivated and knowledgeable, making it an ideal place for businesses to invest in long-term projects that require a well-trained staff. In addition, the government has implemented various initiatives such as SkillsFuture which provides employers with the necessary resources to develop their staff’s skills and capabilities.
Disadvantages of Incorporating a Company in Singapore
High Cost of Living and Operating Expenses
One of the main drawbacks of start a business in Singapore is its high cost of living. This means that companies will incur higher operating costs, as they need to pay their employees more than in other countries. Furthermore, with some of the highest rental expenses for office space, businesses will need to factor this into their budgets and operating costs.
Businesses in Singapore are also subject to additional costs such as stamp duties, annual filing fees and corporate taxes. The government has implemented various initiatives such as Corporate Income Tax Incentives which provide companies with a temporary deferment of up to 70% of the payable corporate income tax, however these can have an expiry date which needs to be considered by businesses when making their budgeting decisions.
Singapore has a highly regulated business environment and companies need to comply with various rules and regulations in order to operate legally. This includes having proper licenses for certain types of activities and registering with the relevant authorities. In addition, businesses will need to adhere to strict labor laws which include minimum wage requirements as well as health and safety standards.
Businesses also need to be aware of Singapore’s restrictions on foreign ownership, which stipulate that certain types of activities are only open to companies where more than 50% of the total shareholding is held by Singapore citizens or permanent residents. Furthermore, businesses will need to comply with the country’s anti-corruption laws which are among some of the most stringent in the world.
Restrictive Immigration Policies
Singapore has long been known for its stringent immigration policies; the country is home to a population of nearly 6 million, yet only 2.4 million of those are citizens. International arrivals have encountered many challenges regarding gaining permission to stay in this beloved island nation – ranging from being asked for proof of financial stability, providing sponsorship and job offers to simply proving their purpose for travel or stay in the country. Stringent background checks on virtually all potential immigrants ensure that only those with a track record of legitimacy and lawful compliance find approval. While this method may seem harsh, it has allowed Singapore to remain one of the safest countries in the world. Carefully regulated immigration policies have kept foreign pressures and influence at bay while providing comfort and security to both local citizens and those who have been accepted into Singapore’s closed-off borders.
Summary of Benefits and Disadvantages of Opening a Company in Singapore
All in all, start a business in Singapore is an ideal solution for investors looking to establish a presence in Asia. With its high standard of living and well-developed infrastructure, the country offers many benefits such as access to a large market with high purchasing power. In addition, the government provides various incentives and tax exemptions which can help offset operating costs. However, there are some drawbacks such as high costs of living, stringent regulations and restrictive immigration policies which businesses need to be aware of before making their decision.
Recommendations for Potential Investors
Start a business in Singapore can be a viable investment opportunity, but it is important to carefully consider the various factors before proceeding. Potential investors should obtain detailed information on the external economic and geographic conditions that could affect the success of their venture. It is also essential to research relevant legal regulations and registering requirements particular to Singapore in order to remain compliant with local statutory standards. Other things to consider are obtaining permission and licenses needed according to their industry, forming an effective team qualified to handle operations, and establishing connections with local networks prior to launching operations. With the right preparation and effort, investors can make informed decisions regarding their foray into Singapore’s market.
How to Get Started with Opening a Company in Singapore
To learn more on how to start your business in Singapore, contact us and read our comprehensive guide to cover all the most important aspects.