What Are the Procedures for Incorporating a Company in Singapore? Explaining the Benefits and Costs as Well

Singapore has become a renowned country for its ease of corporate establishment by foreign companies. Currently, there are approximately 7,000 foreign companies that have set up their corporations in Singapore.

The reasons for this include the geographical advantage of easy access to various locations as a Southeast Asian hub, favorable corporate incentives, and minimal regulations during corporate establishment. Additionally, the stability of the political climate and infrastructure also stands as one of its strengths.

This article will provide a detailed explanation on how to establish a company in Singapore.

How to Establish a Corporation in Singapore

There are primarily four methods to enter the Singaporean market. By selecting the method that best aligns with your objectives, you can develop your business smoothly without undue strain.

Establishing an Independent Local Subsidiary

One of the greatest advantages of setting up a local subsidiary in Singapore, independent from the Japanese headquarters, is the benefit of one of the world’s lowest corporate tax rates. Singapore’s corporate tax rate is 17%, which is nearly half compared to Japan’s 35%. When you include tax incentives and income exemptions, the difference becomes even more significant.

However, to enjoy Singapore’s tax benefits, it is essential that the company is recognized as a Singaporean corporation for tax purposes, and it must meet the necessary registration requirements.

If there are remittances from the Singaporean corporation to the Japanese corporation, Japanese tax laws (such as transfer pricing and tax haven regulations) will apply, so caution is needed.

When establishing a local subsidiary, first decide whether to go public with the company’s shares or not.

If you choose to go public, you can raise funds through a public offering, but you will need to have more than 50 shareholders. On the other hand, if you do not go public, there are no restrictions on the number of shareholders, but there will be limitations on the transfer and sale of shares.

While there are many points to consider when establishing a local subsidiary, compared to other Asian countries, the process of setting up a corporation is relatively easy, and the fact that all procedures can be completed in English only is also a significant attraction.

Establishing a Branch Office of a Japanese Corporation in Singapore

In addition to establishing a local corporation in Singapore, it is also possible for a Japanese corporation to set up a branch office in Singapore. In this case, the branch will exist as a foreign corporation without a separate legal entity in Singapore, but it can conduct business activities just like a local corporation.

The major difference between a local corporation and a branch office lies in the tax system.

Since the Singapore branch is considered the same legal entity as the headquarters (the Japanese corporation), the headquarters will file tax returns in Japan. In this scenario, it is important to note that the branch may not be eligible for the preferential tax treatment available in Singapore. Additionally, the branch itself will also need to file tax returns, which can be seen as a disadvantage compared to a local corporation due to the various procedures involved.

However, there are advantages to being the same entity as the headquarters (the Japanese corporation), such as easier movement of funds compared to a local corporation, and the ability to consolidate and offset profits and losses, which makes it easier to make overall decisions for the corporation as a single entity.

There is also the option to start as a branch office and then transition to a local corporation based on the situation, but this would involve considerable effort and cost in transferring registrations and contractual relationships.

Establishing a Representative Office as a Preliminary Step to a Local Subsidiary

A representative office refers to a base established by a Japanese corporation in a foreign country for the purposes of market research and promotional activities.

When setting up a representative office, legal procedures such as corporate registration are not required. One advantage is that it can be established at a lower cost compared to setting up a local subsidiary or branch.

However, unlike local subsidiaries or branches, a representative office is not permitted to engage in commercial activities such as sales or business transactions. The same applies to opening bank accounts.

To establish a representative office in Singapore, the headquarters must meet the following conditions:

• The headquarters must have been established for more than three years.
• The headquarters must have annual sales of at least 250,000 US dollars.
• The number of representatives sent must be fewer than five.

While a representative office is primarily an institution for preliminary investigations and for assessing the suitability of market entry, it can also be considered a useful step prior to establishing a local subsidiary, depending on the circumstances.

Partnership Collaboration

One method of entering the Singapore market is through partnership collaboration.

A partnership refers to a business form registered by two or more individuals or corporations, with less than 20 partners (exceptions apply), and there are three types of partnerships:

• “Partnership”
• “Limited Partnership (LP)”
• “Limited Liability Partnership (LLP)”

A “Partnership” is an organizational form composed of individuals, hence it does not possess a separate legal entity status, and each partner bears unlimited liability, similar to a sole proprietor. Taxation is also similar to that of a sole proprietor, where each partner is taxed on their individual income tax.

While a “Limited Partnership (LP)” also does not have a legal entity status like a partnership, it differs significantly in that it requires at least one limited liability partner among its members. A “Limited Liability Partnership (LLP)” allows not only individuals but also corporations and other LLPs to become members. Taxation is applied individually, but personal partners are taxed as personal income, while corporate partners are taxed as corporate income.

A distinctive feature of a “Limited Liability Partnership (LLP)” is that the partnership itself is recognized as an independent legal entity. Therefore, an LLP can own property as a corporation and is responsible for business losses and debts as an organization, which means that individual partners are not personally liable. Compared to an LP, an LLP is closer to a company in nature.

While there are few advantages for Japanese companies to enter Singapore through partnership collaboration, particularly with LLPs, there are cases where accounting and law firms use this form due to the simplicity and lower cost of establishment procedures compared to local corporations.

Procedures for Corporate Establishment in Singapore

We will provide a detailed explanation of the procedures for establishing a corporation in Singapore. From the creation of documents to the submission of registration applications, opening of bank accounts, and the associated costs, we will guide you through the process step by step for your reference.

Preparations for Corporate Formation

To establish a company in Singapore, you need to decide on the following:

Company Name

While a standalone entity can freely choose its name, a branch must use the same name as the headquarters.

Business Activities of the Company

It is necessary to define the main business activities of a Singaporean company. Once you have decided on the business activities to be included in the registration certificate, select the Singapore Standard Industrial Classification (SSIC) code.

Choose the SSIC code that most closely matches your business activities. If in doubt, consulting with a specialist is a surefire way to avoid mistakes, but keep in mind that the SSIC can be changed at a later date if necessary. Please note that some industries require applying for additional permits after establishment.

Examples of businesses that require separate licenses include the finance and insurance industry, education, healthcare and caregiving, food manufacturing, and the accommodation and tourism industry.

Registered Address

It is essential to secure a location for the registered address of a Singaporean company in advance. If you do not have an address in Singapore, consider using an annual registered address leasing service.

Capital

Similar to starting a business in Japan, it is necessary to set up a capital amount. The minimum is set at more than 1 Singapore dollar.

Shareholders (Founders)

There are no restrictions on the nationality or residence of shareholders. Furthermore, there are no limitations on whether shareholders are individuals or corporations.

Directors

Care must be taken with regard to directors. At least one director must be a Singapore resident over the age of 18.

Company Secretary

A distinctive requirement when establishing a corporation in Singapore is the appointment of a company secretary. This may be an unfamiliar system in Japan and can easily be overlooked, but it is an important position for preparing minutes and statutory documents.

Fiscal Year-End

It is also necessary to determine the fiscal year-end date.

Preparation of Documents for Corporate Formation

Once you have outlined the general concept of your company, the next step is to prepare the actual documents. The following documents are required for company registration:

Articles of Incorporation

Create the Articles of Incorporation, which are the fundamental principles of the company. The Articles should primarily include the following:

• Amount of capital stock
• Shareholders
• Directors
• Company Secretary
• Principal place of business
• Nature of business

Directors’ Consent to Act (Form 45)

This is a document declaring that the individual meets the requirements to become a director, and it must be signed by each director. The requirements include age and the absence of a criminal record, among others.

Other Necessary Documents

All documents must be translated into English.

If the shareholder is an individual:

• Passport of the shareholder (a copy is acceptable)
• Document proving the address

If the shareholder is a corporation:

• Certificate of All Historical Matters of the parent company
• Document verifying the shareholder structure of the parent company
• Passport of the individual shareholder(s) owning 25% or more of the parent company (a copy is acceptable)
• Articles of Incorporation of the parent company
• Document proving the address

Incorporation Registration Application and Approval

Once the above documents are completed, please proceed with the company name reservation application with the Accounting and Corporate Regulatory Authority (ACRA) of Singapore.

Reference: ACRA (Accounting & Corporate Regulatory Authority)

A fee of 15 Singapore dollars is required at the time of registration. The reservation is valid for 60 days, and if exceeded, you can extend the reservation by paying an additional 10 Singapore dollars.

After registering the company name, you will then apply for company incorporation with the same Accounting and Corporate Regulatory Authority (ACRA). Upon approval, a registration fee of 300 Singapore dollars is payable.

Once all procedures are completed, a Business Profile (Biz File) will be issued, marking the completion of the company’s registration.

Following the company registration, the next step is to set up a bank account. When opening a corporate bank account, you may need to submit minutes detailing the fiscal year-end and the decisions made regarding the corporate bank account, so it’s advisable to hold a board of directors meeting to address this.

Additionally, plan accordingly as the first Annual General Meeting (AGM) must be held within 18 months from the date of incorporation.

Opening a Corporate Bank Account

After establishing a corporation, it is essential to set up a bank account. In Singapore, the following documents are generally required to open a corporate bank account:

• Application form for opening a bank account
• Company registration information (a copy is acceptable)
• Articles of Association (a copy is acceptable)
• Directors’ identification documents (both original and copy)
• Proof of directors’ residence (both original and copy)
• Board resolution approving the opening of the bank account

However, as requirements may vary depending on the bank, we recommend confirming with the bank you plan to open an account with in advance.

Once the account opening process is successfully completed, please deposit the capital funds.

Obtaining Work Visas for Local Staff

Once the initial preparations such as corporate establishment and opening of corporate bank accounts are completed, the next step is to obtain work visas for Japanese employees who will work locally.

In Singapore, there are mainly two types of work visas: the “Employment Pass” and the “S Pass”.

The Employment Pass (EP) is more challenging to obtain but comes with fewer restrictions, whereas the S Pass, officially also known as the S Pass, is easier to acquire but has a limit on the number of individuals a company can employ. Therefore, it is necessary to differentiate and apply them according to the type of personnel.

Employment Pass

The official name is Employment Pass. It is a work visa obtained mainly by professionals, managers, and executive personnel working in Singapore.

Application Requirements

• A fixed monthly salary of at least 5,000 dollars (or 5,500 dollars in the financial sector)
• Adequate educational qualifications (at least a bachelor’s degree)
• Positions with high specialization or executive level

etc.

The validity of the pass is up to two years for the first issuance and up to three years for renewals.
Reference: Government of Singapore｜Employment Pass

S Pass

The official name is the S Pass. It is a work visa primarily for mid-skilled skilled workers who are not in managerial positions.

Application Requirements

• A fixed monthly salary of at least 3,150 dollars (or 3,650 dollars in the financial sector) as of 2024
• However, the minimum monthly salary may vary depending on age and educational background
• Graduation from a university or junior college, or completion of at least one year of full-time education at a vocational school

※From September 1, 2025, the minimum monthly salary for new applications will be revised to at least 3,300 dollars (or 3,800 dollars in the financial sector).

etc.

Reference: Government of Singapore｜S Pass

Costs Associated with Incorporating a Company

As of March 2024, the main costs typically required to incorporate a company in Singapore are as follows (additional costs may apply depending on the type of company and industry):

At the Time of Company Incorporation

Reference: ACRA (Accounting & Corporate Regulatory Authority)｜Setting Up a Local Company

Visa Application Costs

In addition, if you rent an office, you will incur rental costs, and if you engage professionals or consultants for incorporation or visa application procedures, their fees will also apply, so it is important to budget for these expenses.

The Benefits of Incorporating in Singapore

Let’s discuss the main benefits of incorporating a company in Singapore.

Differences in Tax Rates between Singapore and Japan

As mentioned earlier, one of the attractions of Singapore is its low tax rates. While the corporate tax rate in Japan is 37%, Singapore’s rate is half of that at 17%.

In Singapore, as a national policy to foster the country’s development, various tax reduction measures and preferential tax treatments are actively implemented. It is said that the effective tax rate can be even lower than 10%. Compared to other developed countries, Singapore’s tax rates are definitively lower, which is a reason why many multinational corporations have expanded their operations into Singapore.

Well-Developed Infrastructure

Singapore’s infrastructure is highly regarded, not only in Asia but also globally. From utilities such as water supply to the development of public transportation that minimizes traffic congestion, and a robust internet environment, Singapore offers an ideal setting for business.

Furthermore, the government itself envisions the country as Asia’s hub. Changi International Airport, the gateway from various countries, is only about 20km away from Raffles Place, the heart of Singapore’s business district. Singapore serves as a focal point for expanding business into other Asian countries, India, and Oceania.

Friendly to Foreign Corporate Involvement

There are few countries as welcoming to foreign corporate expansion as Singapore. In many other countries, policies favor domestic companies, and it is not uncommon for 100% foreign-owned enterprises to face restrictions.

So why does Singapore allow such a degree of foreign corporate presence?

The answer lies in the small size of Singapore’s market. Singapore is a country with limited resources and absolutely needs the inflow of foreign capital. For Singapore to continue to prosper among the nations of the world, it is necessary for influential foreign companies to enter the market.

Additionally, Singapore is home to a diverse range of cultures and has adopted English as an official language, making it a suitable environment for multinational corporations in the international business arena.

The symbiotic environment for both Singapore and foreign companies is one of the country’s most distinctive and strongest features.

Conclusion: Consult with Experts for Corporate Establishment in Singapore

Singapore has proven to be an accessible market for international expansion and is a country multinational corporations should consider securing a presence in. The key to successful business operations in Singapore lies in careful planning and cost consideration, as well as deciding on the type of business to develop.

While this article has comprehensively covered information necessary for establishing a corporation in Singapore, it is important to recognize that each case is unique and there may be unexpected pitfalls.

To adapt to any situation with agility, it is advisable to deepen your understanding of Singapore and, concurrently, to consult with knowledgeable experts in the field.

Guidance on Measures by Our Firm

Monolith Law Office is a law firm with extensive experience in IT, particularly in both the internet and legal fields. In recent years, global business has been expanding increasingly, and the need for legal checks by specialists is growing more than ever. Our firm provides solutions related to international legal affairs.

Areas of practice at Monolith Law Office: International Legal Affairs & Overseas Business[ja]