Why choose Singapore –
Singapore is ranked as one of the easiest country’s to do businesses in the world, it is also an ideal location for global businesses to base their headquarters. The trade and the flow of investment make Singapore lead in all frontiers. The business environment is stable, giving companies to plan for long-term.
Investing in Singapore –
- It is the gateway to the APAC region. Provides better connectivity via air and sea, the telecommunication services are top-notch.
- The Corporate tax is capped at 17%, attracting the top corporate interests. There are no capital gains tax, progressive personal income tax rates, and no tax on foreign income for non-resident taxpayers.
- The economic conditions in Singapore are developed and mature. The major industries in Singapore are manufacturing, oil refining and financial services, while there are a few emerging sectors coming up in the fields of integrated electronics, big data, and biomedical sciences.
- The regulatory framework is transparent and strict checks are made to ensure fairness and security in the system for organizations operating in the country.
- Singapore businesses employ highly skilled people from a competitive pool and the high profile status in APAC – attracts some of the best talents for good quality roles.
Entry to Singapore –
Before deciding to set up business in Singapore, Entrepreneurs can obtain a Social Visit Pass and explore the business opportunities. After entrepreneurs having decided that Singapore is the right destination for their business they need to obtain an EntrePass. EntrePass is for those entrepreneurs who wish to stay and open a business in Singapore and to remain actively involved in the business. For more information on the pass, click here
Foreign businesses that wish to set up offices may approach the following Government agencies:
- Banking, Finance, and Insurance – Monetary Authority of Singapore
- Legal – Legal Services Regulatory Authority
- All other industries – Enterprise Singapore
A company is required to submit Central Provident Fund Contribution via CPF Auto-Excel plus, this can be done using the representative’s SingPass and Unique Entity Number i.e. UEN of the company. The company will receive an email and a welcome letter mentioning the CPF Submission Number (CSN), Payment Advice (CPF91) and an application for Interbank GIRO form. Any time transacting with the CPF board, the company needs to quote the CSN number.
CorpPass, Singapore Corporate Access, is required by entities who already have a UEN and even for foreign entities who wish to have access to Government to Business (G2B) digital services in Singapore. CorpPass, a one-step authorization service, to transact with all Government agencies on behalf of corporate users.
Corporate Banking in Singapore –
There is no compulsion from the government to make payments from a Singaporean Bank account.
Income Tax and Social Security in Singapore –
The tax period for corporations is the year preceding the financial year. For e.g. if the financial year for a company ends on 31st December, the YA 2019 will be based on the accounts for the financial year ending 31st December 2018.
For Personal Income Tax, all employees must file an Annual Tax Declaration and pay their tax liability to Singapore’s Inland Revenue Department. Employers need to prepare Form IR8A or Form IR8S for employees employed in Singapore by the 1st of January. Any company with more than 10 employees for an entire year (ending 31st December) or for those employers who have received a notice to file Employment Income of Employees Electronically, must submit the information by 1st of December following the assessment year.
Employees earning in Singapore will be taxed on all incomes i.e. base salary, commission, bonus etc. and are even subject to deductions of tax reliefs. The Personal Income Tax Rate is a progressive one and the highest tax rate is 20%. All resident taxpayers will be given a Rebate on Personal Income Tax payable for the Year of Assessment. The calculation of the rebate amount depends on the age of the individual as of 31st December.
Social Security in Singapore –
The Central Provident Fund (CPF) is more like a savings plan for employees. The CPF board keeps a check on this, it funds for a variety of social security schemes such as retirement, healthcare, and housing. The contributions to CPF are made by both the employer and the employee. The contributions go into three accounts:
- Ordinary Account (OA): Covers housing, education, insurance, investment
- Special Account (SA): Covers Retirement products
- Medisave Account (MA): Covers medical expenses and other medical insurance
A fourth account is opened when an employee turns 55 i.e. Retirement Account (RA), to provide savings for retirement.
The contributions are made by Singapore citizens and Singapore Permanent Residents who are working in the city under a Contract of Service. Contributions are not mandatory for workers employed overseas.
The CPF contributions should be given within 14 days of the end of the month. For a Singaporean Citizen and a 3rd year Singapore Permanent Resident (SPR) below the age of 50 and an income level of above S$1500, the statutory contribution rates are 50%. A 50-50 split between employer and employee.
New employees in Singapore –
The employers of foreign workers are required to obtain an employment pass/ work permit before commencing employment. The process takes 2 weeks online and 5 weeks in case of hard copy. Work visas are given by Ministry of Manpower, prior to the commencement of employment.
For Singaporean and Permanent Residents –
Form CPF91 (Payment Advice) and Form CPF92 (New Employee Contribution Form) are required to be submitted together if submitted via hardcopy.
If using the online mode, Form CPF92 is not required.
Expats in Singapore are required to provide the following documentation:
- Work Permit
- Employment contract
- Must have a valid Working Pass prior to the commencement of employment
Leavers in Singapore –
If an employer dismisses and terminates an employee and the employee is dismissed on the grounds of misconduct, the salary must be paid on the last day of employment.
If the contract of service is terminated by an employer, the salary must be paid on the last day of employment or within 3 working days from the date of termination.
Termination by Employee –
Suppose an employee resigns and has served his/her notice period, the salary must be paid on the last day of employment. If the contract is terminated by the employee without notice, then salary needs to be paid within 7 working days of the last day of employment.
For foreign employees –
The company has to withhold any transactions with the employee and inform the IRAS via Form IR21 at least 30 days before the date of cessation of employment. The form is required to facilitate IRAS for tax clearance before the foreign employee leaves Singapore. This form is even applicable to a Permanent Resident employee who intends to leave Singapore for more than 3 months or permanently.
Notifications are made to the CPF board via CPF contributions indicating the date of resignation, for Singapore and permanent resident.
Payroll in Singapore-
The status of foreign workers is taken into account. There are no monthly obligations for employers in Singapore but contributions to Social Security Schemes are required. The legislation in Singapore requires payslips to be issued to all employees and it is legally acceptable to issue payslips online. Details such as the date of payment, basic salary amount, deductions made, and net monthly salary must be included in the details of employment. Foreign companies setting shop in Singapore can employ a global payroll provider to help them identify and adjust with the country’s regulatory compliance.