Which is an ideal jurisdiction for company incorporation in Asia? Singapore and Hong Kong have been dominant players in the Asian region, vying for the position of “the best place to do business.” But the crucial questions are, which of these jurisdictions have an edge over the other? Is incorporating a business easier in Singapore or in Hong Kong?
Strategic location and attractive tax benefits make Singapore the most preferred location for the overseas companies to set up their business. Various options are – opening up a Branch Office, a Representative Office or a Subsidiary in Ghim Moh . The country also has liberal immigration policies. If the company wants to set up their regional head quarters in Singapore they are also provided with Financial Assistance.
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A key determinant for setting up a business in Ghim Moh is the tax regime in force. In this regard Singapore boast of being one of the lowest tax jurisdictions in the world. Detailed below is an overview of the tax system and Payroll Services in Singapore.
Tax jurisdiction Singapore: Taxes are levied on a territorial principle i.e. companies and individuals are taxed on Singapore sourced income. In addition, the Foreign sourced income (branch profits, dividends, service income, etc.) are taxed when it is remitted or deemed remitted into Singapore unless the income was already subjected to taxes in a jurisdiction with headline tax rates of at least 15%.
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In 2010, Singapore was ranked as the most competitive country in the world. Doing business in Singapore, therefore, means a more fulfilling business atmosphere and better chances of higher profits. However, anyone can say the same about any other country or city in the world. So, what sets Singapore aside from the others? What makes it unique and more business friendly? Why is it that many multinationals are moving their headquarters in to this 710 square kilometers span of an island?
What Makes Doing Business in Singapore Attractive?
1. Singapore is a modern city
Singapore is placed among the most dynamic cities to live in and work in the world today. It has global connections, is cosmopolitan and is also multi-cultural, accommodating a population of about 5 million inhabitants. It is also regarded as one of the most conducive cities for the knowledge-driven industries, globally.
2. It is pro business
Within the last 4 decades, this city has transformed itself from being a small business trade center to one of the world's top financial hubs. It has international air, sea hubs, and one of the most open economies for investment and trade.
3. Consistency in governance
This city is governed by consistent guidelines on business and investment where any business is guaranteed access to an impartial and competent judicial system. There is also clarity and commitment with regards to corporate governance and anti-corruption policy enhancement.
4. Ease of set up
The excellent infrastructure, a cosmopolitan labor force that is highly skilled, attractive tax laws that allow avoidance to double taxation, and low startup costs make starting a business in Singapore very attractive and easy to set up. Entrepreneurs are known to come in to Singapore and set up big businesses within a week!
5. Knowledge based industry
The economy of Singapore is skewed towards high knowledge based industries. There is a lot of emphasis towards innovation and this is what keeps this city very competitive business-wise. The government of this city-state is also relentless in its efforts to protect intellectual property to ensure that ideas and innovations nurtured here are well protected. This further enhances competitiveness.
6. Free trade
Being an active member of the World Trade Organization, Singapore businesses enjoy the luxury of investment guarantee agreements and the many free trade agreements with most other countries in Asia and around the world. International businesses here also get to enjoy 50 of the state's comprehensive double taxation avoidance agreements.
It is these powerful factors that have made Singapore to stand as one of the strongest financial hubs in the Asian region regardless of its small size and small, almost insignificant, population. It has grown in to an Asian region power house for international banking, maritime finance, asset and wealth management, trade finance, treasury operations and insurance.
Companies and businesses that seek to establish themselves in this city-state can easily tap in to the diverse and deep capital markets, while at the same time getting access to the many local and international professional service and financial institutions that are based here.
Simply put, doing business in Singapore is affordable, easy to set up, and fun for any serious business person.
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The Inland Revenue Authority of Singapore (IRAS) has imposed a new scheme known as the Production and Innovation Credit (PIC) to benefit logistics companies in Singapore. For several years IRAS was designing strategies for logistics department to be at par with international companies of Japan and China so they came up with PIC.
The several ways PIC Grant can benefit the logistics companies are listed below:
Funds for automated machines
The PIC scheme has been very beneficial for the logistics companies as they can purchase automated machines and devices. The entire funding is covered by IRAS PIC Grant. As a result, the companies can reach higher levels with increased production and returns. The automated machines also reduce the cost of extra labour and the job can be finished in less time. The productivity becomes higher resulting in greater profits thus competing in the international market.
The experts of IRAS also help these companies to come up with efficient strategies to enhance their productivity. The highly educated panel of IRAS has a lot of experience when it comes to managing financial growth of a company. In most of the cases, the managers of these logistics company are not well accustomed with the strategies to match the international standards. A proper analysis by the IRAS experts will ultimately lead to higher sales and improve the quality of their service.
Logistics companies are a huge blunder when it comes to paying taxes. The tax keeps on mounting and at the end, the companies have to pay a large sum compromising their profit. So the IRAS comes into the scenario and helps these companies set up various plans to solve problems regarding taxation. There can be tax deductions up to 400% in several cases. This will help the companies to provide their services at a cheaper rate to beat their competitors.
The cash pay-out option
The small and growing businesses are the ones who can be hugely benefitted by this cash pay-out option. To aid these companies the Singapore government has come up with many strategies so that they can reach the heights of big companies. With the cash pay-out option, the financially distressed companies can invest in modern equipment and improve their standards.
Productivity along with improvement of Logistics Companies
The PIC Grant, 2014 offers productivity with improvement of the companies all at the same time. There are certain regulations and to be eligible, these companies need to invest in several areas of Singapore economy. This will ultimately benefit the logistics companies but at the same time, the government is doing its part.