- Article, U.A.E
- January 21, 2021
What is the Tax Residency Certificate?
A Tax Residency Certificate in Dubai sometimes called Tax Domicile Certificate (TDC) is issued by the Ministry of Finance (MOF), International Financial Relations and Organizations Department conferring eligibility to government entities, companies and individuals to benefit from the treaties of double taxation avoidance of the UAE with its other global counterparts.
If a person resides in the UAE for at least 180 days he can apply for the Dubai Residency Certificate. The non-residents cannot apply for this certificate.
Companies functioning in the UAE for at least past one year can apply for the certificate.
The eligible applicants on opening an account online on the MOF website system receive the Tax Residency Certificate in Dubai through email after making payments of necessary government fees.
Double Taxation Agreement(DTA)
Double Taxation Agreements (DTAs) are treaties reached between the UAE and other treaty countries for relieving double taxation of income earned in one country by a resident of the other country.
The United Arab Emirates first signed the Double Taxation Avoidance Agreement with France and since then, the Emirates, including Dubai, have signed 92 double taxation treaties with countries across the world.
Eligibility for a Tax Residency Certificate
For individuals:
- To qualify, individuals must have lived in the UAE for a minimum of 183 days within the applicable tax year.
- Residency can be verified using an Emirates ID, a residence visa, and documented entry/exit stamps.
For businesses:
- Entities must have been legally established in the UAE for at least one year to qualify for a DTA TRC.
- A valid trade license, whether from the mainland or a free zone, is required.
Processing Time
Procedures for Dubai Tax Residency Certificate
The procedural steps involved in the tax residency certificate in Dubai are
- Creating an online account in the system of the MOF
- Filling up tax Residency application form
- Attaching necessary documents in digital formats such as PDF or JPEG and applying with fees
- Receiving email notification of successful verification of application and remaining payment advice
- Making payment
- Issuance of certificate and sending to the registered address by express courier
Goals of Tax Residency Certificate
- This stimulates Dubai and the UAE’s economic growth
- It helps individuals to avoid paying taxes in multiple countries
- The process of international commerce and investment becomes more efficient with its implementation
- This facilitates increased economic growth for all parties involved
The Validity of Tax Residency Certificate in Dubai
Documents Required for Tax Residency Certificate in Dubai
For Companies
To apply for tax domicile certificates, the company must have exercised its activity in the UAE for at least one year:
Documents required for Companies to get a tax residency certificate in Dubai are
- A copy of the trade license and partners’ attachments
- A copy of MOA (Memorandum Of Association
- A copy of the company’s owners/partners/directors’ passports, IDs and permits of residence
- A certified copy of the audited financial accounts
- Validated Bank statement for 6 months
- A certified copy of the lease agreement
- The establishment contract certified by official authorities (if it is not a sole company)
- The organizational structure of the company ( if it is not a sole company)
For Individuals
To apply for a tax domicile certificate individuals must have been a resident in the UAE for at least 180 days. The certificate is not granted to non-residents.
The documents required for individual tax residency certificate in Dubai are
- A copy of Passport and Emirates ID
- Valid residence permit
- A certified copy of the (residential) lease agreement / Tenancy contract
- Bank statement for 6 months
- Salary certificate / Income certificate
- A report from the General Directorate of Residency and Foreigners Affairs mentioning the duration of the person’s stay in UAE (Minimum 180 days)
- Tax forms (if any) from the country where the certificate needs to be submitted
For Investors
For Housewives
Fees for Tax Residency Certificate in Dubai
For Individuals
For Companies
TRC for Treaty Purposes
- Submission fee: AED 50
- For commercial activities and tax registrants: AED 500
- For non-tax-registered individuals: AED 1,000
- For non-tax-registered legal entities: AED 1,750
TRC for Domestic Purposes
- Submission fee: AED 50
- For tax registrants and commercial activities: AED 500
- For non-tax registrants’ natural persons: AED 1,000
- For non-tax registrant legal entities: AED 1,750
- Commercial Activity Certificate: AED 500
- Printed Certificates: An additional AED 250 for hard copies
- For duplicate, damaged, or missing original certificates: A total of AED 103 (AED 100 + AED 3 for processing).
- All fees must be paid using the e-Dirham Card
UAE Tax Residency Test
- The individual has physically resided in the UAE for at least 183 days within the last 12 months
- The person’s center of financial and personal interests is located in the UAE, or they satisfy another condition specified by the Ministry
- Over a 12-month period, the individual has been physically present in the UAE for at least 90 days and meets one of the following conditions:
- Is a UAE citizen or resident, or a GCC national
- Owns a permanent residence in the UAE
- Is employed or operates a business within the UAE
For legal entities, such as companies or establishments, the tax residency status under the Resolution is determined if the entity is:
- Established, formed, or registered according to UAE law (this does not include branches of foreign legal entities).
- Recognized as a tax resident under UAE tax law
Benefits of Tax Residency Certificate in Dubai
Investors in Dubai can considerably benefit from their access to the international market after company formation in Dubai. The benefits of being a Tax Resident in Dubai are many and include
Leverage Double Taxation (DTA) Avoidance
Enhance Import-Export Operations
Legal Validation
Boost Credibility and Transparency
Ease and strengthen cross border business relationship
Bottom Line
Effective tax planning with a multidisciplinary approach backed by strong business knowledge, accounting and finance structures and prevailing tax rules are must get the maximum benefits out of the tax residency certificate in Dubai. Considering this fact It is always prudent to outsource one of the best professional and experienced PRO services in Dubai for this purpose.
FAQs
Q1. What is the tax residency certificate in Dubai?
Q2. What is the purpose of the tax residency certificate in Dubai?
Q3. What is the validity of TRC?
Q4. Is the Tax Domicile certificate applicable for the UAE offshore companies?
Q5. What are the requirements for the TRC?
Q6. What documents are required for companies?
Q7. What documents are needed for individuals?
Q8. How long does it take to obtain a TRC in Dubai?
It usually takes 4 to 5 working days for pre-approval processing and 5 to 7 working days for the issuance of a tax residency certificate in Dubai once approval is made.
Q9. What happens if the tax Residency certificate in Dubai is lost or damaged?
Q10. Do I need a residential address in Dubai?
Q11. Are foreign bank statements acceptable?
Q12. Can I get a backdated certificate?
- Article, Singapore
- January 20, 2021
All are not over yet! Even after choosing the company name and completing the registration process and paying your fees, you are still left with a bunch of compliance requirements stipulated by Accounting and Corporate Regulatory Authority (ACRA) and Inland Revenue Authority of Singapore (IRAS), and also some other compliances to be religiously met on an ongoing basis.
Statutory requirements and companies act are primarily aimed for ensuring good governance of the company’s business and monitoring business health periodically both by the company owner and Singapore regulatory authorities for continued growth and sustainability of an organization.
Failure in complying with the requirements generally attracts hefty fines and other penalties. The compliance requirements encompass many business perspectives and range from reporting of Balance Sheet, Financial Statements to maintaining Beneficial Owners’ Registers.
The statutory compliance requirements applicable to your newly registered company in Singapore are mentioned below.
1 .Final Confirmation of Fiscal Year-End of Your Company
Now that you have done with your new Singapore company registration and also opted for the financial year-end, it is time to finally confirm the same or else notify both ACRA and IRAS about any changes that you would like to make.
It is mandatory for all Singapore registered companies to file annual business reports with ACRA and IRAS, based on your Financial Year End (FYE), the timeline for submitting newly registered company’s annual business performance to the authorities.
The fiscal or financial year-end commonly determined by Singapore companies is either 31st December or 31st March however, you may also choose 30th June or 30th September as your financial year-end.
How to select FYE?
Unless otherwise approved by the Registrar, the FYE for a company shall not exceed 18 months in the year of its incorporation. However, it is recommended that you choose to keep your FYE within 365 days for enjoying tax exemptions for the initial three years of assessment.
Final confirmation on FYE is stipulated to prevent companies from changing their FYE on a later date and as a safeguard.
2. Appointment of Auditors
All companies incorporated in Singapore must appoint an auditor within 3 months of the date of incorporation unless they are exempt from auditing requirements.
Is your company exempted?
Exemptions apply to small private companies. A company will be considered a small business if it is a private corporation in that fiscal year and it meets at least 2 of the following 3 criteria in the last 2 consecutive fiscal years
- Its total annual revenues do not exceed SGD10 million;
- Its total assets do not exceed SGD10 million;
- The number of employees does not exceed 50.
If your company is a part of a group, it is eligible for the audit exemption when
- The entity qualifies as a small company;
- The whole group must be a “small group”.
3. Disclosure of Your Company Registration Number
Singapore company law requires that every company must have the company registration number, known as the Unique Entity Number (UEN), on all business letters, bank statements, invoices, official notices, publications, etc.
4. Appointment of a Company Secretary
The Company Secretary needs to be a natural person and must reside in Singapore. The Singapore Companies Act requires companies to appoint a Company Secretary within six months of company formation.
New start-ups and SMEs usually engage a CSP services firm in Singapore for company secretarial services. You can derive many benefits by engaging a company secretary services Singapore.
How to appoint a company secretary?
Though as a Singapore Private limited company; you have one minimum resident director who is a resident of Singapore e.g. a Singaporean citizen or a permanent resident of Singapore or a person holding an Employment Pass / EntrePass, the resident director can not function as your company secretary.
Besides being a natural person, the company secretary must be a qualified person under the Legal Profession Act, public accountant registered or deemed to be registered under the Accountants Act, a member of the Singapore Association of the Institute of Chartered Secretaries and Administrators, a member of the Institute of Singapore Chartered Accountants (formerly known as the Institute of Certified Public Accountants of Singapore), a member of the Association of International Accountants (Singapore Branch), a member of The Institute of Company Accountants, Singapore a secretary of a company for at least 3 of the 5 years immediately preceding the above mentioned date of my appointment as secretary of the above named company.
In the event of the resignation of your company secretary, you must fill the vacancy within six months.
5. Maintaining Statutory Registers of Your Company
The Singapore Companies Act requires every company to maintain certain registers. These statutory registers are a part of the company’s informative records and are usually updated and maintained as official books together with the Constitution of the Company, Share Certificates, Common Seal, all Minuted Resolutions, etc.
The following information is mandatory to be maintained in the statutory registers
- Updated information about company members including your directors, auditors and secretaries in the form of Electronic Register of Members (EROM) and must contain the date of appointments and resignations, as appropriate.
- Shareholding and share transfers information. https:// www.acra.gov.sg/docs/default-source/default-document-library/legislation/companies-act-reform/companies-(amendment)-act-2014/NoticeToUpdatePaidUpShareCapital.pdf
- Information about any loan secured by the company
- Beneficial ownership information in the form of a Register of Registrable Controllers (RORC), and to make the information available to public agencies upon request.
Appointed company secretary needs to be assigned the duty for creating, updating and maintaining the company’s statutory registers.
6. Financial Reporting – Audited and Unaudited
All Singapore companies require to prepare and present financial statements in strict compliance with the Singapore Financial Reporting Standards (SFRS), which has converged to the International Financial Reporting Standards (IFRS).
This is a measure taken by the Accounting Standards Council (ASC) to reinforce Singapore’s status as an international financial centre and to remain informed of your company’s financial health and profitability, and tax liabilities.
You can use Zoho Books as an online accounting software with complete accounts payable and accounts receivable functionality for managing your finances and automating business workflows and complying with all applicable SFRS requirements.
7. Obtaining Business Licences and Permits
Certain business activities in Singapore are subject to regulation by government agencies. Even if your company is registered, you cannot establish your company if you do not have the necessary permits and/or licenses from the relevant government authorities. For instance, if you are in an Import Export Business you need to be registered with Singapore customs for obtaining CR, Central Registration number license.
For verifying a company and applicable business licenses and permits you can visit a Singapore Government Agency Website.
Obtaining necessary permits may not be that easy and straightforward sometimes and usually, it is a good idea to engage a professional corporate service provider to ensure that you are on the right track during your Singapore company incorporation.
8. Registration with Singapore Central Provident Fund (CPF) and Skills Development Fund (SDF)
The Central Provident Fund (CPF) Singapore is a statutory pension scheme where employers and employees pay a percentage of their monthly salary in the fund.
Employer contributions to the CPF are mandatory for all local employees who are either Singaporeans or permanently resident and earn more than SGD 50 per month.
The maximum contribution rate to the CPF for the employer and employee is 17 per cent and 20 per cent respectively and may be lower depending on certain factors such as the age of the employee, permanent residence status, etc.
Employment Pass holders do not need to contribute to the CPF.
https://www.cpf.gov.sg/Members
Your newly registered company) is also mandated to contribute to the Skills Development Fund (SDF). Employers must pay a contribution to the SDF of 0.25% for all employees up to the first USD 4,500 of gross monthly salary.
9. Filing Estimated Taxable Income (ECI) with IRAS
ECI as defined by the IRAS is the valuation of your company’s taxable income for the financial year. The ECI statement shall include the income of the company, excluding items such as capital gains from the sale of fixed assets.
Who needs to file the ECI?
A business entity needs to submit an estimate of its taxable income (TCI) within 3 months of the end of the tax assessment year. Even if the corporation estimates its taxable income to be zero, it must still file ECI “NIL” return.
What benefit do you get from Filing ECI?
IRAS provides an option for flexible payment to companies that submit their ECI declarations in advance enabling them to pay taxes in instalments. The earlier you file your ECI return, the greater the number of instalments allowed for you.
What happens if you fail to comply with the filing of ECI?
After the 3 months waiting period, if your company doesn’t comply with this requirement, IRAS will issue a Notice of Assessment (NOA) based on its estimate of the revenues of your company. Your company then will have one month from the date of issuance of NOA to file its written objection if it does not agree with the estimated IRAS assessment. If your company does not agree, NOA will accept the valuation as final, despite the differences in the revenue information provided in both the Form C and the subsequently submitted statements.
10. Holding First Annual General Meeting (AGM)
Though an AGM must be held physically and anywhere in the world, the Covid 19 pandemic mandates no necessity for a physical meeting to organise an AGM.
So long there is a means to exchange your documents e.g. electronically, it shall be adequate.
The following matters are to be discussed at an AGM:
- Approval of the report/audit report of the directors
- The company’s Profit and Loss and cash flow statements and details of sales, expenses and profit
- Balance Sheet detailing the assets, liabilities and equity
- Approval of the fees, remuneration and emoluments of the directors
- Re-elect the director(s) as appropriate
- The renewal of the term of office of the statutory auditors
- Explain any dividend announced and any changes in equity
- Any other business transactions
Updated Guidance on the Conduct of Meetings Amid Evolving COVID-19 Situation
ACRA, the Monetary Authority of Singapore (MAS) and Singapore Exchange Regulation (SGX RegCo) have updated the checklist to guide issuers and non-listed entities on the conduct of general meetings arising from the latest updates from the Multi-Ministry Taskforce to ease safe management measures to facilitate business operations.
Following links can provide more information
https://www.moh.gov.sg/news-highlights/details/resuming-more-activities-safely
11. Annual Tax Return Filing with IRAS
The deadline for filing the tax return is 30 November. The documents need to be submitted are the audited or unaudited report and the tax calculation (Form C).
Simplified Tax Declaration with Form C-S
To simplify the declaration process for small companies, IRAS has introduced the C-S form, a simple and shortened three-page tax return form for small businesses that are entitled to declare their income to IRAS.
From the 2017 tax year, companies can submit the C-S Form if they meet all of the following conditions:
- The company must be registered in Singapore
- The company must have an annual income not exceeding SGD 5 million.
- The company only has income taxable at the applicable corporate income tax rate of 17%
- The company is not claiming any of the following in the Year of Assessment:
- Deferment of shares/loss of capital from the current year
- Group Relief
- Investment grant
- Foreign Tax Credit and Tax Deducted at Source
What do you need for Form C-S preparation?
You need to prepare the following documents for form C-S
- Financial statements
- A declaration statement
- Tax computation and supporting documents
- Any other claim forms e.g. R&D expenses, M&A expenditures, Double Tax deductions etc.
12. Filing an Annual Return (AR) with ACRA
Under the Singapore Companies Act, all locally registered companies are required to file their annual returns.
Information required to be submitted for filing annual returns are
- Company Name and registration number
- Registered address
- Main activities
- Type of company during the year
- Summary of share capital and shares with changes in share structure, if any
- Recorded expenditure
- Information about company managers
- Information about shareholders
- Dates of the annual reports, the General Meeting and the annual accounts
- Company’s financial statements in XBRL format when applicable
When to File your AR?
The AR should be filed no later than 7 months after FYE confirmation and after the AGM.
Penalties for failure in submitting AR are heavy and can be SGD 300 for every breach and can even be SGD 600 on the repetition of failures.
Your company would need to file its financial statements in XBRL format during the filing of the annual return if your company:
- Becomes Insolvent with liabilities exceeding assets.
- It has at least one shareholder in the company for the year and is not dormant.
All companies must keep proper accounting records for minimum years.
TAKEAWAY
A lot of tasks need to be performed once you register your new company in Singapore for the first time. Besides the 12 compliance requirements mentioned, there would be other requirements to comply with too e.g. GST Registration, Company Seal, Registered office hours etc. and engaging a one-stop professional corporate service provider is strongly recommended.
- Newsletter, U.A.E
- January 13, 2021
UAE business entities, coordinated by Dubai based Emaar group will invest up to USD billions in India’s food sector over the next three years as a part of the UAE-India food corridor project. The investment is planned for the mutual benefit of two nations with the core focus of UAE’s food security and company-formation–in–India.
UAE- India diplomatic ties date back to 1972 and have developed as a strategic partnership over the years. UAE is the third-largest trading partner of India with an annual trade volume of approximately USD 60 billion.
The National Strategy for Food Security was presented during UAE Government’s second annual meeting in November 2018 with its objectives focused on ‘facilitating the global food trade, diversifying food import sources identifying alternative supply schemes, and covering three to five sources for each major food category.’
In line with its National Food Security 2051, the UAE has a concrete and robust plan of investment in India for developing food security and in the sector including agricultural produce as well as logistics for storage and transport.
In a recently held two days of food conclave on 7th and 8th December 2020 between the two countries, UAE confirmed its investment of USD 7 billion in Food-Corridor.
Two UAE based companies, DP World and Dubai Multi Commodities Centre (DMCC) are already working on possible tie-ups with Indian companies and farmers. While DP World is exploring synergies for Integrated Supply chain solutions, DMCC with its agriculture trading platform “Agriota” will connect Indian farmers with the food companies in the UAE for promoting agriculture import from India.
The Emaar group, a real estate company in the UAE will invest USD 5 billion in setting up mega food parks, logistics and warehouse hubs, fruits and vegetable hubs in several Indian cities and USD 2 billion in contract farming, and sourcing of agricultural commodities and related infrastructures.
“Considering our strategic relationship, I strongly believe that this is an opportune time for UAE and India to escalate food security cooperation,” remarked Ahmed Al Banna, UAE’s Ambassador to India in a public briefing. UAE’s investment in eight food parks in Madhya Pradesh in India is a testimony to this statement. This project will benefit 2 crore Indian farmers and will create 20,000 new employments by establishing logistics and agriculture infrastructures. The food park projects are essentially planned to keep in mind the farmers from Punjab and Maharashtra, the two most fertile Indian states with excess agriculture produce.
UAE choosing India over other adjacent gulf countries as a food security partner doesn’t come without reasons. Firstly, India with its vast fertile land bank and geographic climate has tremendous potential in agriculture and becomes a food surplus nation. As per a report, approximately 30 per cent of agriculture produce goes waste due to shortages of appropriate storage and other logistics facilities. Agriculture export to the UAE will not only prevent this huge wastage but will also pave the path for additional income for Indian farmers who are currently demonstrating in Delhi for the Minimum Support Price (MSP). This will help alleviate Indian farmers’ monetary concerns and direct contact with the companies will free them from the clutches of middlemen.
Secondly, UAE’s climate is not conducive for agriculture and farming and partnering with India in its food security programme can bring its objectives to fruition. The long-standing diplomatic ties with UAE is thus a guiding factor in choosing India as its reliable partner.
Thirdly, UAE is one of the biggest trading partners of India and there are already regular trades in oil and petroleum. India presently imports approximately 8 per cent of its oil requirements from UAE.
Last but not the least, this investment will help promote the UAE’s logistics and services sectors and lower food prices from India can hugely benefit UAE economically.
It is worth noting that a Minister from the Punjab government, Rana Gurmeet Singh Sodhi, invited UAE investors to set up food processing industries in the state who can benefit from a reliable and steady source of crops and can avail efficient logistics support through a company–formation–in–Delhi.
With increasing business and FDI policy reforms, India is becoming an attractive business destination for foreign investors easing the incorporation steps–for–companies-in–India. The recently launched production linked incentive scheme will also make India lucrative to foreign companies. Even the presently introduced more lenient insolvency and bankruptcy act will help foreign investment flow in India.
- Newsletter, Oman
- January 13, 2021
Foreign direct investment in Oman for the first quarter of 2020 crossed OMR 15 billion, an increase of 5.9 per cent compared to the same quarter in 2019.
For the first three months of 2020, FDI inflow amounted to OMR 15.064 billion compared to OMR14.213 billion for the same quarter in 2019, according to the National Centre for Statistics and Information (NCSI).
The United Kingdom topped the list of FDI in Oman at the end of the first quarter of 2020, reaching OMR 7.54 billion, up from OMR 7.396 billion during the same period of 2019.
The FDI from the UK was followed by that from the USA, with an amount of OMR 1.794 billion, up from RO 1.758 billion in the same period of 2019; and then by the UAE, with an amount of OMR 1.208 billion, compared to OMR 1.164 billion at the end of the same three months period in 2019.
Another member of the Gulf Cooperation Council, Kuwait came fourth in Omani FDI accounting OMR 916.8 million for the first quarter of 2020, in comparison to OMR 835.3 million for the same duration in 2019.
FDI from the Kingdom of Bahrain in Oman stood at OMR 402,300 million at the end of the first quarter of 2020, an increase from OMR 389,900 million compared to the same quarter last year while the FDI from the state of Qatar reached OMR 372,800 million, up from OMR 344,400 million.
China also invested heavily in Oman and the FDI values for the first three months of 2020 were OMR 760 million, up from OMR 75 million for the same period in 2019.
Foreign direct investments from India rose to OMR 323.1 million, up from OMR 320.7 million of 2019 first-quarter figure. Then came the Netherlands who invested OMR 304.7 million in comparison with OMR 298.5 million.
The Republic of Switzerland also participated and invested OMR 260,400, up from OMR 251,100 million during the corresponding period in 2019.
However the investments from other countries around the globe declined marginally and Oman received, till the end of the first quarter of 2020 an investment of OMR 1.176 billion against OMR 1.378 billion during the same tenure of 2019.
The NCSI data revealed that the maximum FDI went into oil and gas extraction activities in Oman amounting OMR 9.69 billion, up from OMR 9.5 billion in the corresponding period of 2019, while the FDI in the manufacturing sector stood second at the end of the first quarter of 2020 registering OMR 1.695 billion, up from RO 1.635 billion during the first three months of 2019.
The financial sector of the Sultanate of Oman also witnessed OMR1.362 billion in investment, the same amount of investment received in this field for the same period in 2019. The considerable upside in FDI also seen in the Real estate sector totalling an investment of OMR 1.14 billion, up from OMR 724.7 million for the first quarter of 2019.
Other economic activities in Oman saw a total investment of OMR1.302 billion, up from OMR 990.9 million for the first three months of 2019.
The World Trade Organisation (WTO) praised Oman for mobilizing increased FDI inflow into the country and interestingly the Ministry of Commerce, Industry and Investment Promotion of Oman also recently celebrated the 20th anniversary of its inclusion in the WTO.
WTO’s Deputy Director-General, Alan Wolff, described the Sultanate as a reliable and supportive partner for WTO and also appreciated its role in implementing transparent and clean business practices.
“We are fortunate that the Sultanate is a member of the WTO for various reasons, in particular its long history in the global trade,” he added.
The Sultanate has also enacted some anti-dumping regulations with Gulf Cooperation Council (GCC) countries against the produce of some countries who encouraged and have adopted harmful trade and business practices for doing–business-in–Oman.
Over the past twenty years, the data point showed that the Sultanate’s GDP has gone up by four times from $20 billion to $80 billion and Oman has been successful in achieving economic diversification and fixed trade surplus that the Sultanate can boast of.
The Sultanate is an ideal example of an open country believing in competitive advantage and transparent business systems and luring many global investors for their company-formation–in–Oman.
- Newsletter, U.A.E
- January 13, 2021
Abu Dhabi Global Market (ADGM) ends 2020 on a strong note despite all-round disaster caused by Covid-19 pandemic. 2020 is marked as the record year of achievement for ADGM with remarkable growth in key areas of fintech, regulation, sustainable finance and arbitration.
Amidst the adverse impact of the pandemic, ADGM continued to register steady growth in its three authorities namely the ADGM Financial Services Regulatory Authority (FSRA), the ADGM Registration Authority (RA), and the ADGM Courts. ADGM increased the number of registered licences by 43%, totalling 3,211 by year-end 2020. Assets increased by 193% totalling over USD 85 billion.
H.E. Ahmed Ali Al Sayegh, Minister of State (UAE) and Chairman of ADGM noted: “The year 2020 had been a trying period for the UAE and its community. However, the timely intervention and invaluable responses from the UAE leadership, the Abu Dhabi government and authorities have helped the country and its people to overcome the challenges brought on by the pandemic. The UAE economy is also well underway to recovery and further growth.”
“Despite the strong headwinds from the pandemic, ADGM grew to become more agile and responsive to the needs of its stakeholders and customers. We have achieved better results and developments than expected this year. We had welcomed the successful amendment of ADGM’s Founding law, launched several transformational initiatives, formed historical partnerships, and also established greater outcomes in the FinTech, arbitration, sustainable finance and academy fronts. I would like to express my sincerest gratitude to the Abu Dhabi leadership and government, our partners and customers for their unwavering support of ADGM. All these are possible only because of their trust and vote of confidence in us,” the Chairman of ADGM highlighted.
H.E.Ahmed Ali Al Sayegh also commented saying, “2020 marks the fifth year in operations for ADGM as an International Financial Centre. The ADGM team is committed to better serve the needs of its community and will continue to do our part in bolstering the financial development, growth and economic sustainability of Abu Dhabi and the UAE. We look forward to 2021 with anticipation and great hope for our nation.”
ADGM marked its 5th anniversary in 2020 and finished the year by hosting the fourth edition of its flagship event, the FinTech Abu Dhabi Festival, in association with the Central Bank of the UAE (CBUAE).
More than 7,500 delegates from over 110 countries participated in this event held in a virtual format and was a record success. FinTech AD convened the world’s foremost policymakers, regulators, investors and FinTechs to a digital platform and hosted leading initiatives including the Government FinTech Forum, the FinTech100 and the Innovation Challenge.
2020, also saw the official launch of the ADGM Digital Lab enabling the rapid prototyping and adoption of digital solutions aiding businesses to overcome their pain points and accessing new market opportunities for company–formation–in-Abu–Dhabi and showcased ADGM FSRA’s growth as a financial regulator.
ADGM Academy has been expanded in co-operation with the Human Resources Authority (HRA) and First Abu Dhabi Bank (FAB) and the Abu Dhabi Commercial Bank (ADCB) to create an education platform for young Emiratis. Together, these four institutions will launch The Bankers Programme, a new initiative to support the government’s requirements for vital professions guided by the UAE Central Bank and in line with FAB’s talent employment and management requirements.
ADGM also exhibited significant progress in Sustainable Finance and has hosted the second edition of its flagship Abu Dhabi Sustainable Finance Forum serving as a background to several high-profile announcements, including the region’s first green Real Estate Investment Trust (REIT), as well as the second round of signatories of the Abu Dhabi Sustainable Finance Declaration.
2020 also witnessed ADGM and the Ministry of Climate Change and Environment releasing the ‘State of Sustainable Finance’ report, underscoring the collective achievements by private and public sector stakeholders. This year also saw agreements with Israeli bank Hapoalim and Israel Securities Authority.
ADGM also expanded its partnership network with globally recognised institutions and regulators such as the Aurora50, Abu Dhabi Exports Office, the International Renewable Energy Agency (IRENA), Companies House Gibraltar, the British Virgin Islands Financial Services Commission, and ArbitralWomen, among others and had entered into a total of 208 MoUs, including 88 International MoUs and Statements of Cooperation (SoCs).
2020 showcased ADGM’s commitment to its community members through various support and relief measures introduced including an array of fee reductions, waivers and refunds, including a 100% waiver on continuation fees, annual fund fees and commercial licence renewal fees, and a 50% waiver on any new supervision fees, a 50% refund of supervision fees, and a 50% reduction on the incorporation fee for new ADGM companies boosting up business–set-up-in-Abu Dhabi.
- Newsletter, Saudi Arabia
- January 13, 2021
Saudi Arabia has made it clear on Sunday,13th December 2020 that its investment plans in India have not gone out of track and expressed confidence saying Indian economy has all the potential to bounce back from the adverse effects of the deadly coronavirus pandemic and will attract increased FDI inflow and new company-registration-in-India.
In February 2019, an investment of more than USD 100 billion in various sectors including petrochemicals, refining, infrastructure, mining and manufacturing, agriculture, etc. was announced by the Kingdom’s crown prince, Mohammed bin Salman. Recently, Saudi Ambassador Dr Saud bin Mohammed Al Sati reaffirmed Riyadh’s plan of 100 billion dollar investment in India.
“Our plans to invest in India are on track and we are in discussion to prioritize investment opportunities in several sectors in both countries,” Ambassador Dr Al Sati remarked.
He added that the Indian economic revival will help support other nations. He also praised the Indian government’s proactive measures and economic relief package, saying, “The economic relief package provided by India for its most prominent sectors is commendable. As the fifth-largest global economy and the largest economy in South Asia, the Indian economy has the impetus to recover from the impact of the ongoing pandemic”.
“The Strategic (Partnership) Council set up by two countries in 2019 has opened new avenues on partnership in strategic areas like defence, security and counter-terrorism, and renewable energy”, Dr Al Sati noted.
Saudi Public Investment Fund (PIF) had planned for an investment of $1.3 billion in Reliance Retail and $1.5 billion in Jio. He also added that the Saudi Aramco, the state-owned petroleum and natural gas company, is upbeat about India’s energy sector and also has investment plans. He also noted that the recent Labor Reform Initiative (LRI) will further reinforce economic ties between the two countries and facilitate setting–up–a–company–in–India.
The government fund acquired a 2.04 per cent stake in Reliance Retail venture, an ecommerce business running more than 12,000 stores across different cities in India.
As per Ambassador Saud Al-Sati, Saudi Arabia values India as a strategic partner and close friend. Ambassador Al-Sati remarked both countries are cooperating to create and strengthen partnerships in the defence and security sphere by training, knowledge sharing and fighting against terrorism.
“The Strategic Partnership Council set up by the two countries in 2019 has opened new avenues on partnership in strategic areas like defence, security counter-terrorism, energy security and renewable energy,” he added.
He also said the economic recovery of both countries will help promote the economic growth of other countries in the region.
“This investment will further strengthen PIF’s presence in India’s dynamic economy and promising retail market segment,” the fund said.
This latest expansion in India follows an earlier acquisition of a 2.32 per cent stake in Jio Platforms, the digital services unit of Reliance Industries.
The Reliance business group of India has interests in oil, petrochemicals and telecoms, and is controlled by Indian billionaire Mukesh Ambani who is leading the Reliance group in making huge investments now in the booming technology sector.
India’s retail industry tops the global list and accounts for an approximate 10 per cent of the country’s gross domestic product, however, the sector has been badly impacted by the covid pandemic and in turn, adversely affected the wider economy too.
“This investment further demonstrates PIF’s commitment to generating returns for the Saudi people and driving the economic diversification of Saudi Arabia,” highlighted the fund’s Gov. Yasir Al-Rumayyan.
With a belief that investment flows in both directions, the Saudi Investment Ministry announced granting of investor licenses to 306 international companies in the Kingdom during the third quarter of 2020, an increase of 96 per cent license issuance over the previous quarter.
Investment Minister Khalid Al-Falih remarked that the latest figures suggesting a phenomenal increase in investor license issuance show that the Kingdom can retain the long-term trust and confidence of the global investor community, and is steadily moving towards “steady and positive” economic recovery.
Analysis of the investors’ data reveals that India topped the list of foreign companies who were granted licenses in the KSA, followed by Egypt and the UK.
The business sectors with the highest number of new investors have been primarily in services sectors including education, financial services and housing and followed by the manufacturing industry and transport and logistics business.
- Newsletter, U.A.E
- January 13, 2021
The recent ground-breaking policy reforms allowing full ownership rights to the foreign companies are primarily designed to enhance the openness of UAE’s business climate and increase the number of businesses operating in the UAE to one million within the next decade jumping three-fold from 300,000 currently, the Minister of Economy added.
In a virtual media briefing, the economy minister Abdulla Bin Touq Al Marri highlighted the amendments to the commercial companies law would increase the business transparency and attract more foreign investment and help diversify the economy and ensure additional non-oil income.
“In light of the recent economic changes and challenges that were witnessed globally as a result of the Covid-19 pandemic, the realisation of this vision and this transformation has become even more necessary and urgent.”
Al Marri also pointed out the key changes will boost investor’s confidence and “provide a greater opportunity for establishing productive partnerships between citizens and foreign investors” and also enable the nation ” to contribute to the creation of new job opportunities, development of market movement, localization of technology, and development of skills and human capabilities.”
Other notable personalities who attended the briefing included Dr Ahmad Belhoul Al Falasi, Minister of State for Entrepreneurship and SMEs; Dr Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade; Abdullah bin Ahmed Al Saleh, Undersecretary of the Ministry of Economy; Dr Obaid Saif Hamad Al Zaabi, CEO-Securities and Commodities Authority.
“We are expecting new companies to come in, more FDI (foreign direct investment) flow to the country and we are going to support those companies and direct them to right clusters and projects within the country,” Thani Al Zeyoudi, minister of state for foreign trade noted during the briefing.
The compulsory provision for a UAE national or a UAE-owned company acting as an agent has been abolished as part of the new measures. A stipulation requiring a company chairman to be an Emirati and for boards to have a majority of Emirati directors has also been abandoned.
The reforms have been welcomed by the business community as it would reduce the costs of doing business and improve competitiveness and stock market listings.
“There is no doubt that the new amendments to the commercial companies law will encourage local and foreign investment. It will encourage initial public offerings and listings in the country’s capital markets and will increase the rate of transactions and attract foreign capital, which in turn will increase the depth and size of financial markets capitalisation,” Obaid Al Zaabi, chief executive of the Securities & Commodities Authority said during the event.
Al Marri added the UAE currently has around 300,000 companies of various formats and also highlighted saying, “National companies represent 99.3 per cent of this figure, and the new amendments are designed to increase the number of companies operating in the country to one million within the next ten years.”
“Besides, they will accelerate the rate of transformation of SMEs in general into joint-stock companies listed in the financial markets to secure public financing, risk-based capital financing activities market development is also expected to be an outcome,” emphasized Al Marri.
Al Falasi described the initiatives that are being undertaken in partnership with various concerned government establishments to lay sound foundations for the transformation towards a more flexible economic model including updation of the regulations and legislation governing economic, commercial and investment activities in the country.
Launching and implementing new initiatives and policies that would enhance the national economy’s ability to accommodate the changes in the current global economic scenario, develop future sectors and generate opportunities are also on the UAE government’s agenda to promote new business–set–up–in–Dubai.
The minister for SMEs pointed out that the new reforms would help protect the interests of both the UAE and the foreign investors by reviving the market movements, increasing the number and size of companies and projects in the country, and diversifying the foreign investment base.
Al Zeyoudi emphasized the efforts of the UAE to bring about a qualitative transformation to the existing economic model encouraging Emiratis to directly engage in business and invest in the local market.
“It will also boost the UAE’s ability to attract start-ups, innovative companies, and SMEs focusing on advanced technology,” Al Zeyoudi noted.
Al Saleh said as per the new law, the formation of a foreign company branch can now be possible without a Local Agent.
Recent policy reforms made UAE companies more optimistic than their global peers about profitability returning to pre-Covid levels in the next two years as business slowly recovers with more investments pouring in for doing–business–in–UAE.
- Newsletter, Singapore
- January 13, 2021
Singapore can decisively contribute to global recovery amid the coronavirus pandemic through continued investment and global collaboration, noted Deputy Prime Minister, Coordinating Minister for Economic Policies and Minister for Finance Heng Swee Keat on Monday, 7th December 2020 in his inaugural address during Singapore FinTech Festival x Singapore Week of Innovation & Technology (SFF X SWITCH).
As new frontiers are opening through technology and innovation across the world with a unity of purpose, Singapore is also joining the league to ensure inclusive and sustainable growth for its companies and workforce, he added.
Describing the meet at extraordinary circumstances when Covid 19 has taken more than a million lives and disrupted the global economy, Mr Heng highlighted how the Covid-19 crisis has unearthed inequalities in many societies and the need for the world to take a more inclusive approach in global recovery plans.
The five-day event, which ended on Friday, 11th December 2020 witnessed more than 60,000 participants from 130 countries.
Mr Heng, reiterating on Singapore’s commitment to investing in innovation remarked that the Singapore Government is making an investment of approximate 1 per cent of the country’s gross domestic product in research and development each year and finalizing plans for the next five years.
Singapore continues to deepen its capabilities to keep the tech ecosystem vibrant and develop as a global financial hub, he emphasized. “Our commitment to innovation and work together will be key to driving economic recovery and growth.”
During this festival, Mr Heng announced the launching of The Asian Institute of Digital Finance, hosted by the National University of Singapore and backed by the Monetary Authority of Singapore and the National Research Foundation on Monday, 7th December 2020.
One of the institute’s first projects is to build a data-sharing platform that can train models to improve credit assessments enabling lenders make better decisions and offer better rates, Mr Heng said, which will improve the financing of small businesses and enable a stronger post-pandemic recovery.
The institute will also play a strong role to nurture global fintech talent for Asia and will take in its first batch of post-graduate students in 2021.
To deepen its capabilities in Blockchain technology and enable transactions even in a zero-trust environment, Singapore is also launching “Singapore Blockchain Innovation programme” as the first major Blockchain research and translation programme to ward off limitations associated with the energy efficiency of processing blockchains and the ability to connect different blockchain systems, he said.
“The programme will expand blockchain research to the needs of the industry, and will also look into scalability and interoperability of blockchain solutions,” Mr Heng added.
Mr Heng also emphasized saying, “Our commitment to innovation and to work together will be key to driving economic recovery and growth. As we do so, the question before all of us is this – How do we use innovation and tech in a way that will build better lives for all our peoples? How do we build a future that is inclusive and sustainable?”
“To avoid widening inequality, we must recover from this crisis in a manner that is inclusive. We must speed up the time that it takes for the last company and worker to access and benefit from technology. Small and medium enterprises account for 90% of businesses worldwide and 50% of global employment. Many SMEs are not making use of digital technologies, much less training their workers for the digital world. It is imperative that we bring them on board the digital economy.” he said
He also highlighted how Singapore is levelling up the capabilities of its small and medium-sized enterprises (SMEs) by helping them adopt digital solutions and scale beyond Singapore’s shores and promoting new company–registration–in–Singapore.
He also talked about “Business sans Borders” initiative, or BSB, to digitally connect SMEs around the world for expanding their markets and helping foreign-companies–relocate–to–Singapore. BSB is a ‘meta hub’ helping SMEs access a much larger eco-system of suppliers and buyers and also connecting businesses to logistics and financial services providers. “Using AI, BSB enables SMEs to discover prices and sales opportunities in a much larger global marketplace”, he commented.
He pointed out with an example of a furniture maker who has used Singapore-based platform Source-Sage to connect to other digital marketplaces, discovering more buyers and recently acquiring a new buyer on the India business-to-business platform. This platform also offers a tremendous advantage to other businesses such as electronics, one of the top–10–business-options–for–foreigners–in–Singapore.
Describing Covid 19 as a wake-up call for the world with a reminder to be better prepared for big problems like climate change, Mr Heng reinforced Singapore’s commitment for addressing climate change issues through innovation citing how Singapore is deploying at least 2 gigawatts of solar power by 2030 that would accelerate the deployment of electric vehicles as well as explore smart charging technologies and promised to phase out all IC Engine vehicles by 2040 in Singapore.
“We believe that putting sustainability at the core of what we do can create economic growth opportunities,” he pointed out and reaffirmed Singapore’s ability to contribute to a green recovery in Asia.
In his address, Mr Heng emphasised that the foundation for a more inclusive and sustainable post-Covid-19 future lies in the creation of a more resilient global commons.
“One key element of a resilient global commons is stronger governance on the use of technology. Fair and ethical rules that are generally accepted will allow more people to trust and use technology,” he said.
He pointed out how Singapore’s Model AI Governance Framework released in 2019 is providing guidelines to address ethical and governance issues when deploying AI solutions with best practices captured and adopted by companies including Google, Microsoft and DBS Bank.
On the same day, Mr Heng announced the launching of Singapore Financial Data Exchange, World’s first public digital infrastructure which will allow Singaporeans to view their consolidated financial information through financial institutions’ financial planning services or the Singapore Government’s MyMoneySense app.
“Such an approach to trusted data sharing – involving both innovation and conducive regulations – can potentially be applied in other areas and other jurisdictions,” he remarked.
SFF x Switch was jointly organised by the Monetary Authority of Singapore and Enterprise Singapore and had week-long hybrid physical and digital events taking place round the clock.
1,400 speakers were invited including New Zealand Prime Minister Jacinda Ardern; Mr Sundar Pichai, chief executive of Google’s parent company Alphabet; and Microsoft co-founder Bill Gates.
- Article, Singapore
- January 11, 2021
If you are a freelancer in Singapore and seriously thinking of starting your own business, the first thought that comes to your mind is forming a sole proprietorship company.
A Sole Proprietorship company, by its very nature of minimum administrative complexities, may appear to be the most logical and suitable business vehicle to a freelance professional already accustomed to working alone and independently. However, a closer look with a broader perspective of Singapore company types will reveal that registering as a private limited company should always be your most preferred choice as a freelancer offering multiple benefits in the long term.
Freelancing in Singapore
Freelancing is a profession where you work for yourself rather than for a company. Generally, freelancers take contractual work for companies and organizations but cannot be termed as self-employed in true sense.
When it comes to self-employment it means that you have your own business and do not work for anyone else. Generally, as a self-employed person, you own a business to provide goods and services to customers and have complete ownership and control of the business and independently decide how to operate the business, contrary to freelance professionals offering services as their livelihood.
In contrast to conventional employees, Freelancers are flexible in their working hours and they plan and execute projects, invoice customers, and pay taxes on their own. The freelancing fields are diverse and may range from writing and editing, photography, designing, consultancy including even sales and marketing.
With the 21st century witnessing a tremendous increase in technological advancements and innovations across the globe and more so in Singapore, increasing numbers of people are choosing to work freelance instead of working for a specific company. There are plenty of freelance jobs available in Singapore today, especially if you possess any skill in great demand. As per the Singapore Ministry of Manpower (MOM), some 0.2 millions Singapore citizens and permanent residents were working as freelancers in 2019.
Private Limited Company in Singapore
A private limited company also called as Pvt. Ltd, is a dynamic and scalable business structure in Singapore. In contrast to other types of businesses that you can incorporate, such as a sole-proprietorship or partnership, Pte Ltd private limited company has a separate legal identity from its owners or shareholders.
A private limited company can sue or be sued under its name in Singapore and case of any legal issue arising in the course of its business activities, shareholders can stay out of it. You need to register a private limited company with the Accounting and Corporate Regulatory Authority (ACRA), the Company Registrar of Singapore.
Guide to Incorporating Your Business in Singapore: Essential Checklist
Setting Up a Private Limited Company in Singapore
Minimum Requirements
- One resident director
- A physical Singapore office address
- If a foreigner wants to become a local director, he or she should apply to the Ministry of Manpower (MOM) for an EntrePass or Employment Pass
- Initial paid-up share capital of at least SGD 1
- One company secretary
- At least one shareholder (individual or corporate entity)
Process Steps
- Obtaining ACRA’s approval for your company name
- Preparing documents to set up Singapore company
- Submitting Application to ACRA
Documents Required for Setting Up a Private Limited Company in Singapore
The documents that are required to register a private limited company in Singapore are as follows
- Company name approved by the authorities
- Business activity description stating the type of activities the business is involved in and described as per the standard classification code
- Shareholding structure disclosure by the founders with the shareholding pattern detailing how the shares are distributed
- Registered address proof with details of actual physical location in Singapore
- Identification details for the shareholders, the directors, and the company secretary
- The company constitution documenting the Articles of Association as well as the Memorandum
- First Board resolution during which the directors of the company are appointed
- A copy of the National Registration Identity Card
Advantages and Disadvantages of a Private Limited Company in Singapore
Incorporating a private limited company can be very rewarding for a business entrepreneur offering many benefits.
As a freelancer, you must critically consider all the advantages and disadvantages of a private limited company and can be a time-consuming decision. However, note that many business owners plan for the long term and choose to incorporate a private limited company in Singapore.
Advantages
A few advantages are
- Limited liability: Private limited companies are liable for their losses and debts incurred during their business operations however the shareholders’ liabilities only extend up to their investment in the company’s shares. Their assets are protected and not used to pay off the debts or losses of the company.
- Competitive tax rates: The corporate tax rate is very competitive in Singapore. Tax exemptions are available for new startups and partial tax exemptions for all companies, effectively resulting in only a 9% tax rate on the chargeable income of up to SGD 300,000. It is thus wise to set up a limited company over the other types as chargeable incomes of a sole proprietorship and partnership firms are treated as the personal income of the owners and partners that could potentially translate into higher tax expenses for the firms.
As Singapore follows a single-tier taxation regime, incomes once taxed at the corporate level will not be taxed again for the shareholders. Hence, the dividends received by the shareholders of a limited company are not taxed resulting in tax-free personal income for the shareholders.
- Startups are entitled to tax exemptions
The Singapore government supports local startups. Under the tax exemption scheme for the new startups, the local startups get:
- 75% tax exemption on their first SGD 100,000 of normal chargeable income
- An additional 50% tax exemption on their next SGD 100,000 of normal chargeable income
- Separate legal entity
A private limited company has its own legal identity, which is separate from its shareholders enabling it to acquire assets, enter into contracts, avail debts and be sued or sued in the company’s name.
Because of this distinct identity, the company remains a functional entity until the shareholders dissolve it or it gets liquidated by the orders of the court or the Registrar of Companies.
The death or disability of the owner/owners does not impair its existence or the contracts that it has entered into. More importantly, the identity thus created is protected and the use of the same/similar identity or name by any other business is legally prohibited.
- Ease of transfer of ownership: Company share certificates describe the portion of stakes a shareholder has in a company. Transferring ownership of shares is very simple and easy just through the transfer of shares to the new owner’s name.
- High growth rates and ease of raising capital: When a Singapore private limited company grows in size, it can opt for getting converted into a public company. Once it goes public, it can easily raise funds by offering its shares and debentures to the general public.
- Higher attractiveness to foreign investors: Banks and financial institutions prefer to lend to private limited companies as they see more accountability and credibility in such companies.
Disadvantages
- Complex and lengthy Process of winding up: Winding up a private limited company is more complicated and expensive. The legal complexities are many and often need the hiring of legal experts
- Higher Administrative Cost: A private limited company must put a lot of administrative efforts and hire qualified employees for its successful operation resulting in higher operational costs. Even the cost of setting up businesses is higher than that of sole proprietorship companies
- Many post-registration compliance requirements: Stringent rules and regulations are imposed by ACRA and IRAS requiring many ongoing statutory compliances for a private limited company. The accounting set up for a private limited company is also complicated often requiring experienced external accounting services in Singapore
Pros and Cons: Private Limited Company and Sole Proprietorship
The most important thing to decide before starting a business in Singapore is the type of business structure that the company will embark upon and choose from the 3 common types of business vehicles including Sole Proprietorship, Limited Liability Partnership and Private Limited Company.
For a freelancer, the two most obvious choices are Sole Proprietorship and Private Limited Company and the pros and cons associated with these two types of business structures based on different perspectives are summarized below.
Legal Considerations
A sole proprietorship in Singapore does not become a separate legal entity hence it is synonymous with an owner or proprietor of the business. The company owner is personally accountable for all liabilities, business losses and debts incurred during the entire business life cycle.
A Private limited company, on the other hand, is a separate legal entity where owner and shareholders are not personally liable for company debts and losses with limited liability to their investments in the company.
Tax Implications
For Sole proprietorships, profits from the business are taxed at individually applicable tax rates. Singapore sole proprietors are taxed at zero to 22 per cent progressive tax rates.
Corporate tax rates are applied for Private limited companies and taxed at the prevailing corporate tax rate of 17 per cent. Qualifying Private limited startups enjoy the Tax Exemption Scheme in the first 3 assessment Years. From 2020 onwards, SGD 125,000 is exempted from the first SGD 200,000 taxable income.
From 2020, Private limited companies can also enjoy the Partial Tax Exemption from the 4th YA and SGD 102,500 is exempted from tax for the first SGD 200,000 chargeable income.
Private limited companies, therefore, can enjoy significant business leverage from tax exemption during the first three years of assessment in comparison with Sole proprietorships where no such exemptions are applicably forcing them to pay higher taxes during this period.
Statutory Regulations
Sole proprietorships don’t have many filing requirements. Taxable income from the business is assessed on an individual basis and reflected in the personal tax return of proprietors.
Private limited companies need to comply with more regulatory requirements including the appointment of a Company Secretary, holding Annual General Meeting (AGM) and filing Annual Returns (AR) with ACRA. A private limited company that is not considered as a small business also requires appointing an auditor. However, the additional compliance requirements though complicated and requires outside help from professional Company secretary services in Singapore ultimately become a blessing in disguise for improved transparency, long term growth and sustainability of the company.
Business income is also assessed and taxed as per AR of the Private limited company.
Corporate Income Tax (CIT) Rebate and SME Cash Grant
The Singapore government announced SME cash grant and CIT Rebate in its 2020 budget as financial support to corporates.
Small and medium-sized enterprises (SMEs) will get a cash grant to offset their rental costs as part of government efforts to help them get back on their feet after covid 19 lockdowns.
To help businesses reduce the adverse economic impact of the COVID-19 outbreak, the “Stabilisation and Support Package” was announced in the Budget Statement for the financial year 2020. Corporate income tax rebate (CIT) is given to all companies to ease business costs and support restructuring by companies and applies for YA 2013 to YA 2020.
A sole proprietorship is not eligible for CIT Rebate and SME Cash Grant.
Private limited companies are eligible for CIT Rebate and SME Cash Grant announced by the Government.
Financial Incentives
There are more government financial incentives available to a Private limited company compared to Sole proprietorship. Many grants are available to a Private limited company including Startup SG Equity, Startup SG Founder and Market Readiness Assistance (MRA) grant.
Businesses willing to avail the Startup SG Equity grant will need to be Private limited company while MRA grant application from Sole proprietorships will be assessed on a case-by-case basis.
Bottomline
It may seem that sole proprietorship’s are more suitable for small businesses with minimal risks when compared to private limited companies demanding more compliance requirements. However, a private limited company provides distinct advantages over sole proprietorship business in terms of scalability and fundraising, better personal asset protection and most importantly tax savings.
Also, many clients do not prefer to work with a Sole Proprietorship and it would be a wise decision to register your business as a Private Limited Company.
Private limited companies are the most common and attractive amongst foreign business aspirants and the Singapore government also encourages the formation of this company vehicle for their better accountability and more stringent regulatory compliances.
The benefits of private limited companies are more visible when businesses generate high profits and are expanding their operations.
- Newsletter, U.A.E
- January 6, 2021
The Ministry of Finance, MOF UAE has announced on 31st December 2020 EXTENDING DEADLINE for submission of ESR Notification and report through a circular in the Ministry’s official website.
All business entities in the UAE undertaking relevant activities as per law and required to submit the annual ESR Notification and Economic Substance Report must do so to the regulatory authority no later than 31st January 2021 to avoid administrative penalties.
All applicable companies falling under this ESR notification and filing requirements must submit a notification and supporting documents online via MOF portal latest by January 31st as no further extension will be given.
The Ministry extended the deadline to support businesses that might have been adversely impacted due to Covid 19 and partly because the MOF ESR portal only went live during the first week of December 2020 when MOF started getting ESR notifications and reports through this portal.
MOF has recently conducted virtual seminars to update companies on the use of the ESR portal and help them submit their necessary ESR documents electronically. More than 5000 companies participated in these seminars.
MOF has also released a set of templates for ESR Notification and ESR Report useful for preparing and analyzing ESR related information that needs to be submitted as a mandatory compliance requirement.
On 10th August 2020, the cabinet of Ministers issued Resolution No. 57 of 2020 concerning Economic Substance Regulations, “Resolution 57” which amended and repealed Resolution 31.
The MOF, UAE strongly recommends that all business entities assess and reassess whether and which of their business activities fall within the scope of the Economic Substance Regulations and how satisfactorily the businesses can ensure Economic Substance Test in respect of each relevant activity.
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