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Ivan Woods
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Ivan leads Stepping Stone's Singapore office and brings over 20 years of experience across Europe, the Middle East and Asia. He qualified as a Chartered Accountant with PwC in London and has since lived and worked in Tokyo, Hong Kong, Dubai and Singapore, including in senior roles with the World Bank and HSBC and with regional investors and financial institutions.

Stepping Stone was founded in Singapore specifically to focus on foreign-invested SMEs and startups to help them start their business, scale it up and expand into new markets.

With offices across Asia and beyond, Stepping Stone's senior staff bring international backgrounds as CFOs with multinationals, SMEs and startups, and as specialists in areas such as tax and corporate finance.

From company incorporation to employment passes, business analysis to strategy implementation, government grants to VC funding, Stepping Stone is your financial business partner in Singapore.

Stepping Stone

August 22, 2017

Establishing and Growing Your Business in Singapore

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For many businesses entering Asia, Singapore is the preferred location to set up and use as their springboard for the region. The choice was for many years between here and Hong Kong, but unless there are very specific reasons otherwise, Singapore is now the place to be.

For those already here, it’s also the perfect place to kick off your brilliant hopefully-next- unicorn.
Establishing a company is quick and cheap, and government support is well-known: from tax breaks to grants and co-investment (although they don’t just hand out golden eggs as is sometimes
believed).

I say this even as a proud ten-year Hong Kong resident until 2009. There’s always healthy
competition between the two Asian world cities, and until the mid-2000s Hong Kong always thought
it was ahead: the proximity to China, the culture and lifestyle, the financial hub, the pool of talent…
We felt pretty complacent, but the pendulum has clearly swung south.

So Why Singapore?

Start with these:

  • We’re right next door to almost all of Asia’s fastest-growing markets (and if you’re doing business in China you often need to set up in the PRC itself anyway)
  • The lifestyle is unmatched in the region, particularly for families, with Singapore’s famed safety, clean air, great schools, and spectacular food
  • The government is doing everything it can to encourage business and entrepreneurship
  • It’s one of the least-corrupt, transparent and business-friendly countries on the planet
  • If you get bored of the (admittedly occasionally oppressive) climate, some of world’s best holiday destinations are a couple of hours’ flight away…

Overall Singapore’s financial, investment and legal framework – particularly for new businesses – is increasingly overtaking its peers. (You’ll know this if you’ve tried to open a new bank account in Hong Kong in recent years: it’s virtually impossible, even for well-established companies entering the territory.)

With all this Singapore has topped the classic global ‘ease of doing business’ rankings for 15 straight years, while Hong Kong slips slowly down. (It was actually pipped to the post by New Zealand in 2017 – but with respect to my Kiwi colleagues, it’s a stretch to run your Asian operations from there).

Getting Started

You can incorporate your company and be operational within less than 24 hours of asking, with (relatively) minimal paperwork. You don’t have to be in Singapore to do this, and it can be a sole personal or corporate shareholder; there’s no need for a local shareholder.

Companies can have just one director, though you must have a local resident director. If you don’t at first have anyone based here, this can with some restrictions be a nominee. You also need a resident company secretary.

Generally you do have to be here to open a bank account, unless you’re prepared to maintain a very
large balance! Local banks have a habit of changing account-opening requirements without notice,
so you have to be well-prepared, but a single appointment should be enough and they are typically
cheaper and more convenient for local payroll and payments/receipts.

The major local banks’ service and online banking platforms are generally very good and if you use the great Xero accounting system as many SMEs do, they provide direct ‘feeds’ into the platform so you can get real-time cashflow oversight and management from your tablet or smartphone.

 

Employment Passes and Visas

The application process to obtain EPs is simple – be warned, however, there’s no guarantee of
success and the government is being increasingly stringent on new passes, and even to renew
existing ones.

You should put together your case well, including full ‘CVs’ and reason for hiring non-local staff, and
be prepared for potential rejections and appeals processes. We’ve also found it makes a difference
to have a business address, rather than use a residential address.

Once you have yours, your family can follow automatically, although spouses don’t have an automatic right to work and will have to apply for their own EP or Letter of Consent.

There is also the EntrePass, a visa specifically to encourage entrepreneurs to set up here. This has recently been enhanced to “create a more conducive environment for global talent keen to establish innovative businesses here” (quoting the Trade & Industry Minister). That comment gives an idea of the government’s outlook – and here it’s not just political hot air, they really mean it.


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Tax

Have you heard that Singapore has an attractive tax base? (If not, you likely shouldn’t be reading this).

Corporate tax is based on a flat rate of 17% – not bad in itself, but then the government gives additional tax breaks on this, particularly for new companies:

  • For three years after incorporation, companies with at least one personal 10% shareholder pay no tax on their first S$100k in annual profits
  • Then only 50% of the next S$200k is taxed
  • The maximum tax rate is therefore less than 6% on your first S$300k of annual profits in the first three years

For any new company this is pretty remarkable, but for startups it likely means that you’re virtually tax-free in your critical first years. It’s also a ‘single tier’ tax system: you’re taxed only at corporate level, with no tax on dividends or capital gains.

Finally GST registration is required only when you hit S$1m in annual revenues – though you can voluntarily register if you’d have benefits in reclaiming GST.

Compliance

Again, this is about as straightforward as it can be. You file your annual tax and financial returns, and then… you’re done. An audit is required only for larger companies (to be precise, when you hit two of these: annual revenue over S$10m; total assets over S$10m; or more than 50 employees).

Local Funding and Partnerships

Australia’s Foreign Affairs Minister commented here recently at the launch of a startup incubator
that “Singapore is a gateway into Asia… speaking to a number of Australians here has certainly
reinforced that Singapore is a great place for collaboration and for attracting capital.”

Several new initiatives are underway. The ‘Committee for the Future Economy’ now brings together
ministers with local and expat businesspeople (from MNCs to entrepreneurs) and consultants, to
identify opportunities and challenges and to come up with ways Singapore can improve local/foreign
tie-ups, with the city’s world-leading universities helping to create research and entrepreneurship
hubs.

A range of government grants are available through SPRING and related bodies: I had a client
recently complain that it was almost too complicated to apply, because there are so many schemes.
(Now there’s a first-world problem.)

On private investment, the government recently announced that it’s considering loosening
regulations to encourage VC firms further to open up startup financing. Singapore is already firmly
established as the venture funding centre of Asia, with a record S$4.5bn invested in 2016.

Welcome to Singapore!

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ABOUT THE AUTHOR

Stepping Stone was founded in Singapore to help foreign-invested SMEs and startup businesses get established, up and running, and headed in the right direction.

With outsourced accounting, compliance and corporate services, CFO & COO partnering and fundraising advice, Stepping Stone can free up your time, let you benefit from today’s great services technology and add value as you grow… while avoiding the need to hire people you can’t afford, and who need office space and management time.

Ivan Woods leads Stepping Stone's Singapore office and heads up the Investment business, advising growth companies on capital raising and partnerships. Visit his author bio page to find out more about Ivan and connect with his social profiles.

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