Offshore Company Incorporation

An offshore company is a company that is incorporated in a jurisdiction other than where its main business activities or shareholders are located. Offshore companies are usually set up for various reasons, such as tax benefits, asset protection, confidentiality, flexibility, and access to foreign markets. In this article, we will explain how to set up an offshore company in Singapore, what are the compliance, governmental and tax related requirements, and what are the benefits, key characteristics, requirements and cons of doing so.

To set up an offshore company in Singapore, you will need to follow these steps:

There are three main types of entities that can be used as offshore companies in Singapore:

  1. public company limited by guarantee (CLG),
  2. private limited company (Pte Ltd),
  3. limited liability partnership (LLP).

Each of these has its own advantages and disadvantages depending on your business objectives, activities, scale, structure, governance, funding sources, and tax implications. You can refer to the web search results for more information on each type of entity :

https://singaporelegaladvice.com/law-articles/set-up-offshore-company-singapore/

https://bbcincorp.com/sg/articles/singapore-offshore-company

https://www.spic.com.sg/singapore-offshore-companies/.

Select an original and suitable name for your offshore company that mirrors its objectives and does not violate any trademarks or existing names. Verify the availability of your preferred name on the ACRA website.

Prepare a constitution or governing document outlining the guidelines and regulations of your offshore company. Include details such as its purpose, share capital, shareholders, directors, management committee, responsibilities of officeholders, meeting protocols, financial procedures, dissolution terms, etc.

You will need to submit the required documents and fees online or in person. You will need to provide information such as the name of your offshore company, its registered address in Singapore, its business activities, its shareholders and directors (if applicable), its constitution or governing instrument, etc.
Relevant Authority includes :

  • Accounting and Corporate Regulatory Authority (ACRA) for company limited by guarantee (CLG and Private Limited)
  • Registry of Societies (ROS) for Limited Liability Partnership

If your offshore company qualifies and you seek to receive tax benefits and public recognition, apply for charity or Institution of a Public Character (IPC) status with the Commissioner of Charities (COC). You must demonstrate that your company has charitable objectives that exclusively benefit the public or a specific section of the public in Singapore or elsewhere. Additionally, you must show that your company has competent and ethical trustees or governing board members who prioritize the charity or IPC’s best interests, and that it adheres to proper governance and accountability practices. Compliance with relevant laws and regulations in Singapore and abroad is also essential.

Seek other necessary licenses or permits from government agencies if your offshore company participates in activities such as fundraising, education, healthcare, social services, or other regulated sectors that mandate them.

Ensure that your offshore company maintains accurate records and accounts, and submits annual returns, financial statements, and tax returns to the relevant authorities punctually.

Adhere to the laws and regulations that govern your offshore company and uphold the highest standards of governance and accountability.

Some of the benefits of setting up an offshore company in Singapore are:

Singapore has a low corporate tax rate of 17% and only taxes income derived from or remitted into Singapore. It also offers various tax exemptions and deductions for qualifying offshore companies, such as those with charity or IPC status ,those engaged in international trade, those involved in research and development, etc.

Singapore boasts a robust legal framework that safeguards the rights and interests of offshore companies and their shareholders. Additionally, the country’s stringent banking secrecy laws prevent unauthorized disclosure of financial information and transactions. Moreover, Singapore does not impose any exchange control regulations that hinder the movement of funds.

Singapore does not require offshore companies to disclose their beneficial owners or shareholders to the public,
unless they are listed on a stock exchange or regulated by certain authorities. Singapore also does not participate in any automatic exchange of information schemes with other jurisdictions, unless there is a specific request based on valid grounds.

Singapore allows offshore companies to choose their own type of entity, those includes : 

  1. Name
  2. Constitution
  3. Share Capital
  4. Shareholders
  5. Directors
  6. Management committee, etc

As long as they comply with the relevant laws and regulations. Singapore also allows offshore companies to change their structure or status as their business needs evolve, such as converting from a CLG to a Pte Ltd or applying for charity or IPC status.

 Singapore is a strategic location that connects the East and the West, offering offshore companies access to a large and diverse market of over 4 billion people. Singapore is also a member of various regional and international trade agreements, such as the ASEAN Economic Community,
the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the Regional Comprehensive Economic Partnership,
etc., which can facilitate trade and investment opportunities for offshore companies.

Singapore is a reputable and respected jurisdiction that is ranked among the top in the world for ease of doing business, competitiveness, innovation, transparency, corruption-free governance, rule of law, etc.

Singapore is also a global financial hub that offers offshore companies access to a wide range of banking, financial, and professional services that can support their business operations and growth.

Some of the disadvantage of setting up an offshore company in Singapore are:

Setting up and maintaining an offshore company in Singapore can be expensive and time-consuming, as it involves legal fees, professional fees, administrative fees, and taxes.
An offshore company also requires a high level of compliance and reporting, as it is subject to various laws and regulations depending on the type and purpose of the entity.
Offshore company also involves a loss of control and ownership over one’s assets, as they are transferred to the entity or its trustees or directors who have the legal title and authority over them.

 

An offshore company in Singapore may face more scrutiny and regulation from the authorities than an onshore company,
especially if it is involved in certain activities that are deemed sensitive or risky, such as

  1. fund-raising,
  2. education,
  3. health care,
  4. social service, etc.

An offshore company may also have to disclose more information to the authorities or the public if it applies for charity or IPC status or if it engages in cross-border transactions that trigger exchange of information requests.

An offshore company in Singapore may face various risks and challenges in its business operations and growth, such as

  • market volatility,
  • currency fluctuations,
  • political instability,
  • legal disputes,
  • tax audits,
  • compliance issues,
  • reputational damage, etc.

An offshore company may also have to deal with different laws and regulations in different jurisdictions where it conducts its business activities or where its shareholders or beneficiaries are located. 

Singapore is a great choice for setting up an offshore company, as it offers many perks and advantages for foreign investors and entrepreneurs.

Here are some of the main benefits of opening an offshore company in Singapore:

 Singapore has a flat corporate tax rate of 17%, which is one of the lowest in the world. It also only taxes income that is derived from or remitted into Singapore, which means that offshore companies can enjoy tax-free income from their overseas operations. Additionally, Singapore has various tax exemptions and incentives for qualifying offshore companies, such as those with charity or Institution of a Public Character (IPC) status, those engaged in international trade, those involved in research and development, etc. Singapore also has a wide network of double taxation agreements with over 80 countries, which can reduce or eliminate withholding taxes on cross-border transactions.

Singapore has a streamlined and efficient incorporation process that can be completed online or in person within a few days. It does not require any prior approval from the authorities for foreign ownership or business activities, unless they are deemed sensitive or risky. It also does not require any minimum share capital or guarantors for offshore companies. The only requirements are to have a unique and appropriate name, a registered address in Singapore, a constitution or governing instrument, and at least one shareholder and one director (who can be the same person)

Singapore has a stable and transparent political and economic system that provides a conducive environment for business and investment. It has a strong rule of law, a corruption-free government, a highly-skilled workforce, a world-class infrastructure, and a strategic location that connects the East and the West. It is also a member of various regional and international trade agreements, such as the ASEAN Economic Community, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the Regional Comprehensive Economic Partnership, etc., which can facilitate trade and investment opportunities for offshore companies

Singapore has a robust legal system that protects the rights and interests of offshore companies and their shareholders. It also has strict banking secrecy laws that prevent unauthorized disclosure of financial information and transactions. It also does not have any exchange control regulations that restrict the movement of funds or assets. Furthermore, it does not require offshore companies to disclose their beneficial owners or shareholders to the public, unless they are listed on a stock exchange or regulated by certain authorities. It also does not participate in any automatic exchange of information schemes with other jurisdictions, unless there is a specific request based on valid grounds

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