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Inclusive and Sustainable Growth with Continued Investment in Innovation and Collaboration are Crucial for Global Economic Recovery: Noted DPM Heng Singapore
  • Newsletter, Singapore

Inclusive and Sustainable Growth with Continued Investment in Innovation and Collaboration are Crucial for Global Economic Recovery: Noted DPM Heng Singapore

Singapore can decisively contribute to global recovery amid the coronavirus pandemic through continued investment and global collaboration, noted Deputy Prime Minister, Coordinating Minister for Economic Policies and Minister for Finance Heng Swee Keat on Monday, 7th December 2020 in his inaugural address during Singapore FinTech Festival x Singapore Week of Innovation & Technology (SFF X SWITCH).

As new frontiers are opening through technology and innovation across the world with a unity of purpose, Singapore is also joining the league to ensure inclusive and sustainable growth for its companies and workforce, he added.

Describing the meet at extraordinary circumstances when Covid 19 has taken more than a million lives and disrupted the global economy, Mr Heng highlighted how the Covid-19 crisis has unearthed inequalities in many societies and the need for the world to take a more inclusive approach in global recovery plans.

The five-day event, which ended on Friday, 11th December 2020 witnessed more than 60,000 participants from 130 countries.

Mr Heng, reiterating on Singapore’s commitment to investing in innovation remarked that the Singapore Government is making an investment of approximate 1 per cent of the country’s gross domestic product in research and development each year and finalizing plans for the next five years.

Singapore continues to deepen its capabilities to keep the tech ecosystem vibrant and develop as a global financial hub, he emphasized. “Our commitment to innovation and work together will be key to driving economic recovery and growth.”

During this festival, Mr Heng announced the launching of The Asian Institute of Digital Finance, hosted by the National University of Singapore and backed by the Monetary Authority of Singapore and the National Research Foundation on Monday, 7th December 2020.

One of the institute’s first projects is to build a data-sharing platform that can train models to improve credit assessments enabling lenders make better decisions and offer better rates, Mr Heng said, which will improve the financing of small businesses and enable a stronger post-pandemic recovery.

The institute will also play a strong role to nurture global fintech talent for Asia and will take in its first batch of post-graduate students in 2021.

To deepen its capabilities in Blockchain technology and enable transactions even in a zero-trust environment, Singapore is also launching “Singapore Blockchain Innovation programme” as the first major Blockchain research and translation programme to ward off limitations associated with the energy efficiency of processing blockchains and the ability to connect different blockchain systems, he said.

“The programme will expand blockchain research to the needs of the industry, and will also look into scalability and interoperability of blockchain solutions,” Mr Heng added.

Mr Heng also emphasized saying, “Our commitment to innovation and to work together will be key to driving economic recovery and growth. As we do so, the question before all of us is this – How do we use innovation and tech in a way that will build better lives for all our peoples? How do we build a future that is inclusive and sustainable?”

“To avoid widening inequality, we must recover from this crisis in a manner that is inclusive. We must speed up the time that it takes for the last company and worker to access and benefit from technology. Small and medium enterprises account for 90% of businesses worldwide and 50% of global employment. Many SMEs are not making use of digital technologies, much less training their workers for the digital world. It is imperative that we bring them on board the digital economy.” he said

He also highlighted how Singapore is levelling up the capabilities of its small and medium-sized enterprises (SMEs) by helping them adopt digital solutions and scale beyond Singapore’s shores and promoting new company–registration–in–Singapore.

He also talked about “Business sans Borders” initiative, or BSB, to digitally connect SMEs around the world for expanding their markets and helping foreign-companies–relocate–to–Singapore. BSB is a ‘meta hub’ helping SMEs access a much larger eco-system of suppliers and buyers and also connecting businesses to logistics and financial services providers. “Using AI, BSB enables SMEs to discover prices and sales opportunities in a much larger global marketplace”, he commented.

He pointed out with an example of a furniture maker who has used Singapore-based platform Source-Sage to connect to other digital marketplaces, discovering more buyers and recently acquiring a new buyer on the India business-to-business platform. This platform also offers a tremendous advantage to other businesses such as electronics, one of the top–10–business-options–for–foreigners–in–Singapore.

Describing Covid 19 as a wake-up call for the world with a reminder to be better prepared for big problems like climate change, Mr Heng reinforced Singapore’s commitment for addressing climate change issues through innovation citing how Singapore is deploying at least 2 gigawatts of solar power by 2030 that would accelerate the deployment of electric vehicles as well as explore smart charging technologies and promised to phase out all IC Engine vehicles by 2040 in Singapore.

“We believe that putting sustainability at the core of what we do can create economic growth opportunities,” he pointed out and reaffirmed Singapore’s ability to contribute to a green recovery in Asia.

In his address, Mr Heng emphasised that the foundation for a more inclusive and sustainable post-Covid-19 future lies in the creation of a more resilient global commons.

“One key element of a resilient global commons is stronger governance on the use of technology. Fair and ethical rules that are generally accepted will allow more people to trust and use technology,” he said.

He pointed out how Singapore’s Model AI Governance Framework released in 2019 is providing guidelines to address ethical and governance issues when deploying AI solutions with best practices captured and adopted by companies including Google, Microsoft and DBS Bank.

On the same day, Mr Heng announced the launching of Singapore Financial Data Exchange, World’s first public digital infrastructure which will allow Singaporeans to view their consolidated financial information through financial institutions’ financial planning services or the Singapore Government’s MyMoneySense app.

“Such an approach to trusted data sharing – involving both innovation and conducive regulations – can potentially be applied in other areas and other jurisdictions,” he remarked.

SFF x Switch was jointly organised by the Monetary Authority of Singapore and Enterprise Singapore and had week-long hybrid physical and digital events taking place round the clock.

1,400 speakers were invited including New Zealand Prime Minister Jacinda Ardern; Mr Sundar Pichai, chief executive of Google’s parent company Alphabet; and Microsoft co-founder Bill Gates.

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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

Overview

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.


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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What are Different Class of Shares in Singapore
  • Article, Singapore

What are Different Class of Shares in Singapore

In brief, shares constitute the ownership of a company. After completion of the Singapore company incorporation process, the founders decide who will be the shareholders of the company. Generally, these founders constitute a major stake in the shareholding. It is very important to determine the percentage of holding each of them owns.

Mostly different shares classes are seen in public limited companies, but the concept is not so uncommon in the private limited companies as well, especially when they are in the growing stage.

The laws in Singapore are quite flexible when it comes to issuing shares with different rights. You can classify the shares in many categories like “management shares” with extra voting rights, “Preference shares” without any voting rights, or “redeemable shares”. There is no legal definition for these share classes, so all the rights every class offers should be clearly defined in the Company’s Constitution.

Here are some of the typical share classes of any company formation in Singapore, along with the rights they offer.

 

Ordinary shares

They are also called simple equity shares and are the most common type of shareholding anyone can own. Holders of ordinary shares are entitled to the profits through dividends, one vote per share, and the surplus assets when the company is wound up. However, there can be a variation in these terms and are generally mentioned in the holding documents.

As compared to preference shares, ordinary shares are of a low priority to the company. For example, when the company distributes a dividend, first the preference shareholders receive their share and then, if remaining, comes the turn for equity shareholders. Also, when a company is wound up, Creditors and preference shares are paid off first and the equity holders in the end. This is the reason why ordinary shareholders are called “residual claimants of the company”.

 

Preference Shares

These are the shares that provide a priority to the holder in areas such as dividend payment or capital payment while winding up of a company. However, preference shareholders can have more extended rights depending upon the further classification by the company issuing it.

Every company issuing preference shares needs to state the right of holders in Constitution under S 75(1) CA, related to the following points.

  • Any rights towards repayment of capital
  • Any rights related to participation in surplus assets or profits
  • Any voting rights
  • Regarding the dividends whether non-cumulative or cumulative

Under s 75(2) CA, if any company fails to comply with the above procedure, the company and every officer will be guilty of an offense and shall be liable to a fine not exceeding $2000.

Now, the voting rights associated with the preference shares depend upon the terms under which they are issued. Hence, it is entirely normal for a company to issue preference shares with increased voting rights or no voting rights, or voting rights on specific matters.

 

Non-Voting Shares

These shares carry no rights for voting or attending the annual general meetings conducted by the company. Generally, the preference shareholders are the non-voting ones. These shares are mostly issued to (a) the employees of a company (to pay some of the remunerations as dividends, as an incentive to the employees), and (b) the family members of the main shareholders.

 

Redeemable Shares

These shares are issued on the terms that the company may, or will, buy back the shares at a specified date in the future. This provides the shareholders with a guarantee that their capital is safe and a specified amount will be received either at the specified date or at the option of the company.

If a preferred stock does not have a maturity date, i.e. the date on which a share will be redeemed, then it is called perpetual. Such stocks have a more fluid redemption structure, which can happen on the call date. Although the company is not obligated to do so, it can redeem the share on its first call date which generally falls after five years of issuing. The price at which the company buybacks these shares id slightly higher than the original issuing price.

 

Deferred Ordinary shares

It is a stock that comes without any right of receiving the company’s assets until other shareholders have been duly paid. Also, these shareholders do not receive any dividends until others have received a minimum amount. The holders of these shares are generally the owners, the founders, venture capitalists, or private investment groups, who have a long-term stake in the company’s performance and growth.

The basic idea behind issuing such shares is to keep the investors and management intact when the company is going through an evolution phase, from a small start-up to a publically-traded brand. This category is very uncommon because the stock units are restricted. It is very important to know that the values of Deferred stocks cannot be calculated until the stakeholder decides to leave the company.

 

Management Shares

This is that category of shares which rests with the management of the company. The voting rights for management shares are greater than ordinary shares like three votes for one share. The basic idea behind issuing them is to ensure that there is a fair decision taken in a process where all other investors go against the management. At this time, the managers can use their voting rights to turn the decision in the company’s benefit.


 Alphabet shares

This is a different class of shares that is generally tied to a specific subsidiary of any corporation. Broadly, you can say that they are shares of common stock that are different in some way from other common stock in the same company. The reason for calling these stocks as alphabet shares is that the classification system used for identifying each class of common stocks uses letters to differentiate it from the parent company’s stock.

Publically traded companies generally issue alphabet stocks when it purchases a business unit from another company. The latter becomes the subsidiary for the former, and the holders are only entitled to the dividends and claims from the subsidiary and not the parent company.

The holders of such stocks may have limited rights for voting. This is to ensure that the inside people can control the working of the acquired subsidiary. For many, issuance of alphabet stocks can be an indication of a complex capital structure. Companies with several subsidiaries or branches may issue different alphabet shares to ensure smooth functioning of operations as well as for controlling the dividend distributions.


Conclusion

All startups indeed choose to give all its shareholders equal voting rights per share, but there is a great sense of flexibility and freedom for the investors and founders to be granted with varying degrees of management control and varying degrees of entitlement to the company’s capital or profits.

The law in Singapore continues to motivate a welcoming dominion for the establishment and growth of businesses, by offering some flexibility of capturing the desires different types of investors have, who may or may not desire greater control in the company’s management, or, who may or may not desire the assurance of a fixed return on their investment made in the company. Anyone who regards the creation of multiple share classes should consider the motive for the distinct classes and, at the same time, fully evaluate the rights supplied to each class.

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Singapore Oman Business Prospects Driven by Oman Economic Zones
  • Newsletter, Singapore

Singapore Oman Business Prospects Driven by Oman Economic Zones

Oman has many export-oriented Economic Zones and Industrial Estates to attract foreign investors to the country and help promote economic development. With world-class and highly advanced infrastructure, the Sultanate’s economic zones offer several investment incentives, tax holidays and simplified procedures for licenses and permits supporting the free zones’ competitive business environment.

Oman has set up three Free Trade Zones (FTZ) namely Sahar  Salalah and Al Muzanah, and two Special Economic Zones (SEZ) called Duqm and Knowledge Oasis Muscat. Besides the FTZ and SEZ, there are also six major Industrial Estates including Rusayl, Raysut, Sur, Nizwa, Al Buraimi and Sumail which offer highly attractive land rents, tax exemptions and equipment duty waiver.

The FTZs and SEZs are categorized based on commercial activities and incentives offered. Different zones are formed for different sectors and all zones are designed for foreign companies to benefit from Oman’s position as a regional manufacturing and distribution base. The purpose of setting up these economic zones is to attract different types of businesses to the country.

In a press briefing to The Business Times, Mr Anwar Muqaibal, the Consul General of the Sultanate of Oman to Singapore said: “There is no minimum share capital requirement for Oman’s free zones. Importers enjoy tax exemptions as no duties are imposed on goods imported and exported from the free zones. Oman free trade zone companies are allowed to trade within Oman without a local agent.”

The Duqm SEZ has long been considered as the place that will balance regional development by energizing the Al Wusta governorate and diversifying Oman’s revenue sources and employment opportunities of Omanis, added SEZAD, the regulator of the economic zone.

Duqm, established in 2011 is the newest SEZ and also the biggest in the Middle East region. It includes functional zones: Duqm, a deepwater port, a dry dock, a regional airport, a heavy/medium and light industries complex with a refinery and petrochemical complex, a residential and commercial space, tourism and logistics service areas and an industrial fisheries complex with a port and offers unique foreign investment opportunities in Oman.

Oman’s Consul General highlighted: “The port entered into an early operations phase in 2012 and currently remains in this stage with a fully functional commercial quay capable of handling heavy-lift project cargo, general cargo, dry bulk and containers.”

The development, management and regulation of the SEZ are administered by the Special Economic Zone Authority at Duqm, SEZAD which is responsible for the management of entire economic activities in Duqm, including long term strategies of infrastructure development and investment. The urban expansion of Duqm city and environmental protection are also overseen by SEZAD.

“Oman has taken important steps to make it’s economy more competitive and conducive to foreign direct investment. Incentives include a five year renewable tax holiday, subsidized plant facilities and utilities, and customs duties relief on equipment and raw materials for the first 10 years of a firm’s operation in Oman,” Mr Muquaibal added.

Mr Muquaibal also said: “Oman’s strategic location connecting the Persian Gulf and the Indian Ocean with east Africa and the Red Sea could also boost the country’s economy. The Duqm Special Economic Zone, which is among the largest in the world, could become the commercial thread between Oman, South Asia and China’s Belt and Road initiative.”

Trade exhibitions and investment events promotions are also planned at a global level to woo more foreign investors for doing business in Oman. 

Skill enhancement of the local Omanis has also been planned by the Oman Government so they can be hired by foreign investors contributing to the nation’s economy.

“As the Sultanate remains a very stable country, Oman has good prospects and is an ideal location with its easy market entry,” emphasized Mr Muquaibal.

Referring to Oman and Singapore bilateral relations, the Consul General remarked that ties between the Sultanate of Oman and Singapore date back centuries as both countries share the same aspiration for economic prosperity and social stability.

Mr Muquaibal added that his priorities in the coming months would be to enhance economic relations between the two countries by promoting investment opportunities in Oman and encouraging Singaporean businesses to explore them.

With the tourism sector gradually opening up, this sector also becomes a priority as Oman remains a very attractive destination being unique in the region not commercialized and largely untouched with its mesmerizing scenic coastlines.

Another item on the list of Consul General’s priorities is promoting the visit of high-level Omani officials and specialists from different sectors to Singapore for exploring and investing in health, logistics and manufacturing sectors.

Hyflux, CrimsonLogic and SembCorp are the main business ties Singapore already has with the Sultanate of Oman. Hyflux’s first destination was in 2009 for setting up one desalination facility in Salalah and then in Qurayyat in 2014 to design, build, own and operate an independent water project.

CrimsonLogic has signed an MOU with local Omani SMEs in the IT sector and is also engaged in developing a customs management platform with an office in Oman. SemdCrop won a 15-year contract to supply power and water to the Oman Power and Water Procurement Company.

“Singapore businesses should be looking into investing in agriculture and fisheries, manufacturing, logistics and transport, energy and mining, and tourism,” remarked Mr Muquaibal.

Oman also has business entities in Singapore. The Bank Muscat runs a Singapore Representative Office since 2011 and OQ Trading Company Oman also has a presence in Singapore.

As per Mr Muquaibal said that the Sultanate of Oman is a hidden jewel in the Middle East region and worth exploring by Singaporean business entrepreneurs.

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Know More About Corporate Taxation in Singapore
  • Article, Singapore

Know More About Corporate Taxation in Singapore

Singapore is often lauded for having low corporate tax rates and a transparent tax filing system. The country also offers several tax incentives that draw global investments, making it one of the world’s most ‘‘business-friendly’’ countries. Thus, if you are planning to register a company here or opening a branch of an existing business, knowing about the corporate taxation is important.

Corporate Taxes in Singapore – Who Is Legally Required to Pay?

Any company that is supervised and managed from Singapore is an official tax resident in the country. However, not all branches of multinational companies qualify as tax residents. If the company is not managed in Singapore, it doesn’t qualify, even if the company holds its day-to-day operations in Singapore. Being “managed in Singapore” means that the company’s strategic decisions (e.g., company policies) are discussed in Singapore.

However, even companies that don’t get the coveted tax-residency status have to pay corporate tax on any taxable income consequent of their activities in Singapore. But, these companies will not enjoy the several benefits that tax resident companies enjoy.

Singapore levies taxes on profits and not on revenue. Profits of your Singapore company will be taxed at 17% (with an effective tax rate often lower due to various tax incentives and tax exemptions available to Singapore-resident companies).

How to Become a Singaporean tax-resident?

Every year, companies get 12 months to shift their management department to Singapore. They have to have one year of management, board meetings, strategic decisions, etc. conducted in Singapore in their Year of Assessment (YA). For instance, for the Year of Assessment 2020, the 12-month period will be 1st April 2019 to 31st March 2020.

A company incorporated in Singapore is not automatically considered a tax resident of Singapore.

To be considered a tax resident of Singapore, a company must be controlled and managed from Singapore. According to IRAS, controlled and managed refers to, “making decisions on strategic matters, such as those on company policy and strategy.”

In general, the location of board meetings is a key factor in determining where a company is controlled and managed.

Furthermore, the location of company personnel who have a key role in the company’s decision making can also determine tax residency.

Typically, a company is deemed to be a non-resident if board meetings and key management personnel are located outside of Singapore–even if the day-to-day operations of the company are in Singapore.

For example, foreign-based holding companies that only earn passive income are normally considered non-residents since these companies are run with instructions from owners and shareholders who are based outside Singapore.

Note that the tax residency of a company can change from year to year.

Following are the benefits of being a Singapore tax resident companies with Singapore tax residency enjoy the following benefits:

  • Tax benefits provided under Avoidance of Double Taxation Agreements (DTAs)
  • Tax exemption on foreign-sourced dividends, foreign branch profits, and foreign-sourced service income
  • Tax exemption for new startups

How Do Companies Benefit from Singapore’s Income Tax System?

Singapore is renowned for having a single-tier corporate income tax system. Stakeholders don’t have to pay taxes twice on their incomes. The tax filed by a company on its deductible income is the closing tax payment. All dividend installments paid to the company’s shareholders are exempt from additional taxation. Such a lenient taxation system is not common. Here are a few reasons why this taxation system is so lucrative for global companies –

  • The profits of your Singapore company will be taxed at 17% (with an effective tax rate often lower due to various tax incentives and tax exemptions available to Singapore-resident companies)
  • No taxation on capital gains
  • No tax on post-taxation profit payments to shareholders. Companies only pay taxes on profits. Post-tax profit distribution (i.e. dividends) to shareholders is tax-free.
  • Certain type of foreign-source income is exempt from taxation in Singapore

Singapore offers generous incentives and tax breaks when investing in new and promising industries, R&D, and productivity-enhancing technologies

  • No Double Taxation of Income
  • Singapore has tax agreements with more than ninety countries.
  • All foreign tax credit is exempted.
  • Companies from countries that don’t have a tax agreement with Singapore are provided with a unilateral tax credit system which respects foreign tax on all income from foreign companies.

What are Corporate Tax Rates?
 

Startup Companies Tax Exmeption

  
 

Chargeable Income (SGD)

% exempt from Tax

Amount of Tax Exempted (SGD)

  
 

First 100,000

75%

                       75,000

  
 

Next 100,000

50%

                       50,000

  
 

Total 200,000

 

                     125,000

  
 

All companies will be given 25% corporate income tax rebate, capped at $15,000 for YA 2020

      
 

Example:

    
 

Chargeable Income (SGD)

Tax before Rebate

Effective Tax Rate

  
 

100,000

4,250

4.25

  
 

200,000

                      12,750

                            6.38

  
 

300,000

                      29,750

                            9.92

  
 

400,000

                      46,750

                          11.69

  
 

500,000

                      63,750

                          12.75

  
 

600,000

                      80,750

                          13.46

  
 

1,000,000

                   148,750

                          14.88

  
 

2,000,000

                   318,750

                          15.94

  
 

3,000,000

                   488,750

                          16.29

  
 

5,000,000

                   828,750

                          16.58

  
 

10,000,000

                1,678,750

                          16.79

  
      

Partial Tax Exemption – For all Companies not fulfill the condition of SUTE YA 2020

 

Partial Tax Exemption

  
 

Chargeable Income (SGD)

% exempt from Tax

Amount of Tax Exempted (SGD)

  
 

First 10,000

75%

                          7,500

  
 

Next 190,000

50%

                       95,000

  
 

Total 200,000

 

                     102,500

  
      
 

Example:

    
 

Chargeable Income (SGD)

Tax before Rebate

Effective Tax Rate

  
 

                      200,000

                      16,575

8.29

  
 

                      300,000

                      33,575

11.19

  
 

                      400,000

                      50,575

12.64

  
 

                      500,000

                      67,575

13.52

  
 

                   1,000,000

                   152,575

15.26

  
 

                   2,000,000

                   322,575

16.13

  
 

                   3,000,000

                   492,575

16.42

  
 

                   5,000,000

                   832,575

16.65

  
 

                10,000,000

                1,682,575

16.83

  
 

20,000,000

                3,382,575

16.91

  
      
 

All companies will be given 25% corporate income tax rebate, capped at $15,000 for YA 2020

      

 

What is Taxable Income?

Taxable income in Singapore’s single-tier territorial tax system includes –

  • Profits from the trade/business.
  • Royalties, premiums, interests on the property, and other earnings from investments.
  • Earnings from investments also include rent from a property.
  • Other income that is considered ‘‘revenue.’’


What are Net Income and Taxable Income?

As per the Income Tax Act of Singapore, any earnings made in Singapore and money sent to Singapore from an overseas source is taxable. However, net profits are, in most cases, not taxable.  Some of the costs sustained by companies may or may not be deductible. Some incomes may even be taxed as a non-corporate income.

There are other forms of taxation levied on any overseas income received in Singapore. ‘‘Exemptions on Foreign Sourced Income” is an official guideline by the Singapore Income Tax Act, which deals with such sources of revenue. Some examples of exemptions include income from foreign-based dividend payments, branch profits, etc.

What Happens if a Company Loses Money?

As per the provisions prescribed in the Singaporean Income Tax Act, companies are allowed to deduct permissible costs from the money meant for taxation. This loss cumulates until a company record statutory income. The authorities allow companies to use taxable revenue only if there are no considerable changes in ownership or other important commercial activities.

What are the major Tax Incentives for Companies?

Singapore offers lucrative tax incentives for startup companies. A tax incentive scheme for startups was launched in 2005 (“SUTE”). The new companies have to meet these criteria for their first three years – consecutive YAs depending on where the YA falls to avail exemption under SUTE:

  • The company’s total share capital is beneficially held directly by no more than 20 shareholders throughout the basis period for that YA where:
  1. All of the shareholders are individuals; or
  2. At least one shareholder is an individual holding at least 10% of the issued ordinary shares of the company
  • Property and investment holding companies are not eligible for SUTE


YA 2020 Onwards

New companies that qualify are given a 75% tax exemption on the first S$100,000 of taxable income and an additional 50% exemption on the next S$100,000 of taxable income.

Partial tax exemption (PTE) scheme for companies

All companies qualify for PTE unless the company already claims under the tax exemption scheme for new startups. Under PTE, companies enjoy the following exemptions.

YA 2020 Onwards

  • 75% tax exemption on the first $10,000 of normal chargeable income and
  • A 50% tax exemption on the next $190,000 of normal chargeable income

If you are looking to know more about taxes and business in Singapore, you can hire the services of professionals.

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Singapore and Germany Collaborate to Boost Digital Transformation of Businesses
  • Newsletter, Singapore

Singapore and Germany Collaborate to Boost Digital Transformation of Businesses

Singapore is one of the leading nations in the World Digital Competitiveness Ranking in 2020 only being second to the USA. Even in 2019, it remained the second most digitally competitive country in the world. This international ranking is based on the ability of any nation to use digital technologies for promoting economic transformation in business, government and other social domains. There is a sizable increase in Foreign Direct Investment in South- East Asia with Singapore attracting the highest investment.

“The Post-Covid world will be characterised by a K-shaped recovery, with two types of economies: those that will recover quickly and those that will recover more slowly,” says Professor Arturo Bris, Director of the IMD World Competitiveness Centre. As per him,”

Recovery is driven by many factors, such as the health of public finances. But also, fundamentally, by the digital competitiveness of those economies”

Germany, on the other hand, has been the biggest contributor to technology and science over centuries; be it in physics, chemistry, cars and consumer products and given birth to most of the Nobel Laureates in Science in the world. Many EU funded projects are controlled and coordinated by German companies and research institutes today and highlight its science and technology innovation in diverse fields including Information and Communication Technologies.

Several initiatives recently announced by Singapore and German authorities will now provide multiple opportunities to the companies from both countries to work together and spearhead their digital transformation of various business processes.

A Memorandum of Understanding (MOU) jointly signed by Enterprise Singapore (ESG) and the Asia Pacific Committee of German Business (APA) on 15th of October, 2020 announced a series of initiatives to be undertaken jointly to support enterprise development through a transformation in sectors of common interest for the two countries.

The joint initiatives are launched to strengthen business ties and exchange technological know-how between Singapore and Germany. The Germany Singapore Business Forum (GSBF) organized twice over the last four years has also been a part of the initiatives. GSBF helped influence Singapore companies to take interest and explore potential business opportunities in Germany.

As part of agreements, ESG and APA will support enterprise development through industrial and digital transformation in sectors of mutual interest including advanced manufacturing, digitalization and innovation, medical technology and healthcare, and future of mobility.

The enterprise development will be realized through increased collaboration in open innovation and by jointly accessing market opportunities in Southeast Asia and Europe.

Under the MOU, a refreshed version of GSBF newly named as GSBF Connect will be jointly organized by ESG and APA to facilitate sector-specific and more frequent collaborations between the two countries.

GSBF Connect will now be sector-specific and will be held throughout the year with the first edition dedicated to the manufacturing sector and planned to run virtually. The second edition is scheduled to take place in December during the Singapore week of innovation and technology.

More than 400 companies from both countries have used this forum over the last four years. The Germany Business missions also increased from 13 to 22 between 2018 and 2019. Over 150 companies have been benefited in 2019 from different sectors such as advanced manufacturing, medical technology and healthcare, the future of mobility and e-sports.

Peter Ong, Chairman of ESG addressed, ” In this changing business environment, our enterprises need to connect with one another in more and better ways. Germany and Singapore are trusted partners who place a high emphasis on delivering quality and innovative products and services.”

“Singapore is attractive to German companies in several ways as a long term partner with whom new technologies and innovative business models can be developed, but also as an experienced bridge builder into the emerging Asian region.”, highlighted Professor Axel Stepken, co-chairman of GSBF connect and TUV SUD AG management board chairman.

Prof Stepken also said,” Singapore has a strong record as a leading Research and Development Hub and digital trendsetter, while German companies are known for their ability to manufacture state-of-the-art machinery and products. I still see many fields and sectors in which we can bring our specific strengths together.”

Singapore and Germany collaboration also include SME funding programme facilitating Partnerships e.g. Singapore firm Move on Technologies and German company Vanguard Automation.

A new four-way partnership was agreed on October 14th between Singapore Polytechnic, German testing, inspection and certification company TUV SUD, Delta Electronics and Singapore’s Smart Transformation Alliance (STA).

Partnering with Germany will inevitably lead to lower integration cost and fewer challenges in the deployment of more advanced automation systems for the Singapore’s local companies embracing industry 4 solutions and more number of foreign companies are expected to pour in for Singapore company incorporation.

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The Ultimate Guide to Setting up a Business in Singapore from India
  • Article, Singapore

The Ultimate Guide to Setting up a Business in Singapore from India

Planning to expand your business or register a company in Singapore? Well, you’re in the right place. Every year, Indians open over three thousand companies in Singapore. This is because Singapore is one of the most ideal regions in the world to start and run business operations. The tax rates imposed in the country are relatively very low – to both foreigners and locals. Any foreigner is eligible to own 100% of a Singapore company. Additionally, the quality of life is also very high. The World Bank has named Singapore the easiest place to open a new business.

Over the past ten years or so, it has become quite common for Indian entrepreneurs to register a company in Singapore. While India is a popular industrial hub, many businesspeople look to expand their commercial empires beyond their native borders. Singapore’s business environment is very welcoming even for small enterprise owners who are looking to expand internationally. Thanks to the Singapore government’s business-friendly corporate tax policies, , tax exemptions on foreign-sourced incomes, liberal foreign direct investment policies and first-world infrastructure, more and more India companies are making Singapore their incorporation destination. Let us dive deep and learn about Singapore company incorporation.

The process of setting up a company in Singapore

The process of registering a company in Singapore is fairly simple and streamlined. Opting for professional incorporation service provider can help you speed up the company formation process.

You can register a company in Singapore through Bizfile, a system that was set up by the Accounting and Corporate Regulatory Authority (ACRA). The key elements involved in the registration process include:

  • Company name
  • Names of the Directors and Corporate Secretary
  • Share structure
  • Registered address
  • Company’s Constitution (M&AA)

A Corporate secretary is someone who is qualified to act as a company secretary and is responsible for lodging and filing all the necessary documents required by law.  Your company can have as many directors as you wish, but at least one of them has to be local. The application along with supporting documents can be uploaded via Bizfile.  And the company formation application can be completed in a few hours only.  After the new firm’s directors, shareholders and the company secretary provide their consent online, the application for company registration is processed in a few days.  Please note that the online should be submitted done within 4 months from the name approval date.

Costs involved in company incorporation in Singapore

Paid up capital in Singapore can be as low as just S$1. You can, of course, increase it later if you wish to. The average cost of incorporation generally ranges from S$2,500 to S$6,000, which depends on the business activity/structure of the new company and required services. This amount largely includes govt fees for company registration and the first year of annual management services (Local Nominee Director, Virtual Office Address in Singapore and Company Secretary).

The most important or the biggest part of the process is the nominee director service. It costs varies from S$1500 – S$3,000 which is based on complexity of business activity of proposed new company. Additionally, many corporate service providers require you to pay a security deposit of an additional S$2,000. This deposit money is utilized as indemnity for the nominee. You are eligible to get it back when his/her contract expires or when you terminate the local nominee director service. On the other hand, a cheaper option would be to hire someone you already know to be the resident in Singapore (Singaporean/Singapore permanent resident) director of your company.

The annual retainer fee for business management (corporate secretary, nominee director, annual returns filing, local address) will cost between S$2,600 to S$5,000. If you relocate to Singapore, you will also save the nominee director service costs. However, you will have to pay for an Employment Pass (S$1200-S$1,500) and/or Dependent Passes (S$600-S$800).

Furthermore, businesses associated with certain sectors like tourism or alcohol must pay the extra cost of licenses, which could range from S$50 to S$500. These costs vary depending on your choice of industry. Other monthly expenses could include renting an office space (about S$800), hiring employees. You will have to approximately spend S$4,000 to hire a software engineer or about S$1,700 to hire a security guard.

Commercial tax concessions in Singapore

Singapore runs a very aggressive commercial campaign in a bid to attract foreign entrepreneurs. The country offers multiple tax concessions to make the process of a new Singapore company registration easy and worth their time. Various Indian firms have greatly benefited from these tax concession schemes after moving their business headquarters to Singapore.

Some of the notable schemes are Global Trade Program (GTP), the International Headquarters Award (IHA) and the Regional Headquarters Award (RHQ). Under the RHQ scheme, business owners receive a concessionary tax rate of 15% on their income from a set of qualifying activities for three years. They can further enjoy these concession benefits for another two years if they can meet the preset conditions.

The qualified participants under the IHA scheme receive an even lower tax rates of either 10% or 5%. Nevertheless, they must exceed the criteria listed for the RHA by a large margin in order to qualify. Under the GTP scheme, the state offers incentives to entrepreneurs who prefer Singapore as their regional base. They get to enjoy a tax concession of 10% or 5% on the qualifying income.

Business VISA in Singapore

If you are a foreign entrepreneur who is planning to relocate to Singapore to run your business operations, then you must obtain an Employment Pass or a relocation visa of type EntrePass (Entrepreneur Pass). These two types of visas do no fall under any quota system. Authorities review and approve each application based on its own merits. After your relocation visa is approved, your spouse and children can also relocate to Singapore with you on Dependent Passes. In due time, you will be eligible to apply for permanent residence in Singapore.

Benefits of running a business in Singapore

  1. Ease of starting a business and managing it: On multiple occasions, Singapore has been ranked highly in international business reports and surveys. It was recently named the city with the highest ease of doing business. It is also known for its highest quality of life and most competitive economy.
  2. Ideal location: Singapore’s strategic location makes the country the perfect hub to gain access to other South East Asian markets that are otherwise difficult to enter. Markets such as Malaysia, Indonesia, Vietnam and Philippines are difficult to penetrate without a Singapore setup, which helps ease problems like language constraints and cultural habits of people in these countries.
  3. Skilled force availability: Singapore has abundant skilled workforce available. In addition, you’ll be pleased to know that INSEAD has ranked Singapore second on their Global Talent Competitiveness Index.
  4. Low tax rates: Singapore offers one of the most attractive commercial tax rates in the world. At just 17%, it is only half of India’s corporate tax rate. Furthermore, Singapore offers tax exemption for companies that are newly formed. Though start-ups are eligible for numerous tax breaks in India, the total tax amount they end up paying is much greater than what they would have to pay in Singapore.

Commonly asked questions about company incorporation in Singapore

1) Is it necessary to come to Singapore to open a business there?
No, it’s not mandatory. You can start and manage your business from anywhere in the world. You only need to come to Singapore once to open a bank account, however due to Covid, few banks in Singapore are assisting bank account virtually. You can work with a professional entity like IMC for all other corporate services.
2) Can I relocate to Singapore if I start a business there?
Yes. In order to relocate, you will need to obtain a type of visa called Employment Pass, which you can receive within about six months. You will need to pay yourself a salary in order to qualify. The salary must not be less than S$3,600 as that is the threshold for university graduates. Your salary must be between S$6,000 and S$8,000 if you are planning to bring your spouse and/or children under Dependent passes.
3) Is it compulsory to have employees in Singapore?
No, it’s not mandatory. As a foreigner, you can start a business in Singapore from any country and not employ a single person there. However, you need to have a resident director and a corporate secretary in place to take care of annual corporate compliances.
4) I do not have a resident director. What can I do?
In this case, you opt our local nominee director service or appoint someone who is known to you residing in Singapore he/she must be Singaporean citizen or permanent resident. In other words, your company can have two directors – you and the nominee. If you decide to relocate to Singapore, you will only need the nominee service when you apply for your Employment Pass. Once that’s done, you can be the director.
5) Is it possible for a foreigner to own 100% of the shares?

Yes, that’s possible. There are no restrictions on foreign ownership when setting up your business in Singapore.

Delegating corporate services, especially for services in other countries, can save you a lot of time, stress and paperwork. If you have any questions regarding business incorporation or employment visas for Singapore, feel free to reach out to the friendly team at IMC.

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Here is All you Need to Know About ESOP Process in Singapore
  • Article, Singapore

Here is All you Need to Know About ESOP Process in Singapore

An employee stock options plan is an employee benefit scheme to provide them an ownership interest in the corporation. The Company’s board of management administers the ESOP process and lays down specific rules regarding the same.

A part of the total equity amount is set aside to offer this benefit to the key employees of the organization. The offer price is decided by the board of directors in advance and it remains very close to the fair market value.

The structure of ESOP is generally governed by the company’s financial needs, health, and objectives. Different issues have to be accounted for before making the final decision of setting up an ESOP.

Here is a step-by-step guide to set it up for your employees.

Drafting the rules

These rules set forth the terms that apply to all options granted under the plan, including the granting options process, when and how employees can exercise their options, and what happens to the options on an exit event, or if an employee leaves the organization.

An efficiently drafted ESOP Agreement helps in structuring the ESOP by creating an Employee Stock Option Pool (ESOP Pool) that helps in placing an equity shareholding percentage on the side for employees.

Hence, employees can participate in the company shares because of this pool. Further, an ESOP Agreement will clarify the details of members of an ESOP committee. The ESOP committee is a committee that comprises the company’s directors and other officers.

The responsibility of managing the ESOP Pool lies with the ESOP committee and it recommends suitable actions to the Board of Directors of the company.

Approval of rules and the ESOP pool

Once your set ESOP rules are completely satisfactory, your directors and shareholders can sign the corporate approval documents for adopting the ESOP rules and successfully setting up the option pool.

For Singapore companies, these resolutions will be practically handled by your corporate secretary. If your company is not Singapore based, you should be confirming this step with a local law firm.

Board and Shareholder Approval

Your corporate secretary will prepare a set of directors’ resolutions in writing for your company’s directors to sign and a similar set of written shareholders’ resolutions for your existing shareholders to sign. The following points should be included in the resolutions:
  • ESOP rules approval
  • The total number of ESOP pool options.
  • Authorization for the board on granting options to recipients
  • Authorization for issuing shares on any exercise of such options

Shareholder waivers and consents

The company’s constitution and your shareholders’ agreement may include precautionary rights on the issue of new shares.

If this is the case then those shareholders having the precautionary rights will have to sign a waiver in respect of any options granted under the ESOP. If required, you should ask your corporate secretary for preparing this shareholders’ waiver also.

Finally, your existing constitution and shareholders’ agreement should also be checked for specific consents required from any shareholder for issuing shares, grant options, or establishing an ESOP. For instance, if you have gone through external funding round, your investor might have a veto right over the issue of any new options. If that is the case then you will need that party’s written consent for granting options and issuing shares under the ESOP.

Granting your options

Here’s what you need to do for granting options to the selected recipients.
  • Prepare your directors’ resolutions
    Every time you feel like granting options, you should ask your corporate secretary for preparing a new set of directors’ resolutions in writing, approving the grant of options to a specific or a list of recipients.

  • Send grant letter to each recipient
    Send each recipient:
  1. A completed & signed grant letter including the number of options granted, the exercise price along with the vesting schedule.
  2. An attached copy of the ESOP rules.
    If the recipient is willing to accept the offer then they should counter-sign the letter of grant and send it back to you.

  • Issuing the option certificate
    After receiving the countersigned letter, you are allowed to issue them their option certificate.

  • Updating your options register
    Internally, you should also maintain an options register, containing the record of all the options the company has granted, the vesting schedules, expiry dates, and the respective exercise dates.

The Process of Checking a Registered Company in Singapore READ MORE


Important Factors to be considered while implementing ESOPs

 
Despite numerous advantages, many critical factors should be considered while implementing ESOP in any organization.
 

Complicated Process

Initially setting up an ESOP is a flexible process but is also very complex. Some many rules and regulations are to be followed in every aspect and considering many different scenarios are extremely crucial. The process of setting up an ESOP is quite costly and should necessarily involve a practicing lawyer.
 

Deciding the Equity percentage

No rule tells how big your ESOP Pool should be. However, experts recommend that companies should set a limit on the amount of equity they are willing to share with their employees. This task can be time-consuming as various trends are to be studied in the process.
 

What happens when an employee exits the organization after the shares are vested?

The ESOP agreement should contain a transparent provision for the happenings when any employee who holds an ESOP decides to leave the company. Generally, an outgoing employee takes back all his unvested options but retains the vested options until a specified period.

Conclusion

Setting up an ESOP is not a very difficult task once you have a set of ESOP rules that are satisfying for you. In most cases, your company secretaries are efficient enough to be able to prepare all the necessary resolutions quite efficiently. You just need to finalize on what is best for your employee’s interest and how you can safeguard this interest in the long-run. Any foolish decision of even a small scale can lead you towards a dangerous future.

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Singapore is instrumental in attracting the highest Fintech Investment amongst all Asian countries
  • Newsletter, Singapore

Singapore is instrumental in attracting the highest Fintech Investment amongst all Asian countries

Singapore, a tiny nation and the city-state in Southeast Asia, has become one of the world’s most promising economies today. The economic policies and structures implemented during the middle of the 20th century have started delivering results in the 21st century. A nation almost without any natural resources and ranked 171st in area wise global ranking, Singapore is considered as the most attractive place for work and business with a high standard of living.

The Singapore economy is mainly dependent on manufacturing industries and the export of electronic products. However, financial technology and tourism space are also fast progressing and attracting lots of foreign investments.

Singapore is the economic center in the Asia Pacific region and is ranked as one of the leading nations in economic freedom. It is also recognized as the second most investor-friendly state by the World Bank. Company formation in Singapore is easy and free of bureaucratic hassles.

Factors responsible for the highest growth and investment in Singapore’s Fintech Industry are as follows.

Low Taxes

Singapore has very low tax rates and offers several tax incentives and tax exemptions to the investors. It also follows a forward-looking diplomatic foreign policy and has entered into a  Double Taxation Treaty with more than 90 countries, further offering tax reliefs on foreign income sources. It is one of the primary reasons that fintech investors are attracted to Singapore as a tax haven.

Large Mobile Base

Digitalization is the future and has become more so post coronavirus pandemic. Singapore has a huge mobile base, with more than 82% of the population as mobile subscribers. As most fintech businesses are heavily dependent on mobile phones, a large mobile subscriber base helps attract more fintech investments in Singapore.

Success Stories of Local Startups

Successful local startups are also inspiring potential fintech investors to come and establish companies in Singapore. In addition to providing e-transactions platforms to their consumers,  local startups offer solutions for lowering the cost of money transfers, digitalization of documents, and cryptocurrency transactions, including digital money-raising platforms. Many more fintech startups are looking for their Singapore company incorporation.

Networking Platforms

Singapore is a great place for networking, and good networking is the essence of innovation and growth of the fintech industry business.  Singapore Fintech Festival is a venue where participants from all over the world come and share their experiences and innovative ideas related to financial technology and business. The recent Fintech Festival attracted more than 40,000 participants from over 100 countries who used it as their deal-making platform for future fintech businesses and investments.


Accessibility to testing and implementation

Singapore, the financial hub in Southeast Asia, is surrounded by countries that are not as developed as Singapore. These surrounding developing countries often serve as a testing and implementation grounds for Singapore in innovative financial solutions. The neighboring countries indirectly help Singapore in developing new technologies related to financial services or fintech industries.

High standard of living

Singapore is a rich nation with an average per capita GDP of $ 64,000. Most of its residents are well off and educated. It is thus imperative that an economy with so much money available in the system and aided by high technology and digitalization can propel the fintech business.

B2B business climate

B2B transactions involve two companies rather than a company and an individual. The B2B sector is highly developed in Singapore that handles corporate to corporate transactions. Compared to B2C, B2B transactions are more complex and involve more paperwork, e.g., digital signature. Lots of new fintech startups are offering B2B transactions and choosing Singapore as the most logical destination.

Government Policies and Support

Fintech is one of the smart strategies of the Singapore Government. Sector-specific strategies are being incorporated in Singapore to boost sectoral fintech businesses and investments. “Fintech Fast Track Initiative ” and ” Smart Financial Center ” are part of this wider strategy of propelling sector-specific fintech business. Singapore Fintech Association, a non- profit platform facilitating fintech collaboration, and Singapore Fintech Festival, a widely recognized event, is also the Singapore government’s brainchild. With so much government support complemented by simple and transparent government business policies, Singapore is rapidly climbing up the global fintech investments.

Key Takeaways

Singapore, known as the Financial capital of Southeast Asia, has developed high technological capabilities; strong, simple, and investor-friendly regulatory framework and, highly skilled and educated workforce. These three attributes are mainly responsible for fintech business growth in Singapore, providing innovative solutions to both consumers and financial services industries.

Many reports and rankings worldwide showcase Singapore as a nation with the highest potential for growth in the fintech sector. Singapore ranked 6th in the latest Global Financial Centres Index and rapidly advancing forward to catch up with the UK and USA.

A finer balance and closer alignment between innovation and regulation will surely take Singapore’s fintech business to the next level.

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Here is The Process to apply for Permanent Residency (PR) in Singapore
  • Article, Singapore

Here is The Process to apply for Permanent Residency (PR) in Singapore

Getting a PR in Singapore will fetch you almost all the same benefits as an originated Singapore citizen. The only key differentiator would be you’ll not be getting any voting rights. To look for corporate or professional penetration in Singapore, you need to have a Permanent Residency pass. Getting a PR will also help you with Singapore Company Incorporation. In other words, if you are looking forward to professional penetration in Singapore, getting a permanent residency will solve all the problems of yours and will ease up the process.

The process to apply for a PR in Singapore is quite complex and involves a lot of steps. Let’s understand each one of them in brief – 

1. Decide when to apply for PR

 The very first question that pops up is when to apply for a PR in Singapore. Generally one can apply for the PR from the day he or she starts working in that country on an employment pass. However, one of the basic requirements that need to be met before applying for a PR is to have pay slips from a Singaporean Employer for 6 consecutive months. So it eventually means that one should have to wait for six months from the date he or she has started working in a Singaporean company. 


2. Calculate your chances of approval 

Apart from the type of employment pass, you are holding, and the duration of your employment in Singapore, many other factors need to be kept in mind while thinking about the approval of your PR application. 

They are as follows:

  • The academic background has a role to play here. The academic degree you hold and from which university or board it is accredited with is considered. 
  • Your physical presence in Singapore. The chances of getting a PR application approved are directly proportionate to the duration of your presence in Singapore. 
  • The stability of your employment and a job profile is also taken into consideration for calculating your chances of getting a PR in Singapore. 
  • Your financial soundness and salary also play an important role. 
  • Your background will also be checked.

 

3. Reviewing the requirement for the application

 Once you meet all the basic eligibility criteria, you are all set to fill in the application form and proceed with the future course of action. You can download the PR application form very conveniently. You need to download two forms, one is form 4A and the other one is accompanying notes to form 4A. Form 4A comprises of two parts, the first one is the PR application form and the other one is Annexe A. the first one is to be completed by you while Annexe A is to be filled by your employer. The second document contains explanatory notes. The whole applications along with supporting documents can be now submitted online through ICA portal via Sing Pass.

 

4. File Supporting Documents 

The most crucial step in filling an application to get the Permanent Residency of Singapore includes properly filling the supporting documents. In case if you commit even the slightest of the error, your application will be rejected then and there. The list of supporting documents is mentioned in the explanatory document which was downloaded in the fourth step. Let’s lookout for some important guidelines that you need to take into account before filing the documents – 

  • At the time of submitting the PR application online, you will need to upload the scanned copies of the original documents. 
  • In case if you have any official document that is in your native language, you need to get it officially translated into English. 
  • Having any previous experience or recommendation letters are useful. You can even contact your previous employers for any sort of help. 
  • If you owe any property in Singapore, attaching the documents that state the same will work as a cherry on the cake. 
  • Attaching a most recent copy of your resume is useful
  • Preparing a cover-letter beforehand that articulates your entire journey with Singapore will work for you to get the brownie points.

 

Documents needed to file your PR application 
  • Employment Proof.
  • Letter of recommendations.
  • Education Proof – Degree, Diplomas, and certificates from your high school or universities.
  • Proof of your income – salary sleep, your bank passbooks.
  • Your most recent CV.
  • If you have any property in Singapore- Documents supporting your ownership.
  • Documents of your spouse or children.

 

How Long Does it Take?

The entire process of applying for a PR in Singapore will take around 4-6 months, officially. However, the capacity of the Singaporean government to grant PR per annum comes to 30,000 applications. So the actual weight before getting a PR is undescribed. 


What is the cost involved in applying to get a Permanent Residency Pass?

The cost involved in the procedure of filing a PR application is $100 which is non-refundable for each application. In case your application gets approved, you have to pay a sum of $120 which includes the fees of your entry permit, 5 years of re-entry, and an identity card issue. 

There are various types of PR schemes for varied classes of individuals. Let’s consider each one of them in brief along with the requirements they have to fulfill.

1. Singapore PR Scheme for Individual Employees

This is the most legit way of getting a PR in Singapore because a lot many skilled workers come to the land to work for the country and directly contribute towards the economical growth. The first step in initiating a PR application process is to relocate to Singapore either with an employment pass or entrepreneurial pass, or a personalized employment pass. After you relocate to Singapore and stay in the country for a minimum of 6 months, you can apply for a PR. 

2.   Singapore PR Schemes for Investors 

One can also apply for a PR through investing in the Global Investor Programme. You can take the benefits of this in two different ways either you or your immediate family members can plan for company formation in Singapore or invest in an established business in the country. 

3. Singapore PR Schemes for Artistic Talent 

If you are blessed with an artistic eye and are inclined toward curating new art in the form of paintings, music, literature, photography, dance, or a film, then the value of your talent will be appreciated in the Singaporean geographies. The scope of new and modern art has increased rapidly over the year in Singapore. The citizens and the government value the individual talent from other geographies that have that hunger to create something new and something different. Individuals who have a concrete plan to involve and grow Singaporean art and culture with a track record of local engagements to showcase on a global platform are more than welcomed and offered a PR.

After having an insight into the brief procedure of applying for a Singaporean PR, there are a few basic things that need to be catered from the legal and political point of view. These include anyone with a minimum 21 years of age, at least before two to six years from the date of applying for a PR, is even eligible to make the application. The government of Singapore welcomes the arrival of people with “want to create something big and out of the box” to contribute towards the overall growth of the country.

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