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Incorporate Your Company Using Virtual Office Space
  • Article, Singapore

Incorporate Your Company Using Virtual Office Space

Are you already thinking of expanding or starting your business in Singapore? What is the first thing that pops in your mind? A modern office space with a neat lobby and beautiful interiors? Everything beautiful has its price. Why pay exorbitant rental bills for office space when you can support your business from the comfort of your home?

Nonetheless, for incorporating your company in Singapore, the most important credential is a registered business address. People who are just starting or expanding to new locations in Singapore must read on to know the answer to all their questions.

How can I incorporate without going for physical office space?

We all know that Singapore has a space crunch, and not all businesses can afford a physical office because of very little revenue to spend on an expense that can be so easily avoided. We recommend going for virtual office spaces.

Virtual office spaces are not only manageable financially, but they also give a boost to your business when employees can work from their homes from any corner of the world. IMC can help you attain one such space for your business. There are various packages for such a subscription, and it generally includes a registered business address, communication services like phone and receptionist services, mailboxes, and mailing address.

If you plan to incorporate without a physical address, then virtual office spaces might be the answer. You can own a physical space without coming to the office and paying rent for the entire office space. Meanwhile, you can also carry out all your business using the internet. Whenever a communication arrives at your mailing address, we will let you know.

Is Virtual Office considered for Incorporating a company in Singapore?

A virtual office with a registered business address is as real as a physical office space in Singapore. You might have many doubts because we understand that it might be difficult to buy what we are saying. To strengthen what we are saying, we will state the ACRA’s criteria for your business’s physical space.

  • The address of the office must be a physical location situated within Singapore
  • The physical office space should be accessible by anybody for at least 5 hours every day
There are various communications to be done after we bring about the company setup in Singapore. The various regulating agencies might need to communicate with you regarding changes in policies and annual filings with the government from time to time. Any communications done to your mailing address would automatically be communicated to you via our services from the comfort of your home.

Guide to Incorporating Your Business in Singapore: Essential Checklist

Download Checklist

Tips on Choosing the best virtual office space

There can be various perks while choosing to go for a virtual office space. It offers multiple advantages, but a virtual office space might not always be the most appropriate choice for your business. Below are highlighted some of the pointers which can help you to decide if going for virtual office space is suitable for your business or not.

1. Rental costs on a physical space

Saving costs on a rental space can be the top of your mind priority if you start small. If you have an internet business with digital services only, then a virtual office space might do wonders for you. On the other hand, if you are a business that needs most of your staff to be present in the office to conduct business, then a virtual office space might not be of use to you.

Moreover, while selecting your virtual office space package (which can range from a few hundred dollars to thousands of dollars), read the services offered to you in the package. Companies that do not provide the mailing address as a part of the package and ask you to top it up with these services with extra charges applied.

2. Work from home is a choice, not a necessity

If most of your staff is very comfortable working from home, virtual office space is for you. There are already established software platforms that come ready to use for all your business needs ranging from managing your projects to contacting clients. Moreover, it is an added advantage for the business to operate from home. You can directly cut down on redundant expenditures like electricity, water, rents, etc. Your business will be more eco-friendly, and people would be able to spend quality time with their families and will be able to work from any corner of the world.

3. If you want a work culture that should be flexible even when your business is small and still growing

Normally, you will observe that for a company’s culture to get ingrained into the employees; it usually takes years. So, these virtual office spaces can help you create a healthy work culture right from the very start. If people typically work from home but sometimes they might need to be more productive, then your business can rent out desks and workstations too. Similarly, holding meetings and carrying other business activities is possible very quickly by making reservations in advance.

4. The quality of services provided

While choosing the virtual space office, you must check the testimonials and look after the details of the services offered. The quality of the services provided will affect how smoothly your business runs. For instance, if the virtual workplace’s internet services are not good, that can severely hamper your business online. Moreover, if there are telephone services included in your package, then the staff’s quality, which attends to those calls from your customers and clients, can impact the business.
5. Privacy
It is vital to ensure that the virtual office provider’s services should keep your information confidential. The internet should be secure, and enterprises should enable WPA2 encryption for security. If the security type is “No authentication,” then there are chances that the internet is not secure. Companies have a term in their agreement to sell your data when they go bankrupt, so you must look out for these terms.
Going for virtual office space might sound lucrative initially, but things can spin out of control if precautions are not taken. The above tips will help you evaluate if you need such an arrangement for your business. If you need more information or wish to enquire about our services further, you can contact us.

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Why and How UK Investors Register and Incorporate Companies in India? All You Need to Know
  • Article, India

Why and How UK Investors Register and Incorporate Companies in India? All You Need to Know

Summary

The United Kingdom and India enjoy long-standing business legacy and deep-rooted diplomatic and economic ties with a strong existing robust bilateral investment relationship that is all set to further flourish during the post Brexit era and boost up UK’s investment for many new India company incorporation.

How is UK India Business Relationship?

Several facts and figures available from the UK India Business Council demonstrate the strength of the relationship and the strong business ecosystem the private sector companies have built-in India. From 2000 to 2016, the UK invested approximately $24 billion in India and increased its investment by almost 8 per cent. between 2015 and 2016. The UK also ranked as the largest of all foreign investors into India.

The operating environments in both countries are congenial to mutual investment and business relationships. An ongoing focus on ease of doing business is expected to give huge dividends.

A Bilateral Investment Treaty providing, protecting and promoting FDI flows would be the harbinger towards a long-term UK-India trade and investment relationship where lots of future scopes exist that can mutually benefit the two countries and enable the potential of both the economies to be realised in the fullest extent. It is also noteworthy that both governments are striving hard to push the pace of their country’s economic development.

The long legacy and historical ties have put India as one of the preferred business destinations for many UK companies, and the UK Government is firmly committed to promoting its existing investment relationship with India, world’s largest democracy and marketplace with great economic powers.

There has been a sharp increase in the number of UK companies entering India since 2000 and the number of new business incorporations over the last two decades greatly outnumbered those that took place in the entire 20th century.

Why an UK Investor Should Register and Incorporate a Company in India?

Following are some key reasons prompting the UK investors for a business set up in India

1. Improved Ranking in Global Competitive Index

2. Improvement in Ease of Doing Business Index

3. Make in India and Swachh Bharat, Clean India Campaigns and Digital India Initiative

4. Improvement in Online Application System for starting a business

5. Betterment in Credit Access

6. More Transparent Payment of Taxes

7. Introduction of GST for a more uniform tax system

8. Improved Legal System

9. Greater Political Stability

10. An young and talented workforce

What Should be the Market Entry Strategy in India?

A private limited company formation is the commonest, easiest and fastest type of Indian market entry strategy for foreign nationals and foreign companies with 100 per cent foreign direct investment into a private limited company or limited company under the automatic route where no Central Government permission is needed. Thus incorporation of a private limited company as a wholly-owned subsidiary of a foreign company or joint venture is the cheapest entry strategy for foreign companies and foreign nationals into India.

A private limited company provides limited liability protection to its shareholders and In the event of any unforeseen losses giving rise to statutory or legal liabilities, the shareholders of the company are not held responsible. Private limited companies can raise equity capital from prospective persons or entities interested in becoming a shareholder. Companies can also raise money from angel venture capital firms, private equity firms, hedge funds and arch investors. Debt financing from banks, NBFCs and other financial institutions are also possible.


How do UK Investors Register and Incorporate a Company in India?

The registration and incorporation of a private limited company can be done in less than two weeks subject to the availability of the following documents.

  • PAN Card
  • Residential Proof
  • Authorization letter from the Landlord of registered office space
  • Address Proof
  • Registered Office Proof
  • Proof of any utility service like telephone, gas, electricity, etc.

The procedural steps on how to register private limited company in India are documented in details online and include the following

Step 1. Submission of Application for digital signatures to eMudhra

Step 2. Submission of Name Approval Request to MCA

Step 3. Preparation and collection of incorporation documents based on the MCA approved name

Step 4. The signing of incorporation documents by all Directors & Shareholders

Step 5: Submission of incorporation documents to MCA for approval

Step 6. Incorporation of the company

Step 7. Issuance of incorporation certificate & PAN

The Fine Print

The Indian government is putting all-round efforts to protect and promote FDI inflows and promising to secure a long-term UK-India trade and investment relationship and help close existing gaps and enable the full potential of both the economies to come to a success.

The UK is constantly seeking to build strong relationships with India after Brexit by realizing the enormous business opportunities due to the recent announcement of India government’s manifesto proposing to spend more than £1 trillion on infrastructure and nearly £10 billion for farming with continued policy reforms. The results should be positive for companies in housing, transport, construction, property, agriculture and financial investment sectors.

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How to start a business in Abu Dhabi Global Market (ADGM)
  • Article, U.A.E

How to start a business in Abu Dhabi Global Market (ADGM)

ADGM Background

Abu Dhabi Global Market is an award-winning international financial centre and free zone located on Al Maryah Island in the heart of Abu Dhabi. Its strategic location helps to serve the growing economies of the Middle East, Africa and Asia.

Since the time it came into operations in 2015, it has gained immense global recognition for its robust, progressive and responsive business-friendly ecosystem. Besides, it is an ideal location for businesses operating in the financial sector, particularly private banking, wealth management, insurance and asset management.

Some of the compelling reasons to consider setting up a company in ADGM are 0% corporate and personal tax, 100% company ownership, 100% repatriation of capital and profits, 100% import and export tax exemption and no currency restrictions.

Legal Framework of ADGM

The ADGM free zone is governed by its own rules and regulations and is controlled by three independent authorities – the Registration Authority, the Financial Services Regulatory Authority and the ADGM Courts.

ADGM came into existence in accordance with Federal Legislation and Abu Dhabi Legislation including Abu Dhabi Law No. 4 of 2013 with its own civil and commercial laws. The free zone offers a world-class legal system and regulatory regime.

Setting Up in ADGM

The four broad categories of businesses that can set up in ADGM are financial businesses, non-financial businesses, retail and Special Purpose Vehicles. Let us see each category in detail.

1. Financial Business

As an International Financial Centre, ADGM offers a conducive environment to financial businesses along with the geographical advantage of serving growing economies. Let us see, which type of companies can set-up under financial business.

Banking

  • Corporate and transaction banking
  • Private banking and wealth management
  • Investment banking
  • Money service business
  • Digital banking

Wealth and asset management

  • Investment management
  • Funds and fund management
  • Asset servicing
  • Virtual assets activities
  • Securities

Capital markets

  • Brokerage
  • Market infrastructure

FinTech

  • FinTech
  • RegLab

2. Non-Financial Business

Along with financial businesses, ADGM also provides a legal and operational platform for non-financial businesses. Let us see, which type of companies can set-up in ADGM under non-financial business.

Corporate

  • Corporate headquarters
  • Corporate treasury
  • Family offices and foundations
  • Professional services
  • Tech start-ups
  • Associations

3. Retail

ADGM also offers a dynamic environment for retail businesses. Some of the permitted retail activities in Al Maryah Island include wholesale and retail trade, manufacturing, transportation and storage, repair of motor vehicles and motorcycles, accommodation and food service activities, scientific and technical activities, information and communication, arts, entertainment and recreation and administrative support service activities, among others.

4. Special Purpose Vehicles (SPVs)

SPVs are passive holding companies that come into existence with an intention of isolating financial and legal risk by ring-fencing certain assets and liabilities. The SPV regime at ADGM

Procedure to Set-up in ADGM

If you are looking to set-up in ADGM, there are various options available for you. You can incorporate as a business limited by shares where you will need at least 2 directors, or you can open a branch of the company which is already established in the UAE or any other foreign country.

When you decide to set-up in ADGM, you will be required to fill up an online application form through ADGM online registry solutions. You can also opt to apply offline by paying some extra fees.

The ADGM registration process is as follows:
  • Before filling and submitting the business application form, you will be provided with a special business development team to discuss the requirements of your business.
  • After receiving the approval from the authorities, you need to fill up the online registration or incorporation form and submit the required documents mentioned in the form.
  • On receiving approval, you will be issued a commercial license within a week.
  • In order to proceed with the visa processing, you need to apply for a FAWRI account and Establishment Card.

    So, this was a brief process of setting up a business in ADGM. However, the specifics of the process largely depend on the kind of business you wish to carry on, type of license and so on. Therefore, it is advisable to consult an expert who can guide you through the entire process and ensure smooth and timely incorporation.

For any assistance related to business set up and allied services in ADGM free zone, you may get in touch with IMC Group.

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What counts as deductible or non-deductible business expenses in Singapore
  • Article, Singapore

What counts as deductible or non-deductible business expenses in Singapore?

To run a business effectively, the owner needs to make certain changes, adaptations, and improvisations from time to time. These changes give rise to expenditures. Apart from these, businesses also have to bear certain fixed costs. So, business expenses are those that one needs to pay for running the business smoothly. While preparing the annual returns, most organizations calculate their expenses that encompasses all the business expenditures, fixed or variable, to make sure that the total income is minimized.

However, most of our expenditures cannot be recognized as deductible expenses. Before discussing the list of deductible or non-deductible expenses, you should know the basic difference between the two.

So, all the expenses that can be deducted from a business’s income before it is subjected to taxation are known as deductible expenses. Whereas all the expenses that cannot be subtracted from a business’s income before taxation are known as non-deductible expenses. 

Deductible expenses help in reducing one’s tax liability. A non-deductible expense, on the other hand, does not affect your tax bill. Expenses that are always deductible include investment losses, charitable contributions, etc. A business can claim a tax deduction only if the expenses are exclusively and wholly incurred in income production. Still there, are some complexities to comprehend the distinguishment in expenses.

For expenses to fit into the category of deductible expenses, it needs to satisfy the following conditions:

  • Expenses that are solely incurred in the production of income.
  • Expenses that are not a contingent liability, i.e. it is not dependent on any event that may or may not occur in the coming future. In other words, expenses must be incurred. An expense is said to be ‘incurred’ only when the legal liability to pay such expense has arisen, regardless of the actual payment date.
  • Expenses that are revenue, and not capital, in nature.
  • Expenses that aren’t specifically prohibited from deduction under any provisions of the Income Tax Act.


Non-deductible business expenses are those which do not fulfill the above-mentioned conditions. This includes your personal expenses like travel, leisure,  entertainment, basically that are not related to the running of your business, and capital expenses that are expenses incurred for incorporating a company’s purchase of fixed assets. A vast majority of your personal spendings are non-tax-deductible. The tax authority considers does not consider natural expenditures in favor of a reduction in the amount of money you are having at your disposal. Deductible expenses, for example, a loss resulting from office embezzlement or stock trading, for instance, are considered to actually reduce the amount of income you effectively earn, thereby resulting in a lower base of tax.

Deductions considered as context-specific

Several expenses can be deducted from your income only under specific cases. Like, money spent on clothing expenses is deductible, only up to a certain specified limit, if it can be deemed a business expense. Healthcare spending is a deductible expense, only up to the extent where it doesn’t exceed 7.5 percent of your adjusted gross income. The canvas, brushes, and oil you purchased for your paintings are deductible only if you can demonstrate that you were treating the art of painting as a money-making venture and not a hobby, for instance.

Therefore, tax-filers usually must necessarily go through the relevant section of the tax code or consult a professional tax accountant before they can actually determine if a particular expense is deductible or not.

Itemizing Your Deductions

Note that even if you have deductible expenses, itemizing your deductions is crucial before subtracting these from your actual taxable income. For individual filers, this implies filling out Schedule A, where you are required to list and add up all of your deductible expenses for the financial year you are filing the return for. The Internal Revenue Service of Singapore permits you to take a “standard deduction” if you have decided not to itemize your deductible expenses.

The standard deduction assumes that even those filers who don’t wish to take the time and effort for itemizing deductions will most likely have deductible expenses and allows them to reduce their gross income by some standard amount depending upon their marital status and age. It is an extremely convenient solution for those filers whose itemized deductions would fall below or only slightly exceed the standard deduction.

Let’s consider certain examples of Deductible and non-deductible expenses.

Deductible Expenses
  • Accounting fee
  • Administrative expenses
  • Advertisement
  • Auditors’ remuneration
  • Commission
  • CPF, foreign workers’ levy, skills development levy
  • Directors’ fees
  • Directors’ remuneration
  • Employee Equity-based Remuneration (EEBR) Scheme
  • Employment Assistance Payment (EAP)
  • Entertainment
  • Exchange loss (revenue and trade in nature)
  • Exhibition expense
  • Periodicals & newspapers
  • Postage
  • Printing and stationery
  • Property tax
  • Provision for doubtful and bad debts
  • Provision for obsolete stocks (specific)
  • Secretarial fees
  • Staff remuneration (Salary, bonus, and allowance)
  • Staff training
  • Staff Welfare/Benefits
  • Statutory and regulatory expenses
  • Stock obsolescence
  • Supplementary retirement scheme

Non-deductible expenses
  • Amortization
  • Bad debts (non-trade debtors)
  • Certificate of Entitlement (COE) for vehicles
  • Depreciation (you can claim capital allowances in its place)
  • Dividend payments made on preference shares
  • Donation
  • Impairment loss on non-trade debts
  • Singapore income tax and any tax levied on an income from a country outside Singapore
  • Installation of fixed assets
  • Interest expenses on non-income-producing assets(Interest adjustment)
  • Legal and professional fees (capital or Non-trade transactions)
  • Medical expense (amount exceeding 1%/2% of total remuneration if a company is under PMBS or TMIS
  • Motor vehicle expenses (RU-Plated and S-plated cars)
  • Penalties
  • Prepaid expenses (not concerning the relevant basis period)
  • Domestic and Private expenses (which are not incurred for business purpose)
  • Private hire car
  • Provision for bad and doubtful debts (Note impairment loss on trade)
  • Provision of obsolete stocks (general)
  • Ex-gratia retrenchment payments and outplacement support cost, where there is a complete business cessation.
  • Transport (S-plated and RU-plated cars)

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Oman Introduces New Foreign Capital Investment Law (FCIL) Listing 70 Prohibited Activities
  • Article, Oman

Oman Introduces New Foreign Capital Investment Law (FCIL) Listing 70 Prohibited Activities

The Omanis Ministry of Commerce and Industry, (MOCI) issued the Executive Regulations of the new FCIL in June 2020 which specified provisions relating registration of the foreign investment projects including benefits available to specified projects and land allocation for investment and business purposes and, an inspection of the projects by the Omani regulatory authorities.

The Minister of Commerce, Industry and Investment Promotion formerly known as MOCI issued Ministerial Decision (MD) No. 209/2020 during December 2029 and finally decided on the list of activities that foreign investors are prohibited from participating and conferring the activities to Omani investors for safeguarding the national products and entrepreneurship projects.

In accordance with the latest MD, an Omani investor can make investments in all activities and if desires can enter a partnership with a foreign investor. Any exception to the prohibited list can only be granted with express written permission of the Minister of Commerce, Industry and Investment Promotion.

The Sultanate of Oman vide MD 209/2020 has issued a list of prohibited activities that cannot be undertaken under the new FCIL.

The full list of the activities prohibiting foreign investors is enumerated in detail however most of the activities are most unlikely to be of any great interest to major international investors.

Importantly prohibition of retail sales of fuel would limit future liberalisation of the retail fuel market anymore unless and until the Ministry considers granting an exception and permits foreign investment in such activities.

The conditions and procedures for granting exceptional approval have not been mentioned in the MD and likely to be considered on a case by case basis.

Additionally, any restriction on shipping and unloading of goods are not very clearly spelt out and may have broader interpretation. It will remain to be seen how these are interpreted by the Ministry in practice without any further clarification in between.

The reservation of drinking water to Omani investors generally considered as an attractive business will support local investors as foreign investors will no longer be able to participate in this business.

The new Foreign Capital Investment Law published in July 2019 came into force from January 2020 and made great relaxation to the rules and regulations of foreign investment. It also simplified and streamlined the registration and business licensing procedures keeping in mind the interests of rights and incentives of foreign investors matching those of the local Omani investors.

The most important of the changes in the new FCIL was the permission of 100% foreign ownership in many business sectors in Oman.

Bottom line

The list of prohibited activities mostly contains activities that are less lucrative to international investors, and Oman, with its continued effort to promote FDI by improving ease of doing business, is expected to maintain and increase FDI inflow in the country as well as help generate local employment.

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Want to Start a Business in Dubai: Dubai PRO Services Can Address All Your PRO Needs
  • Article, U.A.E

Want to Start a Business in Dubai: Dubai PRO Services Can Address All Your PRO Needs

Summary

Dubai is increasingly growing as one of the most attractive international business hubs due to the UAE government’s initiatives in economic policy reforms. Dubai has a competitive and diverse business environment with numerous opportunities. However, from a legal and administrative standpoint, there exists bureaucracy and stringent regulations for an entity willing for a business set up in Dubai.

PRO Services

Pro service providers are equipped with specialized knowledge and expertise in core business areas including law, marketing, accounting etc. They allow customers to focus and excel in fundamental business concerns, take responsibility for end business outcomes.

Dubai Pro services are mainly needed because company owners are not aware of all the applicable laws including labour contracts, residence Visa and other visa applications. Liasioning with different government departments for approvals also becomes an uphill task at times without dedicated internal resources for effectively dealing with government officials which is almost an everyday chore.

Services offered by Dubai PRO Services

The scope of Dubai PRO services normally includes

  • New Company and Branch setup
  • Resident and Employee visa
  • Labor and Immigration cards
  • Emirates ID card
  • Passport
  • Approval and renewal of Trade License
  • Regulatory approvals and NOCs
  • Notarization of legal documents
  • Annual License renewals, automatic status updates and timely reminders
  • Opening Corporate Bank Account

Benefits of outsourcing PRO Services in Dubai
1. Saves Money

PRO services often reduce the cost of document processing and clearing. It also eliminates the need for any internal PRO and administrative set up resulting in a drastic reduction in salary and other fixed costs.

2. Saves Time

Time is money and outsourcing of PRO services can help you save a lot of time. You can concentrate on the core areas of your business rather than standing in queues in various government offices.

3. Reduces Hassles

From picking up documents to handing them over to your offices are all done by PRO services on-time after necessary clearing from government offices and relieve you of your daily worries.

4. Provides Automated Reminders

PRO services keep all the records of your essential company documents and provide automated timely reminders for renewal requirements such as trade license and employee visa renewals.

5. Increases Business Efficiency and Growth

As the huge burden of judicial and government responsibilities are taken away, you can come up with innovative business strategies for future growth and expansion.

6. Improves Company Reputations and Goodwill

PROs act as company extensions in the Government departments improving public relations through their expertise, knowledge and professionalism and generate a positive longtime image in the government and amongst the business communities.

7. Protects from Fines and Penalties

Professional PRO services help companies remain updated with renewals and regulatory compliances e.g. government licenses, visas and registration policies. Businesses in Dubai can be subjected to heavy fines and penalties in case of failure to comply with UAEs rules and regulations.

8. Transparency

Every government fees and incidental spendings are supported by valid receipts and documents enhancing transparency and maintenance of cost.

Criteria for selection of your PRO Services in Dubai
1.  Awareness of Dubai business environment

As a business owner in Dubai, you need to know your competitors on how they are handling their PRO related issues. Your chosen PRO services should be well acquainted with similar businesses in Dubai and their modus of Operandi.

2. Adequate knowledge of the laws of the land

The PRO services in Dubai you choose need to be well-versed with the law of the land for ensuring appropriate business need identification for PRO services.

3. Proven Experience

Your chosen PRO services need to have the right and proven experience preferably with exposure to international laws and regulations.

4. Affordability

PRO services always come with a cost. Selecting the right option as per your affordability without sacrificing the service quality is always a must.

5. Referrals

Before hiring any pro services in Dubai, it is advisable to check from your peer companies, friends and other sources about their quality and cost of services.

6. Scope and terms of services

Critically reviewing all the clauses of the business agreement and clearly understanding the scope of services is important before signing the contract.

Summing up

Doing business in Dubai comes with lots of regulatory challenges and an experienced and expert PRO services can be your real support.

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How Can I Start a Business in India, If I am in Canada
  • Article, India

How Can I Start a Business in India, If I am in Canada?

Three decades have passed since India opened its market for foreign investors and allowed Foreign Direct Investment (FDI) and foreigners can now invest in the majority of Indian business sectors and the country provides a range of incentives encourage company formation in India.

Key Considerations

When a Candian citizen wants to start a business in India, the following considerations are to be kept in mind

  1. Understanding the Indian market regarding the Indian Economic environment, Canada India trade and investment and resources for Canadian investors.
  2. Opportunities for Canadian investors in various sectors including automotive, telecommunication, oil and gas, transportation, medical devices and healthcare, environmental technologies, food processing etc.
  3. Preliminary assessment of readiness through research and identification of target markets, business plan preparation and market entry and, export strategy
  4. Understanding import regulations and licensing
  5. Investment analysis about investment procedures, types of company formation, taxation, labour force and exchange control
  6. Finances and financing including India’s financial systems, import and export financing, types and sources of financial assistance
  7. Legal aspects encompassing such as labour laws, intellectual property protection, litigation and arbitration, standards and conformity, performance guarantees and contractual obligations
  8. Risk management analysis including political risks, foreign exchange risks, customer risks, corruption etc.

Key Company Types

Three types of company formation are possible in India

  1. Public Company needing 7 or more persons
  2. Private Company needing 2 or more persons
  3. One Person Company, basically a private company owned by a single person

The foreign investments in India are governed by the rules and policies of FDI, FEMA, RBI and Companies Act 2013. To establish its business any foreign entity has the following options:

  • Joint Venture with an Indian Company
  • Liaison Office
  • Limited Liability Partnerships (LLPs)
  • Wholly owned subsidiary company
  • Branch Office
Indian Companies act 2013 details how to register private limited company in India, the most popular form of a company allowing 100 per cent FDI through automatic route in the recent reforms and made things easier for Canadian citizens to develop their business in India.

Key Documentation Requirements

Following documents are required for setting up a private limited company in India

  • Photographs of shareholders and Directors
  • Pan card
  • Rent agreement
  • List of Directors and shareholders
  • Authorized representative
  • NOC from the owner of registered office space
  • Address proof
  • Business address proof
  • Constitutional documents; AoA, MoA
  • Identity Proof; Passport, Driving license
  • Prior registrations, if any

Key Process Steps

The company registration is done in 5 easy steps and can be done without being physically present in India
  • Application for Digital Signature Certificate usually takes a day
  • Application for a company name; availability and reservation, generally takes 3 days
  • Drafting of AoA, MoA and preparation of documents, stamp duty payment and documents notarization, takes 2 days normally
  • Application for company registration, application for DIN allotment, PAN and TAN, takes 2 days
  • Application processing by Authority, issuance of the certificate of incorporation, also takes 2 days
Key Online Resources

Following are some resources that can provide additional insights to Canadian citizens for a good start of their Indian businesses

Bottom line

Canada and India share the similar legal heritage of English common law, and in some respects, the two legal systems are almost identical. This facilitates acclimatization of a Canadian citizen with Indian corporate laws and in turn the business environment.

International trade being inherently more complex than domestic trade, retaining a legal, experienced and qualified professional services company who is familiar with the laws and procedures and possess expert knowledge of the target market, is extremely important for company setup in India.

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Dubai Tax Residency Certificate: Everything You Need To Know
  • Article, U.A.E

Dubai Tax Residency Certificate: Everything You Need To Know

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

To obtain a Tax Residency Certificate or Tax Domicile Certificate in the UAE, eligible government entities, legal persons and resident individuals can apply to the FTA from 14 November 2020. Mainland and Free Zone entities are also eligible to apply for the certificate. However, offshore companies may not be eligible to apply for TRC in the UAE since they do not have a physical presence in the country.

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

The Tax Residency Certificate or Tax Domicile Certificate is generally issued within 3-5 days for individuals and 3-7 days for companies after the submission of a complete application.

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

The validity of the tax residency certificate in Dubai is one year from the date of issue. Corporates and individuals can use the Tax Residency Certificate also known as Tax Domicile Certificate for one specific country at a time. Application for multiple certificates can also be made based on specific requirements.

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

  1. A copy of the trade license and partners’ attachments
  2. A copy of MOA (Memorandum Of Association
  3. A copy of the company’s owners/partners/directors’ passports, IDs and permits of residence
  4. A certified copy of the audited financial accounts
  5. Validated Bank statement for 6 months
  6. A certified copy of the lease agreement
  7. The establishment contract certified by official authorities (if it is not a sole company)
  8. 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

  1. A copy of Passport and Emirates ID
  2. Valid residence permit
  3. A certified copy of the (residential) lease agreement / Tenancy contract
  4. Bank statement for 6 months
  5. Salary certificate / Income certificate
  6. A report from the General Directorate of Residency and Foreigners Affairs mentioning the duration of the person’s stay in UAE (Minimum 180 days)
  7. Tax forms (if any) from the country where the certificate needs to be submitted
For Investors
The company license in addition to partners’ names should be attached including any previously mentioned documents.
For Housewives
The application should accompany a copy of Marriage Certificate plus a copy of passports and permits of residence for the married couple including the salary certificate and employment contract of the husband. Any other documents related to the husband and submitted previously must also be attached.

Fees for Tax Residency Certificate in Dubai

For Individuals

100 Dirhams plus 3 Dirhams, paid through e-Dirham Card for application submission and 2,000 Dirhams plus 3 Dirhams paid through e-Dirham Card for issuance of cards.

For Companies

For applying, 100 Dirhams plus 3 Dirhams paid through e-Dirham Card and for issuing the certificate, 10,000 Dirhams plus 3 Dirhams, paid through e-Dirham Card.

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
Additional Charges
  • 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
This streamlined format clarifies the application criteria, processing times, and fees associated with obtaining a Tax Residency Certificate in Dubai.

UAE Tax Residency Test

An individual is considered a tax resident of the UAE under the resolution if they meet any of the following criteria:
  1. The individual has physically resided in the UAE for at least 183 days within the last 12 months
  2. The person’s center of financial and personal interests is located in the UAE, or they satisfy another condition specified by the Ministry
  3. 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:
    1. Is a UAE citizen or resident, or a GCC national
    2. Owns a permanent residence in the UAE
    3. 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
The Federal Tax Authority (FTA) is responsible for implementing the new tax residency test and for issuing Tax Residency Certificates (TRCs) in accordance with these guidelines. It is important to note that the process and documentation requirements for obtaining a TRC may undergo significant modifications. For those seeking to understand the new statutory definition or to obtain a TRC, consulting with a leading tax adviser in the UAE is highly recommended.

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

The UAE has established double taxation avoidance agreements (DTAAs) with numerous countries. By obtaining a Tax Residency Certificate (TRC), you can access the benefits of these agreements, preventing the same income from being taxed both in the UAE and your home country.

Enhance Import-Export Operations

A Tax Residency Certificate enables tax exemptions and additional benefits for your import and export activities, enhancing your business’s competitiveness and profitability.

Legal Validation

The Tax Residency Certificate acts as recognized proof of your tax residency in the UAE, useful for activities like opening bank accounts or meeting regulatory reporting requirements.

Boost Credibility and Transparency

Possessing a TRC affirms your adherence to UAE tax regulations, enhancing your business’s credibility and transparency with partners and potential investors.

Ease and strengthen cross border business relationship

The Tax Residency Certificate facilitates international business by enhancing cross-border relationships. It is available for both individuals and corporates, allowing each to obtain separate certificates.

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?
Tax Resident certificate (TRC), also known as Tax Domicile Certificate (TDC) is an official document issued by the Ministry of Finance of UAE to either a Company or an Individual with UAE residency visa / permanently residing in the UAE for a minimum of 180 Days.
Q2. What is the purpose of the tax residency certificate in Dubai?
The TRC offers tax advantages of the Double Taxation Avoidance Agreements (DTAA) signed by the UAE with more than 76 Countries in the World where foreign-sourced income is not subjected to double taxation.
Q3. What is the validity of TRC?
The certificate is valid for one year from the date of its issue.
Q4. Is the Tax Domicile certificate applicable for the UAE offshore companies?
No, the TRC alias TDC is not Applicable to Offshore Companies or International Business houses.
Q5. What are the requirements for the TRC?
Documents are required for Tax Residency Certificate and depend on the type of Application viz. a company or an individual.
Q6. What documents are required for companies?
The documents required are Valid company Trade License Copy, Passport Copies of shareholders & Manager Copies of Residence Visa, Shareholders’ and the Manager’s Emirates ID, Certified copy of the latest audited financial Statement and Audit Report, Latest and validated 6-month Company bank statement, Certified copy of Company lease agreement or Tenancy Contract and Tax forms, if any from the country of origin.
Q7. What documents are needed for individuals?
The documents required for individuals are Passport Copy, the UAE Residence Visa Copy, Emirates ID Copy, a certified copy of residential lease agreement or Tenancy Contract Copy, latest Salary certificate and validated last 6-months bank statement, a report from the General Directorate of Residency and Foreigners Affairs specifying the number of days the resident has been staying in the UAE, applicable tax forms from the country in which the TDC is to be submitted.
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?
For lost, damaged, or an extra copy of origin you have to pay 100 Dirhams for issuing a replacement of lost, damaged or copy of original certificate plus 3 Dirhams, paid through e-Dirham Card.
Q10. Do I need a residential address in Dubai?
Yes, a residential address in Dubai is mandatory.
Q11. Are foreign bank statements acceptable?
No, a UAE bank personal account is mandatory and should be held for a minimum of 6 months.
Q12. Can I get a backdated certificate?
Yes, you can get one provided there is documented evidence of holding a valid bank account, a residential address and staying in Dubai during that period.

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Done with your Singapore Company Registration! Now it is time to address 12 Compliance Requirements
  • Article, Singapore

Done with your Singapore Company Registration! Now it is time to address 12 Compliance Requirements

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.sgx.com/media-centre/20201001-guidance-conduct-general-meetings-amid-evolving-covid-19-situation

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:
  1. Deferment of shares/loss of capital from the current year
  2. Group Relief
  3. Investment grant
  4. 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.

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Are you a Freelancer in Singapore with a Growing Business? Time is now Ripe to Incorporate Your Private Limited Company
  • Article, Singapore

Are you a Freelancer in Singapore with a Growing Business? Time is now Ripe to Incorporate Your Private Limited Company

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

Download 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
If you wish to apply on your own, you can visit BizFile+ for your new company formation in Singapore.

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

Incorporation of a private limited company also has some limitations and are
  • 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.

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