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Newsletter, Singapore

Singapore Budget 2022 – IMC Group Highlights Key Changes

March 2, 2022

On Friday, 18 February 2022, Minister for Finance, Mr. Lawrence Wong announced the Budget Statement for the Financial Year 2022. In his speech, he stressed upon the importance of a fair and progressive tax rate in the country. The major tax changes and increased social spending in Budget 2022 also highlight that the Government is investing in strengthening Singapore’s social compact.

IMC Group has deeply analysed the budget 2022 and brings to you key changes that can impact the tax structure in Singapore.

One of the biggest announcements from the budget is the increase in GST rate which will happen in two stages.

Year	GST Rate
1 January 2023	7% to 8%.
1 January 2024	8% to 9%

Furthermore, a committee will be set up to ensure that businesses in Singapore do not try to profit from this increase by raising the prices of their products and services in the name of GST increase. The Ministry of Finance has also announced an additional top-up of $640 million to Singaporeans to cushion the impact of the GST increase making the Assurance Package to $6.6 billion.

The increase is complemented by the permanent enhancement of GST Voucher scheme in the following 3 ways:

Every adult Singaporean aged 21 and above will get cash payouts ranging from $700 to $1,600 over the next 5 years;
Eligible Singaporean households will get additional GST Voucher U-Save rebates ranging from $330 to $570 over the next 4 years to offset the cost of utilities;
Eligible lower-income seniors will get GST Voucher cash payout ranging from $600 to $900 over the next 3 years.
All Singaporean children aged 20 and below and seniors aged 55 and above will get a total of $450 in MediSave top-ups over the next 3 years
All Singaporean households will get another two rounds of Community Development Council (CDC) vouchers worth $400 over 2023 and 2024. These vouchers can be used at heartland stores as well as major supermarkets.

The above move will support retiree households to combat the impact of the total increase in GST that they have to pay. For lower-income households, without seniors in their family, these vouchers will offset about half their total GST expenses every year.

Over and above this, for vulnerable households who may need additional support, the Citizens’ Consultative Committees ComCare Fund will get a $5 million top-up over the period of five years, while the four self-help groups will get a total of $12 million over the period of four years. The personal income tax rate for individuals in the top marginal tax bracket in Singapore will increase from the year of assessment 2024. Those earning between $500,000 and $1 million will see an increase in personal income tax rate from 22% to 23%. While those earning in excess of $1 million will see an increase in personal income tax rate from 22% to 24%.

Note: Those earning between $320,000 and $500,000 will not see any change in their income tax rate in this budget. They will still be taxed at 22% without any change. For small and medium sized enterprises various support packages are announced to provide temporary relief for businesses and workers.

H4 Skills Future Enterprise Credit
This grant aims to support businesses to upskill their employees by waiving Skills Development Levy contribution requirements on them. As a part of the initiative, up to $10,000 credit can be used to offset up to 90% of expenses for transformation initiatives.
Productivity Solutions Grant
Around $40 million will also be set aside for businesses to apply for subsidised accounting and point of sale solutions to combat the impact of GST increase and raise productivity.
Small Business Recovery Grant
Small and medium sized enterprises in the eligible sectors will receive $1,000 per local employee they hire, up to $10,000 per firm.
Sole-proprietor, partnerships and stallholders including SFA-licensed hawkers, market and coffeeshop stallholders in eligible sectors that do not hire local employees will be given a $1,000 one-off grant.
Jobs Growth Incentive
The said grant will be extended to September 2022 to support the hiring of mature and vulnerable workers.
Advanced Digital Solutions
Starting from 1 April 2022, SMEs offering advanced digital solutions will receive up to 70% funding support for qualifying costs on digital solutions.
Grow Digital
Starting from 1 April 2022, SMEs will receive 70% co-funding to onboard cross-border digital platforms.

Another important tax rate hike was seen for those who own a non-owner-occupied residential property in Singapore which includes investment properties. At present they are taxed at 10% to 20% but following the budget, the property tax rate for such properties will be raised to

Year	Tax Rate
2023	11% to 27%
2024	12% to 36%

The excess amount to pay will depend on the annual value of the home. The said tax rate increase will apply to all non-owner-occupied property in all annual value tiers.

The property tax rate for owner-occupied homes with an annual value above $30,000 will also be raised. At present they are taxed at 4% to 16% but following the budget, the property tax rate for such properties will be raised to 6% to 32%. The tax rate change will only affect families who stay in a private property with an annual value above $30,000.

The hike in tax rate signals that the government is taking initiatives to resolve rising wealth inequality in a country. The move is set to increase the government’s property tax revenue by approximately S$380 million annually i.e. around 12% of the existing property tax collection of $3.1 billion. The government has announced an increase in carbon tax rate from the present

Year	Tax Rate
2024 and 2025	$5 per tonne to $25 per tonne
2026 and 2027	$45 per tonne
2030	$50 to $80 (Goal of reaching)

The current tax of $5 per tonne remains unchanged until 2023.

No additional carbon tax will be imposed on petrol and diesel.

Going forward from 2024, large emitters in Singapore will be able to buy international carbon credits to reduce the carbon tax they pay. The minimum qualifying salary for Employment Pass will be increased from $4,500 to $5,000. For the financial services sector, the minimum qualifying salary for Employment Pass will be increased from $5,000 to $5,500. The above-mentioned changes will be applicable from September 1, 2022, for new Employment Pass applications and September 1, 2023, for renewal applications.

Besides Employment Pass salaries, the salary thresholds for S Pass holders will also be raised. The minimum qualifying salary for foreign workers on S Pass will be increased from the current $2,500 to $3,000 for new applicants from September 1, 2022. For the financial services sector, a higher salary threshold of $3,500 will be in effect.

From January 1, 2024, the Dependency Ratio Ceiling (i.e., the proportion of foreign workers a firm can employ) will be reduced from 1.7 to 1.5.

The above write-up summarises the key changes in Budget 2022.

Article, Singapore

Are you Looking to Venture into a Startup Business in Singapore? These 7 ideas can guide you through in 2022

February 14, 2022

Why Singapore?

Singapore is well known for its business-friendly policies. It is the leading startup hub not only in Southeast Asia but in the world. The city-state is the gateway to Asia with great global connectivity and easy access to top-quality talent and business advisory services. The country provides infrastructure and funding support and is an ideal destination expand your business in a growing consumer market in Asia, China and India. Additionally corporates can also enjoy the benefits of a low tax rate, various business incentives, and a supportive startup ecosystem which make Singapore an attractive hub for company incorporation.

Though the covid 19 pandemic hit hard all world economies including Singapore and many businesses pulled down their shutters, Singapore witnessed many startups and SMEs growing and prospering during this time. The country still offers profitable, scalable and sustainable business opportunities and remained encouragingly resilient during this economic upheaval

Why are Companies Registered in Singapore?
The ease of doing business, business opportunities, the fact that it’s a great place to work and live, and

The rate of corporation taxation is 17%
Dividends are not taxed
Foreign Investment Facilitation
No capital gains tax
A low 7%* value-added tax and revised to 8% from 1 Jan 2023

There are all reasons why companies register in Singapore.

High In-demand and Profitable Startup Ideas in 2022
Following are some low-cost startups that benefited hugely during the pandemic due to a demand surge in Singapore.

Affiliate Marketing

Affiliate marketing is an online business model that helps you to make money from other businesses when someone takes an action on your affiliate link and/or makes a purchase. This business is straightforward as merchants or advertisers will pay whenever something happens. However, the way you are paid can be tricky sometimes and needs an understanding.

Following are the ways to get paid.

Cost Per Action (CPA) is a performance-based scheme where you are paid as and when an action happens, or a lead is generated without a monetary transaction. If a web user fills up a form without making an actual purchase, you will earn a certain amount of commission as it leads to identifying a potential customer.

Cost Per Sale (CPS) payment scheme applies as and when there is a transaction, and a customer buys a product through your affiliate link. You get a commission from the sale. This scheme is considered more cost-effective and less vulnerable to fraud or manipulation.

Pay Per Click (PPC) is an advertising scheme where advertisers pay commission to you whenever one of their ads is clicked and a phone lead is generated. This works with a call tracking system that uses a tracking code and converts to a generic number.

Drop shipping

The future of drop shipping businesses looks bright in Singapore as the country’s e-commerce market is expected to grow at a high CAGR for years to come.

It is an online business model which is gaining popularity in Singapore and doesn’t require you to be tech savy or financially savvy.

This business involves you selling goods and services online either on your website or creating accounts in reputed shopping platforms and without holding any inventory. Once a sale transaction is done, the supplier will pack, prepare and ship the goods for the customer, and you earn the margin difference.

You, however, need to address a few aspects for a profitable business including identifying the reliability of suppliers, quality of products, speed of delivery, customer feedback and any restrictions imposed by the shopping platforms.

Telemedicine

Singapore based telemedicine startups are making significant positive impacts on the way remote or virtual healthcare is accessed by patients. A full stack of technology solutions is utilized to provide an enriching customer experience by creating more convenient and easier reach to physicians and healthcare professionals. You can also start a telemedicine business for pets.

The Ministry of Health (MOH) Singapore will start licensing telemedicine in the middle of 2022 and once you comply with the MOH telemedicine e-training and register, you can start providing consultations under the Community Health Assist Scheme. As the hospitals and outpatient clinics are very crowded in Singapore, the Telemedicine business holds promise in the future.

Healthy food supply

Singapore Food Authority doesn’t impose licensing requirements for home-based food supply businesses considering very few food safety risks. This business is trending and is an easy, hassle-free and convenient startup for you. However the scale of business in a residential setup can be limited.

You need to identify competition in this segment and be attentive to how other food supply businesses are designing their posts on social media. You need to consider healthy sustainable foods and may also think of utilizing smart technologies in your kitchen such as smart cookers, smart fridges etc. in future. Promotional packaging can also be a good idea to grow your customer base.

Digital content marketing

Singapore has one of the highest online penetration in the world and if you can provide quality and engaging content to promote companies and brands, you can venture into an online startup business in Singapore. This is trending and holds great promise for growth and profitability as more than 60% of leads today come through content.

You need to provide great content with valuable and useful information as blogs or copyrights to promote a business to a range of prospective customers. Digital content marketing is the future of conventional marketing as it can access a wider and more diverse audience. Companies using content marketing usually register higher business growth.

For great content, you need to connect with bloggers and copywriters and frequently use social media to influence the audience on your products and services.

Software as a Service (SaaS)

SaaS is in great demand all over the world including Singapore as many small and medium-sized companies are trying to automate their businesses for higher productivity, better control and reduced cost. If you can provide business or operation management software based on proven technologies and can streamline single or multiple business functions, you can start your SaaS business.

You can develop SaaS for inventory management, automatic payments, product recognition, electronic signature etc. and can use cloud services to provide a SaaS platform. There are more than 1600 SaaS startups in Singapore today and many of them are very profitable and successful.

Digital learning

Digital learning is commonly known as Education Technology or EdTech and is associated with the development and application of tools for enhancing online education. EdTech has been in use for more than two decades however, it has gained renewed importance after the breakout of the covid pandemic.

It leverages technologies such as VR, AR, Enhanced Video & Rich Media, ML, IoT etc. to promote the reach and impact of education and enables everyone to thrive as learners in a digital world. It is also used for research, innovation and professional development.

You can venture into a digital learning startup in Singapore as it is a profitable and high in demand business opportunity high growth potential.

The Takeaway
The world, no doubt, is becoming more competitive, however, many present-day entrepreneurs are still keen about doing business in Singapore.

Trying times call for sound, robust and innovative strategic themes to invest your time and resources. The above-mentioned startup ideas can help you navigate through, provided you remember that money or capital is not the last word in entrepreneurship, your love, compassion and willingness to devote time will have the lasting impact..

Author Bio:

Mr. Pankaj Kumar is a member of ICAI (Indian Institute of Chartered Accountants of India) since 2002. He has over 17 years of experience in cross border advisory, international taxation, structured finance, trade finance and management consulting. He advises MNCs and SMEs on formation of cross border corporations and business structures and structuring commercial transactions. Previously he has worked with Amicorp Group, DM Ventures, Amba Research (Singapore) and ICICI Bank. He primarily manages Client Advisory, Relationship Management & Business Development amongst group strategies and identification of new business opportunities.

Newsletter, Singapore

Singapore Private Trust Companies: An Ideal Structure for Asset Protection and Succession Planning of Family Businesses

February 8, 2022

Family businesses play the most pivotal role in the Asian economy and almost 85% of the companies in the Asia Pacific region are owned by family groups. Moreover, more than 20% of the top 750 global family businesses ranked by revenue are based in Asia with total revenue of approximately USD 2 trillion.

Trusts, unlike companies and not being a legal entity, have provided an effective structure for holding valuable assets for the beneficiaries and transitioning from the settlor to the trustee like a family business, for a long time. The absence of rigid formal requirements for the creation and operation of trusts, and the high flexibility of trust structures, make them particularly useful for estate and succession planning.

Trusts are being used for holding and passing on family wealth for centuries and providing great advantages of asset protection and disposal of family assets without lengthy probate procedure. Such trusts when combined with a Singapore Private Trust Company (PTC) provide a structure for enabling founders to take continued rapid commercial decisions about their business effectively without sacrificing the validity of the trusts. These private trust companies commonly known as family trust companies form the foundation of the Singapore family office.

If the settlor is willing the board of the PTC can consist of the settlor, members of his family and professional trusted advisors and the settlor and his family members have direct involvement in the decision making processes. A Singapore PTC vehicle thus allows members of succeeding generations of the family to be involved in the management of the PTC providing Management succession planning.

To avoid personal ownership issues, a Purpose Trust is often used to create an entity with no individual owning the structure. Typically, a separate non-charitable purpose trust is used, with the purpose of the trust being to hold the shares of the PTC and especially when control and confidentiality are concerned. The benefit offered is that the Trust can then be used to ensure the board of the PTC is properly controlled. This trust type is formed to hold assets for a purpose and without providing a benefit to any specific individual.

Though Singapore does not have legislation allowing non-charitable purpose trusts, it is possible for the shares in a Singapore PTC to be held by a trust in another jurisdiction with appropriate provisions for the non-charitable purpose trusts formation.

PTC can also hold other assets, such as real estate, private equity and hedge funds appropriate for the family and diversify to optimize assets as and when necessary. As PTCs have no motive for profit-making with no conflicts of interest, the entity can reduce costs of trust administration while ensuring the needed risk management as per the risk appetite of the family. PTC structure with high liquid assets can also invest in and facilitate the best Singapore company incorporation.

There is often slowness or reluctance on the part of the Independent professional trustees in approving certain assets for holding or entering into major transactions or Singapore PTC however provides greater choice to determine investments to be made with the trust fund based on knowledge of family members acting as members of the board.

Continuity of business is assured with a Singapore PTC because even if the administrator changes, PTC remains as a trustee.

In Singapore, the ownership of Singapore companies and PTCs are publicly available on the company register. However, certain confidentiality is maintained and ownership information about trusts is generally not available. A Singapore PTC owned by a purpose trust in a jurisdiction allowing a non-charitable purpose trust structure will maintain confidentiality about the owners of the PTC and the asset holdings of the trust.

As several family businesses in Singapore are focusing on leadership succession, besides wealth succession, a Singapore PTC structure can be beneficial as it familiarizes the family members with the wealth and business interests owned by the trust and provides appropriate instructions to the members in managing such assets.

The island nation with its current trust law and trusted legal system, world-class infrastructure, high level of digitization, openness to foreign talent, attractive tax regime and political stability has come up as a global hub for corporate and financial services activities. The city-state now has become home to many sophisticated wealth management entities including the Single Family Office in Singapore.

Article, Singapore

What Should be Your Choice Between a Sole Proprietorship and a Private Limited Company in Singapore?

January 19, 2022

If you have decided on a company setup in Singapore this year then it is undoubtedly one of the best decisions taken by you. Singapore is the most vibrant, promising and business-friendly country in Southeast Asia and despite the coronavirus pandemic taking a heavy toll on the world economy, Singapore could mobilize almost $17.2 billion in fixed asset investments in 2020 alone.

The FDI commitments in the pandemic year have surpassed the medium to long term target of the Economic Development Board (EDB) ranging from USD 8 to 10 billion and are at the highest since 2008. The electronics, chemicals, and research and development sectors received the majority of capital investments but will promote growth in other sectors as well.

The country’s priorities to keep the borders open for ensuring business continuity garnered the confidence of the global business community. This Asian nation has long been recognised for it’s business-friendly policies and secured top positions in several global rankings awarded by international organizations. Choosing the right type of business structure is primarily governed by the nature and size of the business, licensing requirements, bus taxes and other liabilities, documentation needs, fundraising potential, future growth and expansion prospects etc.

There are many types of business structures available for you in Singapore however we will limit our discussions on the two popular types, a Subsidiary or private limited company and sole proprietorship company amongst the foreigners. A Singapore subsidiary is a private limited company structure available in Singapore and the majority shareholder is a corporation either a local or a foreign company or an individual. It is the most common and preferred form of business structure for small to medium size foreign companies in Singapore.

The subsidiary structure allows the company to function as a separate legal entity from the parent company and provides several advantages including

Protection of the parent company and individual assets from the liabilities of the subsidiary
100% foreign ownership in the subsidiary
Similar tax exemptions and incentives as applicable to Singapore resident companies
Easier and simpler regulatory compliance requirements such as no need for financial statements of the parent company
Several types of Tax Incentives, Rebates and Credits

Guide to Incorporating Your Business in Singapore: Essential Checklist

A sole proprietorship is the simplest but the riskiest business structure in Singapore and can only be availed by Singapore permanent residents, entrePass holders or citizens. As it is not treated as a separate legal entity, it usually poses considerable disadvantages for small to medium-sized businesses. Annual registration renewal from ACRA is mandatory for this business structure.

If somebody sues a sole-proprietorship company and it is unable to pay the dues, the owner must make payments from his assets. This structure allows a single shareholder and new equity participation is not possible as the business grows and expands.

Business entities aspiring for future growth normally don’t go for a sole-proprietorship structure which is generally poorly perceived by the financial institutions and customers. Selling off a sole-proprietorship business is often difficult too.

The tax benefits enjoyed by other business structures are not available to sole proprietorships including a higher effective tax rate than that for a private limited company.

Sole proprietorship businesses however offer a few advantages including less documentation, fewer tax compliances and easier processes, straightforward banking, lower registration fees and freedom of taking business policy decisions. It is easy and convenient to set up a company in Singapore without any bureaucratic interference and corruption. If you are to choose between a sole proprietorship and a private limited company, it is usually recommended that you go for the latter unless you are willing to set up a trading business in Singapore as an individual.

A sole readership business for foreigners is allowed in Singapore if you are not residing in Singapore, you need to appoint a resident as an authorized representative.

Foreign individuals or corporations willing to set up a business in Singapore typically choose a private limited structure as this offers many benefits already discussed. The tax climate in Singapore is simple and aims at promoting investment in the country. Income tax to companies and individuals is levied on the income generated from the businesses.

The applicable tax rate for a sole proprietorship company varies between 2% to 22 & as the last amended Income Tax Act by Inland Revenue Authority of Singapore (IRAS) in 2017 with no tax exemption allowed for this business structure.

IRAS imposes a 17 % corporate tax rate on private limited companies in Singapore. From the assessment year 2020, two partial tax exemptions have been provided to the private limited companies and are as follows

75% tax exemption on the first SGD 100,000 of regular income and,
50% tax exemption on the next SGD 100,000 of regular income

Formation of a sole proprietorship company must be done online through the BizFile+ portal using personal access or SingPass. If you don’t have personal access, then you must appoint registered corporate services firm for filing your case.

Once you register for a sole proprietorship, you will have minimum compliance requirements. This business structure doesn’t need to get their accounts audited and file for annual returns separately as this is done in the tax return of the owner during an assessment.

A private limited company whereas must comply with more regulatory compliance compared to a sole proprietorship company. The private limited structure can have 1 to 50 shareholders but must appoint a minimum of one Singapore resident as Director with full legal capacity. A foreign company director can also take up this position if he has an employment pass but needs a letter of consent (LOC) from the Ministry of Manpower (MOM).

The owners or shareholders of a private limited company need to appoint a Company Secretary who is a resident in Singapore for company secretarial services including the filing of annual returns with ACRA.

Bottom line

Both local and foreign investors can incorporate a private limited company in Singapore however it must not be a listed company. A private limited company can be converted to a public limited company by outsourcing a PRO services provider in Singapore.Mr. Pankaj Kumar is a member of ICAI (Indian Institute of Chartered Accountants of India) since 2002. He has over 17 years of experience in cross border advisory, international taxation, structured finance, trade finance and management consulting. He advises MNCs and SMEs on formation of cross border corporations and business structures and structuring commercial transactions. Previously he has worked with Amicorp Group, DM Ventures, Amba Research (Singapore) and ICICI Bank. He primarily manages Client Advisory, Relationship Management & Business Development amongst group strategies and identification of new business opportunities.

Newsletter, Singapore

The Inaugural Trade Committee Meeting Signals Increased Digital Trade Between the EU and Singapore

January 11, 2022

In an inaugural trade committee meeting on 7th December 2021 under the EU Singapore Free Trade Agreement (EUSFTA), the EU and Singapore agreed to strengthen bilateral partnerships on digital trade. The EUSFTA came into force on 21st November 2019.

The meeting was co-chaired by Valdis Dombrovskis, the Executive Vice-President of the European Commission and Trade Commissioner and S Iswaran, the Minister-in-charge of Trade Relations Singapore.

Discussions were held on the advancement of a comprehensive EU Singapore digital partnership and in a joint statement, the two deliberated on strengthening bilateral digital trade between EU and Singapore and assigned the EU and Singapore officials to resume technical discussions for identifying the digital trade elements.

It ushered in a strong bilateral trade partnership between the EU and Singapore into the digital future as a shared vision imprinted in the EUSFTA.

The partnership reached between the EU and Singapore is all set to enhance digital ties and promote bilateral trade and investments and provide benefits to the businesses and workers especially in the SME categories from opportunities in the world’s growing digital economy.

The joint announcement demonstrated the commitment of both the EU and Singapore to actively participate in digital economy partnerships. The recent EU strategy on Indo Pacific also highlighted its interest to explore and expand the Digital Partnership network with Singapore.

The Southeast Asian digital economy is projected to grow by more than 3 times between 2020 and 2025 and this agreement confirmed the undisputed leadership of Singapore in the technology and digital space that could pave the way for EU companies in the region’s fast-growing market.

EU Singapore digital partnership would also be supportive and complimentary for the continuing e-commerce negotiation initiatives of the WTO and help set digital trade rules in the world.

Strong bilateral trade relations between the EU and Singapore was reaffirmed by the Co-chairs as was evident from the annual goods and services trade figure exceeding €100 billion in 2020 between the EU and Singapore. Noteworthy, it happened at a time when the international trade suffered most due to the pandemic but EUSFTA generated business consistently.

Regional and global trade developments were discussed and the Co-Chairs also shared their views on measures to enhance economic recovery during the post-pandemic.

The latest EUSFTA implementation status was also reviewed including the Trade and Sustainable Development Board meeting that had successfully commenced earlier than scheduled. Issues on labour and fundamental ILO conventions were reviewed too. Green economy cooperation was also a matter of discussion and review in this meeting.

The Co-chairs recognizing the strong economic cooperation between the EU and Singapore in diverse areas also agreed to work together and provide support towards climate change and environmental protection initiatives.

Article, Singapore

What are the Business Opportunities Singapore provides to Canadian Investors? Why Choose Singapore?

December 27, 2021

Singapore has been consistently ranked by International Organisations as one of the most preferred countries in the world for the ease of doing business and business competitiveness. In 2020, the World Bank Group rated Singapore as the second-best country in the world in its “Ease of Doing Business” survey of 190 economies and the International Institute for Management Development (IMD) placed Singapore at the top in its World Competitiveness Yearbook (WCY) after evaluating 63 countries on 338 indicators. The island city-state has been widely recognized globally for its pro-business policies such as low tax rates and no restrictions on capital and profits over the last several decades.

The sovereign nation is strategically located in maritime Southeast Asia and is considered to be the gateway to this subcontinent. It is a robust economy with a high standard of living and excellent quality of life. The country has a well-developed financial system and efficient processes for incorporating and operating a business.

Economically and politically stable, Singapore has an efficient and effective government that is free of bureaucracy and red-tapism The country also boasts world-class infrastructure facilities, a highly productive skilled workforce and a hugely developed banking and financial system including a capital market.

How is Singapore Canada business relationship?

Since the time of its independence in 1965, Singapore enjoyed very cordial and wide-ranging bilateral relations with Canada, which was one of the first countries to establish diplomatic ties with the country. Now it is one of the most important partners of Canada in Southeast Asia and enjoys strong ties in trade, education, science & technology, security & defence etc. that are mutually beneficial for economic sustainability and social progress.

Both the Countries have entered into several agreements including Trade and investment agreements, the World Trade Organization (WTO) Agreement on Trade Facilitation (TFA) Information Technology Agreement (ITA), Government Procurement Agreement ( GPA), Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), Agreement on Trade-related Investment Measures (TRIMS), General Agreement on Tariffs and Trade 1994 (GATT) and General Agreement on Trade in Services (GATS).

Canadian investors and companies regard Singapore as a strong financial hub for future economic and business growth in the Asia-Pacific region and made it their second home. Most of Canada’s top financial institutions and some 200 Canadian firms have operations in Singapore. The country has attracted Canadian businesses of all sizes and belonging to multiple sectors, from SMEs to large corporations, and especially technology-savvy start-ups in greater numbers.

Singapore-Canada Double Taxation Agreement was first signed in 1976 to improve economic cooperation and provide advantageous tax conditions to both Canadian and Singapore companies and later amended in 2011 and 2012. A tax allowance is granted against the tax paid in the other contracting state to prevent double taxation and applies to both Singaporean and Canadian individuals and companies. Any tax falling under double taxation may be levied in one of the two states as stipulated in the agreement, exception being the income from the sale of real estate, which is taxed in the country where the property is situated and employment income, which is taxed in the country where the services are rendered.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was entered into force on December 30, 2018, between Canada and Singapore including six other countries following which trade between the two countries has improved and barriers reduced. Through the CPTPP, Canada can now preferentially access some of the world’s most dynamic and fast-growing markets, strengthening Canadian businesses and economy. The import tariffs have also been eliminated to an extent as high as 99%.

What opportunities does Singapore offer to Canadian investors?

Singapore has a simple and easy single-tier corporate tax system with one of the most attractive corporate tax rates of 17%. Besides lower rates, the country provides numerous tax incentives and cash grants to help businesses grow, thus bringing the effective tax rates even lower.

Business entities in Singapore are eligible for various business and tax incentives subject to committing to certain levels of investments, introducing leading-edge skills, technology and contributing to the growth of R&D and business innovativeness.

In Singapore, the four main government agencies are normally responsible for administering business and tax incentives for Singaporean entities and include the following: – (Details of Sector-specific incentives are available on the individual websites of these agencies).

Singapore Economic Development Board (EDB) is responsible for developing and executing strategies for attracting FDI into the country.

The Inland Revenue Authority of Singapore (IRAS) is the tax regulatory authority in the country.

Enterprise Singapore (ESG) assists Singapore based companies to expand globally and promote local exports.

The Monetary Authority of Singapore (MAS) is the central bank and financial services authority.

Some of the industries eligible for tax incentives are Banks & Financial services,

Shipping, R&D, International trading, Insurance, Processing services; Tourism, Headquarters activities; E- commerce and Legal firms.

The most widely availed incentive schemes include Start-Up Tax Exemption Scheme (SUTE), Pioneer Tax Incentive (PTI), Intellectual Property Development Incentive (IDI), Maritime Sector Incentive (MSI) etc. However, given the range of diverse tax incentives, Canadian investors must consult professionally qualified and well-reputed tax and accounting services in Singapore to determine the most appropriate incentives applicable for their businesses.

On top of tax incentives, Singapore provides numerous business grants and financing schemes to the Canadian companies operating in Singapore and there are more than 100 government grants available for supporting businesses.

For Startups, the following grants can be availed by Canadian businesses subject to fulfilment of certain conditions and include

Special Situation Fund for Startups (SSFS) provides financing for promising startups based in Singapore.

In the Startup SG Equity scheme, the government co-invests with qualified 3rd party investors into technology startups.

First-time entrepreneurs can avail of Startup SG Founder for receiving SGD 30,000 as mentorship and startup capital grant.

Innovative tech companies can avail of Startup SG Tech supports Proof-of-Concept (POC) and Proof-of-Value (POV) for commercialisation.

All business sectors can benefit from the below-mentioned grants.

Enterprise Development Grant (EDG) has been launched to support Singapore companies to grow and transform their businesses and grant up to 70% support for eligible costs up to a maximum of 80% till 31 March 2022.

Operation & Technology Roadmap (OTR) scheme provides up to 70% funding support to SMEs.

Productivity Solutions Grant (PSG) supports businesses in the adoption of productivity solutions and offers up to 80% funding support till 31 March 2022 for eligible costs.

Start Digital is meant for SMEs that are new to using digital technology and can take up any two digital solutions for free.

Sector-specific grants are also available in many sectors including Manufacturing & Engineering, Food and Beverage, Energy, Building & Construction, Real Estate, Financial Services, Tourism, IT, Agriculture, Aerospace and General Services.

What are the business options available for the Canadian investors?

Canadian investors and entrepreneurs looking for Singapore company incorporation can now opt for any of the five main types of business structures available. The choice of company type needs to be based on business capital, the number of business owners, liabilities and responsibilities business owners are willing to undertake etc. The business structures in Singapore include Sole Proprietorship, Partnership, Limited Partnership, Limited Liability Partnership and Company.

Businesses once incorporated can start operation after opening a bank account commonly known as a business account in Singapore.

Conclusion

The future of Singapore-Canada trade and investment outlook is bright and during March 2021, the Honourable Mary Ng, Minister of Small Business, Export Promotion and International Trade Canada initiated a week-long virtual trade mission to Singapore on e-commerce, hosted by Global Affairs Canada in collaboration with the Canadian Chamber of Commerce in Singapore and Enterprise Singapore. In her remarks, Minister Ng emphasized the importance of CPTPP in providing companies in both countries unlimited access to many dynamic and vibrant markets around the globe.

Newsletter, Singapore

Singapore Heavily Invests in Artificial Intelligence (AI) Towards Smart Nation Building Strategy

December 13, 2021

An SGD180 million has been additionally planned on top of the already budgeted SGD 500 million committed for artificial intelligence (AI) research, informed Deputy Prime Minister, Heng Swee Keat while addressing at the Singapore Fintech Festival (SFF) and Singapore Week of Innovation and Technology (SWITCH) 2021.

On November 8, 2021, Mr Heng, in an opening speech announced that the SGD180 million would be only spent towards accelerating fundamental and translational research on AI. While fundamental research involves the advancement of new and novel applications for AI, translational research refers to its application in translating data into meaningful insights.

The Deputy Prime Minister of Singapore, the new silicon valley in Asia also announced that two new national programmes on AI would be initiated for the finance industry and government sector including the ‘National AI Programme in Finance’ and the ‘National AI Programme in Government’.

These two national programmes have been introduced as part of the Singapore government’s strategy to effectively utilize AI technology for economic and social good.

The first programme in Finance includes an industry-wide AI platform and will generate insights about financial risks. The second programme in Government will improve the delivery of public sector services through greater use of AI in planning and policymaking for providing more responsive and personalized services and optimizing governing processes for the benefit of the citizens.

The first programme, NovA! is an AI platform and in its initial phase will focus on helping financial institutions rightly evaluate the environmental impact of companies and identify associated environmental risks. This is a collaboration between Singapore-based banks and local fintech firms. Sustainability related investments and the risks involved can also be better assessed by the financial institutions with this initiative. Building solid and sound AI capabilities within the Singaporean financial sector and enhancing customer service, risk management and business competitiveness is the primary purpose of this initiative.

The second AI programme, besides improving the delivery of public sector services through AI text analytics, will also focus on exploiting AI technology to improve job-matching on the national jobs portal, MyCareersFuture and improve job placements through better and more effective use of personalized jobs and skills recommendations.

These nationwide programmes come as a strategic plan of the Government for large scale adoption of AI across the nation and position the country as a global platform for AI applications and testing. The new initiative aims to leverage AI technology for economic value creation and train Singapore’s workforce on AI technology know-how.

In its efforts to become a smart nation, the Singapore government emphasized the necessity of AI for resource identification and allocation for the key focus areas through increased collaboration between government agencies and researchers.

The national AI strategy has been developed by the Smart Nation and Digital Government Office (SNDGO), under the Prime Minister’s Office (PMO) to position Singapore in a global leadership position for the development and deployment of “scalable, impactful AI solutions’ in key areas by 2030.

The government spearheaded the national strategy to make its citizens aware of the implications and benefits of AI in their lives and promote usage of this technology. Developing AI capabilities has also been on the government’s agenda to support an AI-driven digital economy by 2030. Plans and priorities are made by SNDGO so that Singaporean entrepreneurs and engineers can develop new and innovative AI products and services for both indigenous usage and exports.

“Domestically, our private and public sectors will use AI decisively to generate economic gains and improve lives. Internationally, Singapore will be recognised as a global hub in innovating, piloting, test-bedding, deploying and scaling AI solutions for impact,” emphasized the SNDGO.

Four focus areas have been identified for increased AI deployment including finance, manufacturing, government and cybersecurity. The nationwide projects that have been earmarked are management in healthcare, intelligent freight planning in transportation and logistics, and border clearance operations in national safety and security.

“The national AI strategy is a key step in our smart nation journey. It spells out our plans to deepen our use of AI technologies to transform our economy, going beyond just adopting technology, to fundamentally rethinking business models and making deep changes to reap productivity gains and create new areas of growth,” noted Lee Hsien Loong, the Prime Minister of Singapore.

He also added saying, “As a small country, Singapore lacks the scale of large markets and R&D ecosystems, but we can make up for this by building up AI research, and working together cohesively across government, industry, and research, to develop and deploy AI solutions in key sectors,” Lee added. “At the same time, we must also anticipate the social challenges that AI will create by maintaining public trust and building capabilities to manage and govern AI technologies, and guarding against cybersecurity attacks and breaches to data privacy.”

The Monetary Authority of Singapore (MAS) has already developed the first phase of Veritas, an AI governance framework and Toolkit to ensure that financial institutions use AI responsibly. The framework will focus on three main areas including customer marketing, risk scoring, and fraud detection.

“AI has the potential to transform financial services, but it must be used safely and responsibly. Good governance is essential to AI adoption in the financial industry,” the special AI advisor for MAS David Hardoon emphasized.

As part of the national AI strategy and to develop and manage smart estates, Mr Heng also deliberated a new partnership between the Infocomm Media Development Authority (IMDA) and Singapore University of Technology and Design (SUTD) for enhancing AI technological capabilities.

The rollout of a national AI strategy will empower Singapore to emerge as one of the smartest nations in the world and increasingly attract foreign innovative and tech-savvy SMEs and startups for the best Singapore company incorporation.

Newsletter, Singapore

US Businesses are Exploring Singapore as a Launchpad for Investment Opportunities in the ASEAN

October 7, 2021

The Association of Southeast Asian Nations (ASEAN) long enjoyed a robust and thriving trade and investment relationship with the US and the region is perceived by many American companies as potentially attractive for exploring business opportunities. This has been further fuelled by the recent Regional Comprehensive Economic Partnership (RCEP) signed on 15 November 2020 at a virtual ASEAN Summit hosted by Vietnam, an agreement between the 10 member states of the ASEAN and five of its free trade agreement (FTA) partners.

The RCEP is significant for both US businesses and investors due to the huge size of the participating economies amounting to 29% of the world’s GDP with 30% of the world’s population and having a market value of almost USD 25 trillion. The ASEAN economy also has a vast consumer base of approximately 2.5 billion of which an estimated 1 billion hail from the middle-class.

The RCEP will establish a comprehensive economic partnership based on the existing bilateral ASEAN agreements with individual FTA partners and be governed by a set of rules and standards such as better market access and reduced trade barriers. For American investors who look for one of the best Singapore company incorporation, RCEP will help by providing many trade and investment opportunities in new areas.

As per researchers, technology adoption has taken the front seat in the ASEAN to support economies and societies after the Covid pandemic and mainly for streamlining supply chains through initialization. The US high-tech companies can play a decisive role in accelerating this transformation and make distribution channels more effective. The supply chain has become the centre stage in almost all American companies’ long term business strategies due to the unprecedented disruptions experienced by the pandemic and made it more relevant for them to explore supply chain partners within ASEAN regional partners for digital integration of distribution processes.

Increased consumerism boosted by a resilient supply chain will promote sectors including FMCG, pharmaceutical and medical & diagnostic devices. Many US multinationals are now eager to relocate their manufacturing facilities closer to ASEAN and especially to Singapore, the new Silicon Valley in Asia as the city-state provides the highest level of technology adoption, political stability, safest business climate and strong manufacturing capabilities to make their businesses more competitive.

The ASEAN renewable energy sector has also got a big push recently in the face of increasing clean energy demand due to rapid industrialization and the US businesses can offer clean energy solutions to the participating economies.

A recent survey conducted by Standard Chartered revealed that the majority of the US companies expect considerable business growth in numerous business sectors of ASEAN during the next 12 months. While 93% of corporations expected an increase in revenue, an increase in production was anticipated by 86% of respondents. 60% of the respondents surveyed were optimistic about business expansion in Singapore followed by Indonesia and Thailand that were favoured by 45% and 43% of executives surveyed.

57% of the American companies looking for business opportunities in the ASEAN considered Singapore as their most preferred destination for regional marketing and administrative head offices and 43% favoured it for their innovation and R&D centre in ASEAN.

Several American corporations are critically assessing the USSFTA and RCEP synergy for making Singapore the primary hub to reach out to the vast ASEAN market. Besides the accessibility to a huge market and customer base, skilled workforce and diversified product portfolios have been considered to be the other two most important factors, the survey noted. 70% of respondents reasoned market access as the major driving factor while workforce and diversified product footprints were cited as the main cause by 53% and 40% of companies. Almost half of the surveyed participants expressed their desire to increase investment in Singapore over the next few years.

Singapore is also advantageous as a regional hub due to well-developed banking systems and other financial and logistics support services not readily available in other countries in the ASEAN. Many multinational banks in Singapore offer facilities to foreign entrepreneurs for opening a bank account seamlessly for Singapore company incorporation and meeting their financial needs in the Asia-Pacific region and beyond. US Companies incorporated in Singapore can also be 100 per cent owned by American companies.

A very competitive corporate income tax rate of 17% prevails in Singapore and profits realized overseas is excluded from taxation by the government. No capital gain or inheritance tax is also applicable to foreign American investors.

Besides all advantages, challenges are also being examined by the American businesses while considering Singapore for investment purposes. Amongst these challenges, the current global geopolitical instability reduced consumer spending and the health crisis was cited as the biggest challenges by 73%, 65% & 63% of people respectively. Acclimatizing the business model in the ASEAN was also cited as a great challenge by 68% of participants.

The US has been the worst affected by the coronavirus with the highest number of deaths and many ultra-rich families are becoming vulnerable and looking for a safer haven with world-class health and medical facilities. Singapore naturally comes as the first choice with zero counts of mishaps and high levels of control in combating the virus.

A new and innovative investment vehicle has also been introduced by the Singapore government last year, known as the Variable Capital Company, making it more attractive for American family offices and private equity firms. More than 260 VCCs have already been formed as per data available from the Monetary Authority of Singapore (MAS).

The number of single family offices in Singapore has increased by almost two times over the last two years as it is relatively easier for the ultra-rich to settle in Singapore. Google co-founder Sergey Brin and Shu Ping, the Chinese billionaire, have established family offices in Singapore. American Investment Management company, Bridgewater founder Ray Dalio recently announced establishing a family office in Singapore. The family office of late Microsoft founder Paul Allen also figures in the list.

The Singapore authorities are relentlessly striving to attract high-quality investors and UHNWIs from the USA and make the country the most desired destination for US high-tech multinationals.

Article, Singapore

Solar Energy Transition Outlook in Singapore and other Parts of Southeast Asia

October 6, 2021

Southeast Asia is one of the fastest-growing economies in the world today with nearly 10% of the world’s population residing in the ten member countries of the Association of Southeast Asian Nations (ASEAN) including Vietnam, Singapore, Brunei, Indonesia, Thailand, Cambodia, Philippines, Malaysia, Myanmar, Lao People’s Democratic Republic. Geographically, Southeast Asia is a tropical region favouring Solar energy as the best renewable.

Why Solar Energy Transition?

Rapid industrialisation in the ASEAN and the governments’ commitment to 100% electrification of households are transforming the economic and energy outlook in this region as policymakers across many of these countries are striving to meet the growing energy demand in a secure, affordable and sustainable manner for improving the quality of life of their citizens. Several incentives and support schemes have also been announced by the government of these countries to encourage the renewable energy sector.

As the rising energy demand in Southeast Asia has already outpaced the available energy supply within this region due to declining reserves of fossil fuel, the renewable energy sector is expected to take the driver’s seat with solar technology primarily fueling the growth of the regional renewable. Southeast Asia is presently working on a massive plan to take the renewable energy capacity from 517GW in 2020 to 815GW by 2025.

How is the Solar Energy Outlook in Singapore?

Singapore is intensifying its focus on solar PV installations due to shortage of land for wind energy and hydroelectricity installations and promoting the SolarNova program launched in 2014 by the Economic Development Board (EDB), the strategic measure for solar Photovoltaic (PV) growth.

The country added 296MW capacity over the last four phases spanning over 2015 to 2020 and another 60MW capacity has been installed this year. The rooftop solar PV installations on public housing are becoming most common.

The sea city is gradually approaching the next target of a minimum of 2GW of solar energy by 2030 that can cater to the demand of 350,000 households. The country is also investing in the R&D of floating solar energy for future expansion.

Singapore has demonstrated its commitment towards becoming a low carbon economy with a proposal of USD 1.8 billion investment from its foreign reserves for green financing. Government-owned Temasek in partnership with Black Rock has already invested USD 600 million to lower its carbon footprint.

How is the Solar Energy Outlook shaping in other parts of Southeast Asia?

Countries leading the region’s renewable energy initiatives are Vietnam, Thailand, the Philippines, Malaysia and Indonesia amounting to almost 84% of the total installed renewable energy capacity and setting an ambitious target of a 23% renewable energy share in the total primary energy supply by 2025.

Recently Vietnam has overtaken Thailand in installed solar power generation with an increase in PV capacity from a mere 86 MW in 2018 to 16,500 MW at the end of 2020 having the largest installed capacity for solar power generation among members of the ASEAN mainly contributed by rooftop solar as space is scarce in the country. Amendments in the public-private partnership regulation have also been a contributing factor for the solar PV boom.

Thailand is the second country in the Solar energy race contributing to 17% of total installed capacity in the region and has set a target for 30% of the country’s total energy consumption from renewable sources by the year 2036. Rooftop solar is playing the most predominant role in advancing its energy transition.

Improving the share of renewables in the total energy requirement from 2% in 2019 to 20% by the end of 2025 is the target for Malaysia with an approximate investment of USD 7.9 billion mostly for the solar system infrastructure. The government has also floated a tender for 1GW of solar projects under the fourth round of its Large Scale Solar (LSS) procurement programme.

Indonesia too plans to enhance renewable energy percentage from 9% in 2020 to 23% by 2025 and can generate 640000000 GW of solar power placing the country on the strong ground for achieving 100% green electricity by 2050.

The Philippines in its National Renewable Energy Plan specifies targets for a minimum l34GW of renewable energy installations by 2040 and plans for 100% foreign ownership for attracting foreign investment in this sector.

Bottomline

It is believed that the renewable energy sector in ASEAN region after the covid pandemic would recover in 2021 driven by the resumption of economic activities and support policies of various governments.

Article, Singapore

A Guide to Beginning an E-Commerce Business In Singapore

September 30, 2021

These days, we live almost our entire lives online. It is therefore no wonder that businesses too feel the need to capitalise on this. Naturally, setting up an e-commerce business or service platform seems much more logical than establishing a brick-and-mortar shop. While the initial invested capital may be almost the same, the running costs will definitely be far lower.

If you too are an entrepreneur trying to set foot in the world of e-commerce, where better to start than in the economically flourishing city-state of Singapore. And if you’re looking for a guide for doing business in Singapore, you’ve come to the right place. Read on to discover quick tips on starting your own e-commerce business in the Lion City. While this guide is by no means exhaustive, it will help you gain important knowledge towards laying the foundation for your business plans. Let’s get started –

Research is everything

It almost goes without saying that a business can start only on a foundation backed by strong research. No matter how brilliant your idea for a business is, things may go awry unless you have your research in place.

Why is research so important?

Firstly, research will tell you whether your e-commerce business has an audience or a market. It will also show you what the competition is doing and help you to identify any gaps in the market that your product or service can fill. This knowledge can prove to be immensely profitable for you.

While doing research, remember to dedicate time towards calculating how much business capital you will require to get started. While starting a new venture can be exciting, be careful of overspending. Even though your business is online, keep aside sufficient funds for contingencies.

Guide to Incorporating Your Business in Singapore: Essential Checklist

Learn local guidelines

Starting a business in a new land requires you to study local guidelines and laws. This is even true for starting an e-commerce business. After all, you want to function as a legally compliant organisation to avoid any hassles. Also, learning a bit about how things work in Singapore can help you benefit from local business welfare schemes too. Singapore has many grants designed especially for small to medium businesses. Make sure to get professional help for company registration in Singapore if you are setting up a business abroad for the first time. Do also keep yourself updated on the latest laws concerning taxation in Singapore. A cross-border consultant advisory firm should be able to help you with all the professional information you need in these areas.

Create an incorporated company

Before you take any steps towards setting up your website or even buying raw materials, you need to focus on business incorporation. This is the crucial stage that will lay the foundation of what kind of a business entity you are setting up and thereby also outline the specific local laws and regulations that apply to you. Once your e-commerce business is incorporated, it will be recognised as an independent legal entity in Singapore. You may seek professional help with this stage so that you complete all the required paperwork and formalities the right way.

Create your website

When creating your website, you may either choose to go with ready templates online or make your very own. The second option is slightly harder but will give your e-commerce brand a truly unique online presence and design. Make sure to choose an appropriate domain name that resonates with your business and brand. Choose a good hosting service too – one that you can rely on 24/7. After all, an online store never closes its doors at night…it works round the clock. You want your e-commerce website to be accessible to your audience no matter what time of the day they choose to visit it.

Make sure that your website is user-friendly. All the major tabs for shopping, using filters to sort products, and customer support should be easily visible. Product pages should have good content with easy visibility of the different colours, designs or quantities for buyers. Try to also set up a proper customer support system for your e-commerce business. A number or 24/7 email or chat support can go a long way in creating loyal customers. It will help your buyers know that they can reach out to you at any time.

You also need to focus on setting up a secure payment gateway. Make sure to provide people with a wide variety of payment options, including credit cards, debit cards and Google Pay, among others.

Focus on good marketing

Once your website is set up and your e-commerce business has been incorporated, you can go ahead and market your products or services. Apart from print advertising, do also focus on digital content marketing and SEO. After all, your business is an online brand and therefore, it will help to market it online as well. Use social media platforms to your advantage. Facebook and Instagram have billions of users. There is no limit to the possibilities.

Set up delivery

The final step involves setting up a reliable delivery system that will ensure that your goods or services reach your buyers. You may choose to hire a third-party company to carry out delivery for you or even do it with your own manpower, depending on your needs and how far your buyers are. For instance, if you have buyers from overseas, you will have to tie-up with a third-party delivery platform.

We hope that this guide on beginning an e-commerce business in Singapore has been a great read for you today!

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Guide to Incorporating Your Business in Singapore: Essential Checklist

Bottom line

How is Singapore Canada business relationship?

What opportunities does Singapore offer to Canadian investors?

What are the business options available for the Canadian investors?

Why Solar Energy Transition?

How is the Solar Energy Outlook in Singapore?

How is the Solar Energy Outlook shaping in other parts of Southeast Asia?

Bottomline

Research is everything

Why is research so important?

Guide to Incorporating Your Business in Singapore: Essential Checklist

Learn local guidelines

Create an incorporated company

Create your website

Focus on good marketing

Set up delivery

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