If you wish to raise interest in your business in the Asian market, Singapore is the first location you should investigate. With access to countless other nations, a stable economy, a dedicated and talented local labour force, and a famously straightforward approach to business, Singapore is a dream location for many entrepreneurs.
Does Singapore welcome overseas businesses?
Let’s keep this simple – yes, it does. If your business idea is likely to make money, the authorities in Singapore will be delighted to host you.
What industries are most popular in Singapore?
Singapore is widely regarded as the financial epicentre of Asia, ranking below just New York and London in the global standings, so any business opportunity in this sector will be welcomed – though you’ll face stiff competition.
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Other popular industries include energy, healthcare, and tourism. Technology and CIT are considered a glaring gap in Singapore’s economy, and the authorities are keen to change this. Ergo, if your business operates in this field, your application to trade in Singapore will likely be accepted.
Is it easy to set up a business in Singapore?
It’s pretty simple to get a business up and running in Singapore, though at least one of your directors needs to be a local resident. If you wish to live in Singapore and fulfil this role, apply for an EntrePass. If not, pair up with a local.
Once you are ready to start the process, these are the steps.
How to set up a business in Singapore
- Identify a trading premises in Singapore
PO box addresses will not be permitted
- Choose a company name
Be mindful of local trademarks and any cultural connotations of the brand name
- Choose your business structure
The Private Limited Company, or Pte, is the most popular
- Contact the Accountancy and Corporate Regulatory Authority (ACRA)
Which will regulate your business, and the Inland Revenue Authority of Singapore (IRAS), which will handle your tax obligations. These agencies will supply forms to be completed and advise of any other bodies you need to speak to.
- Apply for a CPF Submission Number (CSN)
Employees who are permanent Singapore residents must make monthly contributions to the Central Provident Fund, or CPF, withheld from payroll.
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Can I run a business in Singapore while living overseas?
A business entity in Singapore can be 100% foreign-owned, and you can live overseas while acting as the company owner. However, the business must have at least one director who is a resident of Singapore. You’ll need to move to the country if you do not wish to bestow such a title on an employee or partner.
Cultural considerations when running a business in Singapore
You’ll need to negotiate some cultural differences when looking to trade with Singaporean business partners. Here are some insights into business etiquette in this nation to keep in mind.
- Never arrive to a meeting late, and certainly do not chew gum – this is a criminal offence in Singapore.
- Address everybody in a room and shake hands with all meeting attendees. Start with the most senior person in the hierarchy. If it is unclear who this is, start with the oldest person in the room – age is highly respected in Singapore and considered a source of wisdom and experience.
- Keep your tone calm and even throughout all discussions. Raising your voice and growing animated will alienate you from Singaporean associates. Watch your body language, too – standing with your hands on your hips is considered very rude and aggressive.
- Never criticise in public, especially if the associate is older than you. Politely and calmly raise any concerns in a private meeting, but always show respect.
- If you’re asked personal questions, answer them freely and cheerfully. In Singapore, business deals go much smoother when the parties feel a kinship.
- If you are invited to discuss a deal over lunch, which is likely, accept the invitation but do not order red meat or alcohol unless your associates do so first.
- Do not brag about your personal achievements. The success of the many is valued above that of the individual in Singapore. If you want to make a good impression, talk about how impressed you are by a company or the nation in general rather than complimenting somebody’s clothing or academic background.
What business structures are supported in Singapore?
Here are the most common business structures used in Singapore.
| Type of Singapore business entity | What is it? |
|---|---|
| Sole Trader | You can operate as a Sole Trader if you live in Singapore, but you’ll pay higher taxes and will be personally liable for any legal or financial difficulties. |
| Private Limited Company (Pte) | The most popular business structure in Singapore, this is a Limited Liability Company. It’s quick and easy to set up, and you can hire up to 50 employees. |
| Public Company | A larger business, with shares available to the general public through the Singapore Exchange (SGX). This business model will be much more closely regulated. |
Taxation in Singapore
If you want to do business in Singapore, you must understand the taxation rules and regulations that will impact your bottom line.
What is the corporate tax rate in Singapore?
Singapore’s standard corporate tax rate is 17% on all annual profits. Exemptions apply, however.
A standard company can deduct 75% from its first S$10,000 of profit and 50% from the next $190,000. So, a business that posts an annual profit above S$200,000 will find up to S$102,500 of this tax-exempt.
A start-up SME enjoys more generous tax exemptions for its first three years of trading. The exemptions here are 75% on the first $100,000 and 50% on the next S$100,000. This means the total tax exemption for a start-up is up to S$125,000. Real estate and investment companies are not permitted to claim this tax exemption.
Singapore and the UK enjoy a double taxation treaty, so you will not be taxed twice for any profit incurred in Singapore.
What are the employee income tax brackets in Singapore?
All resident employees in Singapore need to pay income tax. Contributions break down as follows at the time of writing, but are due to increase at the onset of the 2024 tax year.
| Annual salary (S$) | Income tax rate |
|---|---|
| $19,999 or less | 0% |
| $20,000 – $29,999 | 2% |
| $30,000 – $39,999 | Flat rate of $200, plus 3.5% of salary |
| $40,000 – $79,999 | Flat rate of $550, plus 7% of salary |
| $80,000 – $119,999 | Flat rate of $3,350, plus 11.5% of salary |
| $120,000 – $159,999 | Flat rate of $7,950, plus 15% of salary |
| $160,000 – $199,999 | Flat rate of $13,950, plus 18% of salary |
| $200,000 – $239,999 | Flat rate of $21,950, plus 19% of salary |
| $240,000 – $279,999 | Flat rate of $28,750, plus 19.5% of salary |
| $280,000 – $319,999 | Flat rate of $36,550, plus 20% of salary |
| $320,000 – $499,999 | Flat rate of $44,550, plus 22% of salary |
| $500,000 – $999,999 | Flat rate of $84,150, plus 22% of salary |
| $1,000,000 or more | Flat rate of $194,150, plus 22% of salary |
Non-residents that work in Singapore are charged a flat rate income tax of 22% (this will increase to 24% from 2024.)
It is the responsibility of the employer to withhold income tax from an employee’s wages upon running a monthly payroll.
In addition, employees who are permanent Singapore residents must make monthly contributions to the Central Provident Fund, or CPF, withheld from payroll. These vary according to age as follows.
| Age | Employer Contribution to CPF | Employee Contribution to CPF |
|---|---|---|
| 54 or younger | 17% of salary | 20% of salary |
| 55 – 59 | 14% of salary | 14% of salary |
| 60 – 64 | 10% of salary | 8.5% of salary |
| 65 – 69 | 8% of salary | 6% of salary |
| 70 or older | 7.5% of salary | 5% of salary |
The maximum cap for employer contributions to the CPF is $1,020 per month, while for employees it caps at $1,200 per month.
Employees will also contribute up to 10.5% of their salary to MediSave, a savings account for future healthcare expenses.
How are taxes paid in Singapore?
The Singapore tax year mirrors the calendar year, running from January 1st to December 31st. Taxes must be filed with the Inland Revenue by April 18th of the following year, along with any payments due.
Payroll and hiring employees in Singapore
Hiring the right talent can make or break a company. Ensure your Singaporean business interests are staffed by the best possible talent.
Does Singapore welcome overseas talent?
While the labour laws in Singapore have historically been stringent and heavily weighted towards the local workforce, the authorities are relaxing these regulations and welcoming an increasing number of foreign employees into the nation. The tech sector, in particular, is seeking overseas talent to plug skill and knowledge gaps.
Who needs a visa or work permit to work in Singapore?
Anybody that does not hold a Singapore passport will need a permit to live and work in the country. These are issued by the Ministry of Manpower and come in the following forms.
- Standard Work Permit for unskilled workers. This will not entitle the holder to bring their family to Singapore, and the holder of a Standard Work Permit needs permission to marry a Singaporean native and gain residence this way.
- S Pass, for semi-skilled workers. This is defined by a salary of S$2,300 per month or more – though if the holder of an S Pass wishes to bring their family to Singapore as dependents, they must earn a minimum of S$6,000 per month.
- Employment Pass is open to professionals earning a monthly wage of S$4,500 or more – though, as with the S Pass, this must increase to S$6,000 for anybody with a family. Holding an EP is the first step toward applying for Singaporean citizenship.
- Personalised Employment Pass, open to employees that earn S$12,000 or more per month. Holders of a Personalised Employment Pass are not tied to a particular employer, so they can change jobs once in the country, and can even be unemployed for up to three months and remain in Singapore.
- EntrePass, aka Entrepreneur Pass. This is an alternative to the Employment Pass as you will not need a job offer – this work permit is designed for SME owners. You’ll need to own at least 30% of a company that is less than six months old to qualify, and present a business plan to the Ministry of Manpower that demonstrates an ability for your company to turn a profit in the country.
All work permits and employment passes in Singapore are valid for one year, sometimes two.
What employee benefits are compulsory in Singapore?
Employees of a Singaporean business are entitled to the following benefits by law.
- No less than 7 days of personal holiday, with an extra day earned annually until allowance caps at 14 days. Some companies offer 14 days of holiday as standard, or even as many as 20 days.
- Contributions to the Central Provident Fund, as outlined in our discussion about taxes in Singapore.
- Healthcare insurance if your employee holds a Standard Work Permit or S Pass. Anybody else is responsible for their own healthcare expenses (typically arranged through contributions to MediSave.)
That’s it – anything else, including sick pay, maternity and paternity leave, or pensions, is considered an optional supplementary benefit in Singapore.
Employment law considerations in Singapore
There is no minimum wage in Singapore, with the exception of two vocations – cleaners must earn no less than S$1,000 per month, and security guards no less than $1,100.
The Ministry of Manpower dictates that any working day longer than 9 hours or a week that exceeds 44 hours must be considered overtime, payable at 1.5 times base salary. No employee can work longer than 6 hours without a break. Employment law is taken seriously in Singapore, so abide by these regulations.
The mandatory retirement age in Singapore is 63, but employees have the legal right to be automatically reinstated up to the age of 68 – and can continue working until their 70s, if agreed upon by employer and employee.
It is illegal to dismiss an employer based on age in Singapore, but contracts can otherwise be terminated at will by informing the employee in writing. No reason for the termination needs to be provided, but unless it was on the grounds of gross misconduct or breach of contract, severance pay is mandatory.
Cultural considerations when hiring employees in Singapore
If you wish to run a business in Singapore that relies upon the local labour force, ensure you understand some of the nuances you will encounter. These include:
- Singaporean employees are more interested in group success than individual achievements. This means they will likely be loyal to a business if treated well and see their efforts rewarded – it’s rare for Singaporeans to ruthlessly pursue personal success by switching jobs to climb the corporate ladder.
- Singaporean employees are respectful of hierarchy and unlikely to publicly challenge or disagree with you. Do not expect your employees to join in a spirited debate about the direction of your company – they will politely nod and agree with your suggestions, at least to your face.
- Age and experience are valued higher in Singapore than academic qualifications or fresh perspectives. If two employees hold the same title but one is significantly older, the latter will be considered the more senior figure in a company and will expect to be treated as such.
FAQs about setting up a business in Singapore
Still have questions or are seeking a swift answer to a basic query? Here are some of the most frequently asked questions about establishing a business in Singapore.
Setting up a business in Singapore is a quick and streamlined process, and your part will likely be concluded within a day. It can take as long as two months to have your application processed and approved by the authorities, but it’s usually much faster.
A Private Limited Company (Pte) is Singapore’s most popular business structure. This entity is fast to set up, offers enviable tax conditions, and keeps your business finances and legal status separate from your personal affairs.
It is not a national mandate to provide a private pension for employees in Singapore, but some employers do so to attract top talent.
All companies in Singapore must have at least one resident director. This could be a foreign national that lives in Singapore, but you’ll need to successfully apply for an EntrePass or Employment Pass to qualify.
The social security fund of Singapore is the Central Provident Fund, or CPF. Employers pay between 7.5% – 17% of an employee’s salary, depending on age, while employees contribute between 5% and 20%. Employees also pay 8% – 10.5% of their salary into a MediSave account to cover future medical expenses.
Most Singapore employees will expect a three-month probation period, though senior positions will often see this extended to six months.
This depends on what supplementary benefits you offer your employee. You could spend up to 1.75 times a salary once benefits and social security contributions are managed.
You can open an entity in Singapore with a share capital of just S$1, though if applying for an EntrePass or Employment Pass, you stand a better chance with a capital of at least S$100,000 (around £6,000.)
You do not need to, but it’s advisable to do so. Banks in Singapore make it pretty straightforward to open an account, and you can do so from outside the country. It’s just a case of filling in some forms and making a small token deposit.
Most employees in Singapore will expect to work a 44-hour week between Monday and Friday, though hours must be capped at 88 hours over a fortnight by law unless you pay overtime. Depending on the industry, some employees may expect to work longer during the week or even a half-day on Saturday.
As mandatory benefits are not too generous in Singapore, many companies look to sweeten the pot to attract employees. Popular supplementary benefits include paid sick leave and parental leave, flexible working hours and patterns, private pensions and health insurance policies, and the option for automatic reinstatement once an employee reaches retirement age. Some companies also offer a 13th month of salary payable as a bonus, known as the Annual Wage Supplement.
Employers can terminate a contract at any time, without reason, provided the decision is communicated in writing. However, unless the termination is due to a severe breach of contract or an act of gross misconduct, severance pay will be required.
In addition to 11 public holidays per year, employees in Singapore are entitled to a minimum of 7 days of personal holiday per year. This rises by one day for each year of service, capped at 14 days.
Yes, if your business has international brand recognition will be entitled to open a branch in Singapore.
You can run your payroll from your Singapore-based company, hire an agency in Singapore that manages your payroll, tax, and HR needs, or issue salaries from your UK “home base.”
EntrePass (short for Entrepreneur Pass) is an alternative to the standard Singapore Employment Pass, designed to attract the finest entrepreneurial and innovative business minds to Singapore. Valid for up to two years, an entrepreneur must own at least 30% of a business that is less than six months old to qualify for an EntrePass – and win over the Singapore authorities with a compelling business plan.