F.A.Q

A business firm is either a sole-proprietorship or a partnership. Individuals and companies, being “legal persons”, may set up and own a business firm. However, a business firm, not being a legal entity, cannot register another business firm. A foreign company also cannot register a business firm unless it has registered itself under the Companies Act. A business can be run by one person (a sole-proprietorship) or by two or more people together (a partnership).

A sole-proprietorship is a business owned by one person or one company. There are no partners. The sole-proprietor has absolute say in the running of the business. 

Under the Singapore Business Registration Act, Cap. 32, “business” includes every form of trade, commerce, craftsmanship, calling, profession and any activity carried on for the purposes of gain but does not include any office, employment or occupation, or any of the businesses specified in the First Schedule (List of exempted entities / individuals). 

A sole-proprietorship is not distinct and separate from the people who run it. A sole-proprietorship has unlimited liability and the sole-proprietor is responsible for the debts and liabilities incurred by the sole-proprietorship. 

If you own a sole-proprietorship, you are personally responsible for the debts and liabilities and your personal assets can be taken by creditors towards payment of these debts.

A partnership is a business firm formed by two to twenty partners. Once there are more than twenty partners, the partnership must be registered as a company under the Singapore Companies Act, Cap. 50. 

Under the Business Registration Act, Cap. 32, “business” includes every form of trade, commerce, craftsmanship, calling, profession and any activity carried on for the purposes of gain but does not include any office, employment or occupation, or any of the businesses specified in the First Schedule (List of exempted entities / individuals). 

Generally, all partners have equal rights in the management of the partnership. To avoid possible disputes, it is preferable that a partnership agreement is drawn up. 

A partnership is not distinct and separate from the people who run it. A partnership has unlimited liability and the partner is responsible for the debts and liabilities incurred by the partnership. 

If you are part of a partnership, you are personally responsible for the debts and liabilities and your personal assets can be taken by creditors towards payment of these debts.

A company is a business entity registered under the Companies Act, Chapter 50. It has a legal personality i.e. it has rights to own properties, has perpetual succession and can sue or be sued in its own name. 
It usually has the words ‘Pte Ltd’ or ‘Ltd’ as part of its name. 
A company has limited liability and the shareholders may not be held responsible for the debts and liabilities incurred by the company.

A foreign company is one that is incorporated outside Singapore. It has to register a branch in Singapore under the Companies Act before it can commence business here. 

The Companies Act requires a foreign company to appoint two local agents from Singapore to act on behalf of the company. The agents must be “ordinarily resident” (the usual place of stay of a person) in Singapore. 

For ACRA’s purposes, if a person can provide a local residential address and prove that he is staying in Singapore on a long-term arrangement (i.e. legally remain in Singapore for a long period), Accounting and Corporate Regulatory Authority (ACRA) may accept that he is an ordinarily resident here.

A foreigner, who would like to set up his own company and be present in Singapore to actively manage its operations, should apply for an Entrepreneur Pass (Entre Pass) from the Ministry of Manpower (MOM). 

(*Any person above the age of 18 years old with effect from 1 March 2009 can be a director of a Company) 

What about a foreigner who is to be employed as an employee e.g. a salaried director ? 

Any foreigner who wishes to work in Singapore as an employee would have to apply for an appropriate work pass e.g. an Employment Pass from the Ministry of Manpower (MOM). 

Can the Company commence business upon successful registration with ACRA ? 

The Company may commence business once it has been registered with ACRA. This is on condition that the Company does not require any license/approvals from other government agencies in order to carry out the business activities. 

Can a foreigner incorporate a company without applying for an EntrePass ? 

If the foreigner wishes to incorporate the company with no intention to stay on in Singapore to manage its operations, then he can do so without having to apply for an Entrepreneur Pass (EntrePass). However he will need to have at least 1 locally resident director at the point of incorporation. 

Can a foreigner incorporate a company first and then apply for an EntrePass with MOM ?

A foreigner is required to submit his EntrePass application with MOM. Upon approval of his EntrePass application, he may then proceed to incorporate the company with ACRA. He may also apply for an EntrePass if he owns a company registered with ACRA for not more than 6 months at the point of his EntrePass application. This is subject to MOM’s assessment and approval.

A business (sole-proprietorship/partnership) is not distinct and separate from the people who run it. A business (sole-proprietorship/partnership) has unlimited liability and the sole-proprietor/partner is responsible for the debts and liabilities incurred by the sole-proprietorship/partnership. 

If you own a business or are part of a partnership, you are personally responsible for the debts and liabilities and your personal assets can be taken by creditors towards payment of these debts. 

A company has limited liability and the shareholders may not be held responsible for the debts and liabilities incurred by the company.

A company must have at least one director who is an “ordinarily resident” in Singapore i.e. a Singapore Citizen, a Singapore Permanent Resident, a person who has been issued an Employment Pass / Entrepreneur Pass (EntrePass). 

With effect from 1 March 2009, any person aged 18 years and above may be appointed as a director. However, certain individuals (e.g. bankrupts and persons convicted of offences involving fraud or dishonesty) are disqualified from holding director positions. 

A foreigner who wishes to act as a local director of a company can apply for an Employment Pass / Entrepreneur Pass.

A company shall appoint an auditor within 3 months from the date of its incorporation, unless it is exempted from audit requirements under Section 205B, or 205C, of the Companies Act. 

A Singapore Private Limited company is exempted from audit, only if :
(a) Turnover is less than S$5 million.
(b) There are no corporate shareholders
(c) Number of shareholders is less than 20 persons
(d) Company must be a private limited company
(e) All shareholders agree to audit exemption.

Every company must appoint a secretary within 6 months of the date of its incorporation. The company secretary must be residing locally in Singapore. He/She must not be the sole director of the company. 

The secretary of a public company must comply with section 171(1AA) of the Companies Act i.e. must possess at least one of the following qualifications :
. Been a secretary of a company for at least 3 of the 5 years immediately before his appointment as secretary of the public company. 
. Qualified person under the Legal Profession Act (Cap. 161). 
. Public accountant registered under the Accountants Act (Cap. 2).
. Member of the Institute of Certified Public Accountants of Singapore. 
. Member of the Singapore Association of the Institute of Chartered Secretaries and Administrators. 
. Member of the Association of International Accountants (Singapore Branch). 
. Member of the Institute of Company Accountants, Singapore. 

Duties of a Company Secretary under Singapore Companies Act:

a. To maintain and update the following statutory records of the Company :
. Register of Members
. Register of Directors, Secretaries, Managers and Auditors
. Register of Charges over the Company’s assets
. Register of Directors’ Shareholding
. Minute Books of the proceedings of general and board meetings

c. To prepare board resolutions and minutes of directors’ and shareholdings’ meetings

d. To conduct annual general meeting

e. To prepare annual return and to lodge annual return with the Accounting and Corporate Regulatory Authority (ACRA)

f. To prepare minutes/resolutions and to lodge relevant returns with ACRA, where necessary, in connection with the following :
. Allotment of shares
. Share transfers
. Changes in the officers (directors/secretary/manager) of the Company
. Change in registered office 
. Changes in the Memorandum and Articles of Association
. Opening of bank accounts
. Change of bank signatories

You will have to obtain approval for the company name before you can incorporate a company. An application fee is payable for each approved company name. An approved company name will be reserved for 60 days. After the company name is approved, a registration fee is payable for a company limited by share regardless of the amount of its issued/paid up share capital. 

A company is usually incorporated within 15 minutes after the registration fee is paid. 

However, it may take between 14 days to 2 months if the application needs to be referred to other authorities for approval or review. For example, if the intention of the company is to carry out activities involving the setting up of a private school, the application will be referred to the Ministry of Education.

The Companies Act requires a foreign company to appoint 2 local agents in Singapore to act on behalf of the company. The agents must be ordinarily resident in Singapore i.e. Singapore Citizen, Singapore Permanent Resident or a person who has been issued an Employment Pass. A foreigner who wishes to act as a local agent of a foreign company can apply for an Employment Pass from Ministry of Manpower (MOM). 

You will have to obtain approval for the company name before you can register a foreign company. An application fee is payable for each approved company name. After the name is approved, a registration fee is payable for registration. 

A foreign company is usually incorporated within 15 minutes after the registration fee is paid. 

However, it may take between 14 days to 2 months if the application needs to be referred to other authorities for approval or review. For example, if the intention of the foreign company is to carry out activities involving the setting up of a private school, the application will be referred to the Ministry of Education.

It is a private company : 

. which has not more than 20 shareholders and none of them is a corporation; or 
. that is wholly owned by the Government, which the Minister, in the national interest, declares by notification in the Gazette to be an exempt private company.

. Authorised Share Capital has been abolished in Singapore.
. Issued capital refers to the share capital which has been allotted to the shareholders.
. Paid-up capital refers to the issued capital that is paid up by the shareholders.

A company shall appoint an auditor within 3 months from the date of its incorporation, unless it is exempted from audit requirements under Section 205B, or 205C, of the Companies Act. 

A Singapore Private Limited company is exempted from audit, only if :

. Turnover is less than S$5 million.
. There are no corporate shareholders
. Number of shareholders is less than 20 persons
. Company must be a private limited company
. All shareholders agree to audit exemption.

GST is a tax on the supply of goods and services made in Singapore by a taxable person in the course or furtherance of any business carried on by him; and on the importation of goods into Singapore. 

In general, goods sold or services performed in Singapore are taxable. The only exceptions are financial services or the sale or lease of residential properties which are exempt supplies. 

GST is charged and accounted at a rate of 7% on the value of supply. For instance, if you, a GST registered person, sell a watch in Singapore for $100, you will have to charge a GST of $7 to your customer. The $7 will go to the government as tax. Only a GST registered person can charge GST on the sale of goods or provision of services. For imports, GST is collected by the Customs and Excise Department at the point of importation into Singapore. A GST registered person is able to claim GST incurred from government. 

A person is required to register for GST if his annual taxable supplies had exceeded or is expected to exceed S$1 million.

Under Singapore tax laws, tax is chargeable on the income of any person (including a company) accruing in or derived from Singapore or received in Singapore from outside Singapore. A company means any company incorporated or registered under any law in force in Singapore or elsewhere. 

Generally, all income are taxable in Singapore.

A company is taxed at a flat rate of 17% (corporate tax rate) on its chargeable income (income less deductible expenses).

For Employment Income: 15% or resident rates, whichever gives rise to higher tax. However, short-term employment income (i.e. 60 days or less) is exempt from tax* 
*This rule does not apply if you are a director, public entertainer or exercising a profession in Singapore. 
For Director fees, Consultation fees & all other income: 20%

The Central Provident Fund (CPF) is a comprehensive social security savings plan which has provided many working Singaporeans/Singapore Permanent Residents with a sense of security and confidence in their old age. 

CPF is only applicable to Singaporeans and Singapore Permanent Residents. Work Pass holders (Employment Pass/Entrepreneur Pass holder etc.) are not subject to CPF. 

Depending on the age of the employee, generally, Employer’s CPF contribution rate is 14.5% and Employee’s CPF contribution rate is 20% of his / her total gross salary.