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What Canadian Businesses Should Consider When Expanding to Singapore
If you’re looking for new opportunities to expand your business beyond Canada or are a Canadian multinational seeking the perfect Asian headquarters for your business, then look no further than Singapore. Our article explores what makes Singapore such an ideal location for accessing the high growth markets of Southeast Asia and what the key factors to consider.
Different Singaporean Business Entity Types for Foreign Companies
To start with, foreign companies that are looking to establish a presence in Singapore have the choice of either setting up a branch office, subsidiary, or a representative office in Singapore. So what’s the difference between these options?
Subsidiary company: A subsidiary company is a private limited company incorporated in Singapore with the parent company as its shareholder. For small to medium-sized foreign businesses, a subsidiary company is the preferred choice for registration in Singapore.
Branch office: A branch office is registered in Singapore as an extension of its parent company and not as a separately incorporated entity. The liabilities of a branch office extend to its parent company.
Representative office: A representative office is registered in Singapore as a temporary arrangement for conducting market research activities. A representative office does not have any legal status and cannot be engaged in any profit yielding activities.
For more information about these options, please refer to our guide on this subject here.
Business Grants in Singapore
Further to the general tax incentives and ease of doing business in Singapore, there are a wide range of business grants and financing schemes available to Canadian companies operating in Singapore.
One such grant is the Capability Development Grant (CDG), which serves as a financial assistance programme to help SMEs in Singapore develop their capabilities in ten essential areas of business, such as consultancy, training, certification and software. These grants can be used to subsidise up to 70% of project costs and can ultimately lead to increased productivity, human capital development and improved market access.
Another of the many useful grants available to SMEs in Singapore is an easy-to-use voucher called an Innovation and Capability Voucher (ICV) that companies can use to improve their business operations by paying for consultancy on a wide range of topics.
The Enterprise Development Grant (EDG) can also be used by SMEs in Singapore to develop capabilities in three main areas. These are core capabilities, innovation and productivity, and market access, which can help SMEs to develop, with government grants covering up to 80% of the costs.
More information on the many business grants available in Singapore can be found here.
Singapore’s Corporate Tax Rate
Singapore uses a single-tier corporate tax system with a headline corporate tax rate of 17% and no double taxation for shareholders. It has taxation treaties with countries all over the world, including Canada, facilitating imports and exports for international business.
While the corporate tax rate in Canada is 15%, this follows a general tax reduction for most companies. Unlike many other jurisdictions, capital gains and any dividends paid to shareholders in Singapore by a company are also exempt from additional taxation.
Singapore-Canada FTA and Double Tax Treaty
Singapore and Canada have a long-standing relationship that makes it even easier and more appealing for Canadian businesses to incorporate a company in Singapore, with the CPTPP and double taxation treaty making matters easier than ever.
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
Since the launch of the CPTPP in 2018, trade between Canada and Singapore has become a lot easier; Import tariffs have been eliminated by 99% and the agreement has provided more protection and transparency for doing business between the two countries.
Singapore-Canada Double Taxation Agreement
Both Canada and Singapore grant an allowance against the tax paid in the other contracting state to prevent double taxation. The double tax convention between Singapore and Canada covers both individuals and companies residing in one of the contracting states. The agreement also stipulates that any tax falling under it may be levied in one of the two states.
Exceptions to this rule apply in the taxation of income derived from the alienation of real estate, which is taxed in the country where the property is situated, as well as in the case of employment income, which is taxed in the country where the services are rendered.
How Can Hawksford Help?
Are you a Canadian business looking to incorporate a company in Singapore and access the high growth markets of Southeast Asia? Hawksford can help. With clients from 115 countries, including Canada and an award-winning team renowned among our peers and industry bodies, Hawksford offers you structured solutions to your corporate needs. Contact us now to get your journey started.
Looking to incorporate a company in Singapore?
Our experts at Hawksford can help.