A guide for Australian companies setting up in Singapore
Do you run an Australian company and plan to expand into Singapore? Here’s what you need to know.
With its strategic location in South East Asia, business friendly economic policies and a long-standing reputation as a regional business hub, Singapore is an excellent location for Australian companies looking to expand into Asia and beyond.
Singapore is among the top three easiest countries to do business in the world by the World Bank Group and, at the same time, is one of the world’s most competitive economies. “There's only a couple of countries in Asia where as a foreigner you can set up another branch and conduct business without too many restrictions, and Singapore is one of them. That’s why I chose to set up a Singapore office,” said Timothy Charlton, president and founder of business information firm, Charlton Media Group. If you’re running an Australian company and would like to set up a Singapore office, here are some things that you should know:
Doing business in Singapore
Singapore’s consistently high rankings in global business reports is substantiated by the country’s stable economy. Singapore has had no foreign debt since 1995, a strong GDP (US$297 billion as of end-2016) and enjoys strong currency rates (1 SGD to 0.76 USD as of April 2018).
The stability of the Singapore economy can be attributed to a national focus on services, human capital and innovation, which makes up for the country’s relative lack of land and natural resources. Singapore is a leading regional hub for established industries such as manufacturing, logistics and financial services, as well as emerging industries such as healthcare, aerospace and clean energy.
Australian companies incorporating in Singapore also benefit from a variety of pro-business policies in the country, such as low blanket caps for personal and corporate taxes, the Global Investor Programme (GIP), as well as step-by step assistance offered by Singapore government agencies and local corporate service providers.
Obtaining Singapore work visas
To work in Singapore, there are several types of Singapore work visas that you may qualify for. Those most relevant to Australian companies and employees are:
- Employment Pass (EP) – meant for professional employees in managerial, executive or specialist roles who are earning a monthly salary of at least S$3,600 (AUD 3,543). EPs are valid for 2 years for first-time pass holders, with subsequent renewals valid for 3 years each.
- Personalised Employment Pass (PEP) – meant for senior managers or executives who earn a fixed monthly salary of at least S$18,000 (AUD 17,712). PEP holders are not tied down to any one employer, and the pass is valid for 3 years. Click here to find out more about the PEP: https://www.guidemesingapore.com/business-guides/immigration/singapore-visa/personalised-employment-pass-pep-scheme
- EntrePass – the most relevant pass for company entrepreneurs/founders, an EntrePass gives you the license to start a company in Singapore. There are no minimum salary requirements for this pass; however, applicants need to have a solid business proposal and/or business track record.
Getting a working visa for your spouse
For Australian entrepreneurs or employees who would like to bring family members over to live in Singapore, there are also special passes that apply for them.
- Dependant’s Pass (DP) – for spouses and unmarried children
- Long Term Visit Pass (LTVP) - for common-law spouses, step-children or handicapped children, parents, and fiancées
- Letter of Consent (LOC) - meant for DP/LTVP holders who want to work in Singapore and have already obtained an offer
The ease in bringing family members to live in Singapore is attractive to Charlton and his friends from Australia.
“The families I know love it here – the spouses here have the freedom to hire maids inexpensively. This gives them more flexibility to develop their careers and do more than just caregiving, which is what they’d be tied down to back in Australia,” he said.
However, Nicholas Press, founder of logistics startup CEC Systems, had a different experience: “My Australian friends find it difficult to get EPs for their spouses, even though the spouse may be highly qualified.”
He added that having the support of local incorporation partners on the ground is crucial to help spouses of Singapore work visa holders to get jobs.
Registering your company in Singapore
Once you get your Singapore work visas sorted out, the next step that you’d need to do is to incorporate your Australian company in Singapore with the help of a qualified corporate service provider. Here are some of the most common company types you can register in Singapore:
- Subsidiary company – a private limited company incorporated in Singapore which can be fully foreign-owned. Subsidiaries are usually small to mid-sized and are treated as a resident Singapore company for tax purposes.
- Branch office – a registered legal entity which is treated as an extension of the foreign parent company. Branch offices can repatriate its earnings and capital, and will only be taxed for business activities conducted within Singapore.
- Representative office – a temporary setup for businesses that want to ‘test the waters’ in Singapore or regional markets without conducting profitable business activities.
Company incorporation in Singapore is a straightforward process and usually can be done within a short period of time. The exception to this are companies that are in industries which require more regulation, such as finance, law and media companies.
Learn more about the company registration process.
Companies registering in Singapore are usually required to hire a minimum of one resident director and are encouraged to create job opportunities for locals. For both Charlton and Press, hiring local staff has been a boon for their businesses.
“It's not difficult to find staff who are well-educated in Singapore. In a lot of other Asian countries, high school students don’t complete Year 12, they graduate at Year 10, which affects their quality of education. The worldwide rankings of tertiary institutions are also top in the world,” Charlton said.
“The biggest difference I see between workforces in Singapore and Australia lies in their work ethics. Here, you have many highly-educated citizens who are dedicated, work hard, and offer invaluable support to Australian companies,” Press added.
Enjoy low tax rates
Upon incorporation, business obligations that companies need to undertake are the annual filing of taxes, as well as the establishment of bank accounts to facilitate business activities conducted in Singapore.
Singapore enjoys attractive tax rates and offers a variety of industry-specific tax incentives for Australian companies.
“Singapore’s tax rates are one of the lowest in the region - in several other countries you might need to pay up to 40% tax annually, which makes the effort of setting up in these countries not worth it,” said Charlton.
These are the Singapore tax obligations that Australian companies need to know when doing business in Singapore:
|Tax type||Description|| |
|Payable by ||Due date|
|Income Tax||Taxed personal income||22%||Individual||15 Apr|
|Corporate Tax|| |
Taxed company income, often eligible for further tax exemptions
|Withholding Tax||Tax for services rendered by a foreign entity (i.e. interests, royalties and rent)||10-22%||Company||75 days from date of payment|
|Goods & Services Tax (GST)||Indirect tax charged to consumers for goods and services||7%|| |
Companies with income of $1 million and above
|1 month from financial year end|
Singapore has double taxation agreements with many countries, and Australia is no exception – the Singapore/Australia double tax treaty absolves Australian companies from the need to pay taxes in both countries.
For a comprehensive detailing of the Singapore/Australia tax treaty, see our Singapore-Australia double tax treaty guide.
Opening local bank accounts
Another key part of establishing a business, opening a bank account, is for the most part a straightforward process. Singapore has no shortage of international banks, as well as local branches with comprehensive banking services.
However, Australian managers may need to adjust to the need for initial paperwork and transaction fees when setting up accounts. “In Australia, transaction fees have been abolished, but in Singapore about 1-2 dollars is charged per transaction. There’s also the need for initial paperwork when applying for financial products, such as online banking and payment services,” Press commented, adding that the support of local incorporation partners were vital in getting paperwork sorted out for his bank accounts.
Adjusting to life in Singapore
With Singapore being a hub for many regional and international powerhouses, it’s easy to connect with potential clients and prospects in Singapore.
“Singapore has more representative offices of Fortune 500 companies than any other city in the world, and they’re all located within a short 15 to 20-minute drive,” Charlton said.
He added that the benefits of living in Singapore extend to families with children as well.
“It might take some time for young children to adjust to Singapore’s relatively smaller physical space. Having said that, schools teaching Australian and international curricula are plentiful, and many of my Australian friends love it here,” he added.