For Malaysian entrepreneurs keen to expand overseas, Singapore happens to be the first choice. Do you know that over 4,000 Malaysians expand their businesses to Singapore ever year? With a favorable tax regime, strategic proximity, robust infrastructure, and a conducive regulatory environment, Singapore is one of the best places to start your business. In this comprehensive guide, we have discussed how to start a business in Singapore for Malaysian entrepreneurs.
Singapore boasts a formidable labor force and global industry experts, significantly contributing to your resources. Any foreigner aged over 18 can launch their business in Singapore, even without physically being present in the country!
As a Malaysian, if you are interested in expanding your venture to Singapore but aren’t sure how to register a foreign company in Singapore, this guide will help you.
An Overview of Singapore as a Global Business Hub
Singapore continues to be the largest trading partner of Malaysia, with Malaysian exports hitting $48.09 billion in 2023. Moreover, Singapore is the home to more than half a million Malaysians.
Malaysia, on the other hand, ranks third in terms of the largest trading partners of Singapore. More than 300,000 Malaysians navigate the Causeway and the Second Link, two of the border crossings to reach Singapore for study and work opportunities.
Here are some facts that will give you an overview of the popularity of Singapore among Malaysian entrepreneurs.
- Singapore continues to be a global business center without political disturbance. It currently hosts around 37,000 international businesses, out of which 700 are MNCs
- Malay is the national language of Singapore, a country known for its multi-lingual society
- A strong commercial infrastructure and transparent regulatory processes in Singapore make it a preferred business destination for Malaysians
- Malaysians need to provide just one local or resident director for Singapore company incorporation
- Foreigners, including Malaysians, can hold 100% shares in Singaporean companies without any official permission. On the other hand, foreigners doing business in Malaysia can own only 30% of shares in their companies. Beyond this limit, they need the approval of the investment committee
- The favorable tax regime in Singapore, with corporate tax rates ranging between 0% and 17% fosters a productive business ecosystem for Malaysians. In Malaysia, the minimum corporate tax rate starts from 18% and can be as high as 25%
- Singapore stands tall among all Asian countries as per the 2021 Corruption Perceptions Index Report with minimal corruption. Scoring 85/100, Singapore stands in the second position globally, along with Norway and Sweden
- Malaysia imposes capital gains tax in certain fields that can be as high as 30%. Singapore, on the other hand, doesn’t require businesses to pay any capital gains tax
- Thanks to the Malaysia-Singapore DTA, Malaysians running their business in Singapore enjoy tax relief and grow their ventures to maximize profits
Why Are Malaysian Entrepreneurs Registering Companies in Singapore?
Before exploring how to start a business in Singapore for Malaysian entrepreneurs, let’s take a look at the conducive business ecosystem in Singapore.
Ease of Doing Business
Seamless Business Registration
Entrepreneurs habitually prioritize the ease of setting up an entity in a foreign country. Foreign companies incorporated in Singapore need just 1 – 3 days to complete the formalities. With just two steps involved, the process is surprisingly easy. On the other hand, setting up a business in Malaysia involves 9 processes, and the process takes around 11 days to be completed.
In Singapore, businesses can register themselves online after fulfilling the requirements. The country hosts hundreds of business parks, easing up the process of finding a suitable office for foreign businesses.
Seamless Access to Financing
Being a startup, you’d prioritize getting access to funds to achieve your maximum potential, particularly while operating in a foreign country. Even seasoned entrepreneurs cannot succeed in hostile business environments and stride toward growth. In Singapore, Malaysian entities enjoy better access to financing.
For companies incorporated in Singapore, the government provides various incentives. Malaysian entrepreneurs can qualify for a grant of up to S$6 million, apart from a tax deduction of a maximum amount of S$10 million. Moreover, businesses receive non-financial incentives for development through training programs in Singapore.
In Malaysia, the lack of financing continues to bother entrepreneurs. The Global Competitiveness Report published by the World Economic Forum places Singapore in the second position out of 138 countries, while Singapore ranks 25th.
Robust Legal Infrastructure
Seamless Access to Emerging Economies
Tax Benefits of Company Formation in Singapore
Double Taxation Agreement (DTA)
Foreign Tax Credit (FTC) Scheme
Other Tax Benefits
- Singapore offers a low corporate income tax rate of 17%, compared to around 25% in Malaysia
- In Singapore, interest income is taxed at 10% in the country of origin, with a similar tax in the recipient country
- Royalties are taxed at 8% and technical fees at 5% based on the provisions of the DTA in Singapore
- Newly incorporated companies in Singapore may qualify for tax exemptions up to 100% on chargeable income for the first three consecutive tax years
- Under Singapore’s Corporate Tax Rebate scheme, a rebate of 50% on tax payable is available for Malaysian companies
- The FTC Pooling System in Singapore, introduced in 2011, reduces tax payable on foreign-sourced income for companies in Singapore on meeting certain conditions
Taxation in Singapore for Businesses and Individuals
- Corporate Tax: For SMEs, corporate tax is progressive, starting at 4.25% on the first S$100,000 of income and rising to 17% beyond S$10,000,000
- GST: Once your turnover exceeds S$1,000,000, you need to register and pay GST at 9%. This rule applies unless you export goods abroad, where the applicable GST is 0%
- Personal Income Tax: Personal income tax in Singapore ranges from 0% to 22% and it is progressive in nature.
Key Requirements to Register a Business in Singapore from Malaysia
- A minimal capital of S$1 (capital can be in USD or SGD)
- At least one stakeholder even 100% foreign shareholding is allowed
- A minimum of one resident or local director
- One Company Secretary at least
- A registered local address
If you wish to serve as the resident director, apply for an EP (employment pass) in Singapore. However, you can also run your business from Malaysia by hiring a resident director in Singapore. As long as your company has one resident director, there’s no restriction on the number of directors for the company. If you aren’t sure how to appoint a resident director, the IMC Group can help you hire a nominee director.
Malaysian entrepreneurs would need the service of the nominee director for 3 to 6 months while they prepare the employment pass. Once you obtain it, you can serve as the director of the company. In the meantime, the nominee director will hold the position of director without having any actual power to make decisions or run the company. On paper, the person would be appointed as an officer to fulfill legal obligations.
How to Start a Business in Singapore for Malaysian Entrepreneurs?
- Getting your company name approved from ACRA (Accounting and Corporate Regulatory Authority)
- Applying for business registration to the ACRA
Company Name Approval
Registering Your Company
The next step involves applying to ACRA to register your Malaysian company in Singapore. At this stage, entities need to pay a fee of S$300 to ACRA and furnish their incorporation documents.
ACRA approves the application at the time of filing the same. In few cases ACRA needs time to review the application only if if it gets referred to higher authorities for some reason, the process can take from 14 days to to 2 months.
Documents Required for Company Formation in Singapore
- The name of your company approved by ACRA
- A brief summary of the operations of the company
- Details of shareholders
- Details of Directors
- Registered address
- Details of the shareholders
- Information about the company’s secretary
- MOA and AOA
List of Expenses to Register a Company in Singapore from Malaysia
| Category | Estimated Range of Costs |
|---|---|
| Incorporation Services | S$2,600 – S$5,000 |
| Nominee Director Service | S$1,800 – S$2,000 (Deposit) |
| Annual Retainer | S$2,500 – S$5,000 |
| Employment Pass (EP) | S$800 – S$1,500 |
| Dependant Passes | S$400 – S$600 |
| Licenses/Permits | S$50 – S$500 |
| Monthly Office Rent | S$550 – S$800 |
FAQs
Is it necessary for me to visit Singapore from Malaysia to run my business?
Can I relocate to Singapore after launching my business?
Is it mandatory to hire employees for my company in Singapore?
What is the GST rate in Singapore?
Are dividends paid to shareholders taxed in Singapore?
Do I have to be a resident or citizen to register a company in Singapore?
Streamline Your Company Registration in Singapore with Professional Help
Planning to start a business in Singapore? While Malaysian entrepreneurs have plenty of perks to benefit from, it’s crucial to be on the right track.
The IMC Group continues to be a trusted partner for Malaysian companies expanding to Singapore. Whether you are a seasoned business owner or just planning to launch a startup in Singapore, having professionals on your side can streamline your company incorporation process.
