For several years, Singapore has emerged as Asia’s business hub with its well-developed infrastructure, open and forward-looking business policies, skilled workforce, English as working language, and political stability. The country is the most competitive Asian country when it comes to trade and investment, making it an ideal place for global businesses to set up their office in Singapore, particularly for those who want to tap into the Asian market.
In a report by KPMG, Singapore beat Hong Kong as the top destination in Asia for multinational corporations (MNCs) to set up their regional headquarters. Approximately 46% are headquartered in Singapore whilst Hong Kong only has 37%. The report also stated that Singapore’s tax relief is a big factor in this big difference.
Reasons for Investing in a Singapore Private Limited Company
Many of the privately incorporated businesses based in Singapore are private limited companies, a limited liability company where shares are owned by less than 50 people and are not accessible to the general public but shareholders can be individuals or corporate entities. Most prefer to register their business in Singapore as a private limited company because it is flexible.
Why invest in a private limited company in Singapore?
- Limited Liability: Each member’s liability is limited only to the amount of agreed contribution capital so they can choose to invest what they can only afford to lose.
- Separate Legal Entity: a private limited company bears its own legal entity apart from its directors and shareholders. The company can go into debt, acquire assets, enter into an agreement, sue and be sued in its name.
- Raising Capital: In a private limited company, raising capital is easy. By simply bringing in more shareholders, the company can raise capital. Investors are easily attracted to companies where they can separate their personal and business assets. In addition, banks have more confidence in lending money for limited companies.
- High Credibility: Compared with a sole proprietorship or partnership, a private limited company has more credibility as it gives investors a reason to believe that the company has a vision for growth and expansion.
- Perpetual Succession: Private limited companies do not depend on memberships of its stakeholders. They can easily transfer shares in case of death, insolvency of directors, or resignation.
- An Exit Plan: Private limited companies can give businesses and investors an exit plan. They can sell or transfer company shares in part or as a whole to another without any hassle.
- Tax Incentives: Singapore companies have an effective corporate tax rate below 9% for profits up to SGD 300,000 and capped at 17% for profits exceeding SGD 300,000. Another great thing about investing in Singapore is the absence of capital gains tax. The country uses a single-tier tax policy wherein once taxes are paid at a corporate level, they can distribute the dividends to shareholders free of tax. In Singapore, the personal tax rate starts at 0%, which rises on a gradual scale to a maximum of 20% for incomes exceeding SGD 320,000.
With these given reasons, anyone in the world can generously benefit if they decide to invest their money in a private limited company in Singapore.