In recent years, an increasing number of Indian startups have chosen to incorporate in Singapore, drawn by the city-state’s numerous advantages. This trend is driven by various factors, ranging from tax benefits to a business-friendly environment. Here’s an in-depth look at why Indian startups find Singapore so appealing.
i) Low Corporate Tax Rate
One of the primary reasons Indian startups incorporate in Singapore is its low corporate tax rate. Singapore’s corporate tax rate is less than 17%, significantly lower than India’s 30% rate for domestic companies. This substantial difference allows businesses to retain more of their earnings, which can be reinvested into growth and development.
ii) No Capital Gains Tax
Singapore does not impose a capital gains tax, unlike India, where capital gains tax can range from 15% to 20%. This exemption makes Singapore particularly attractive for startups looking to maximize their investment returns.
iii) Fixed GST
While India’s GST rates range from 5% to 28%, Singapore has a fixed GST rate of 7%, with certain goods exempt from tax. This simplicity and lower rate reduce the overall tax burden on businesses.
iv) No Tax on Dividends
In India, dividends are taxed, leading to double taxation on the same income. Singapore avoids this by not taxing dividends, making it more appealing for companies looking to distribute profits to shareholders.
i) Ease of Doing Business
Singapore is renowned for its ease of doing business, consistently ranking highly in global indices. For example, Singapore was ranked No. 2 in the World Bank’s Ease of Doing Business Ranking in 2020. In contrast, India, with its complex procedures and regulatory requirements, is often considered a challenging place to do business.
ii) Efficient Infrastructure
Singapore boasts world-class infrastructure, which includes reliable internet connectivity and efficient logistics. This is crucial for digital entrepreneurs and businesses relying on import and export, as Singapore’s logistics systems allow shipments to reach their destinations within hours, unlike the often lengthy customs procedures in India.
iii) Political Stability and Transparency
Singapore’s political stability and transparent regulatory framework create a predictable and secure environment for businesses. This contrasts with the bureaucratic hurdles and regulatory unpredictability often encountered in India.
i) Startup Ecosystem
Singapore has cultivated a robust startup ecosystem supported by government initiatives, funding, and favourable tax schemes. The city-state ranks first in Asia and seventh globally in Startup Blink’s Global Startup Ecosystem Index 2022. Government programs provide grants, tax incentives, and support services, fostering a nurturing environment for startups.
ii) Support for Foreign Entrepreneurs
Singapore welcomes foreign entrepreneurs through schemes like the Entrepreneur Pass and Employment Pass, which facilitate business setup and residency. This inclusiveness makes it easier for Indian entrepreneurs to relocate and integrate into the local business community.
i) Robust IP Regime
Singapore has established a strong intellectual property (IP) protection framework, consistently ranking highly on global IP indices.
ii) Safer Option for Safeguarding Intellectual Assets
In contrast to Singapore’s strong IP regime, India’s IP protection is still developing. This makes Singapore a safer and more reliable option for safeguarding valuable intellectual assets, providing startups with peace of mind and security for their innovations.
i) Gateway to ASEAN
Singapore’s strategic location at the heart of ASEAN provides access to a market of 660 million people, making it an ideal base for startups targeting the Southeast Asian region. The city-state’s connectivity and trade links facilitate business expansion and international trade.
ii) Proximity to India
Singapore is just a six-hour flight from Delhi, making it convenient for Indian entrepreneurs to manage their business operations across both countries. This geographical proximity allows for easier travel and closer ties with the Indian market.
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Many successful Indian startups have chosen to incorporate in Singapore, including Flipkart, InMobi, and Milaap. These companies benefit from Singapore’s favorable business environment while maintaining strong economic ties with India. Over 8,000 Indian companies have registered in Singapore since 2000, reflecting the city-state’s appeal as a business hub.
Starting a company in Singapore is a straightforward process, and the city-state’s business-friendly policies make it an attractive destination for Indian entrepreneurs. Here’s a step-by-step guide to help you navigate the incorporation process.
1. Choose a Business Structure
Decide on the type of business entity you wish to establish. The most common structure for foreign entrepreneurs is a Private Limited Company (Pte Ltd). This structure offers limited liability protection and allows for 100% foreign ownership.
2. Reserve a Company Name
Check the availability of your desired company name and reserve it with the Accounting and Corporate Regulatory Authority (ACRA). The name must be unique and not infringe on any existing trademarks.
3. Prepare the Required Documents
Gather the necessary documents for incorporation:
4. Appoint Directors and a Company Secretary
A Singapore-incorporated company must have at least one director who is a resident of Singapore (a Singapore citizen, Permanent Resident, or Employment Pass holder). Additionally, you must appoint a qualified company secretary within six months of incorporation.
5. Register Your Company
Submit the incorporation application through ACRA’s online portal, BizFile+. The process is usually completed within a few hours if all documents are in order. The registration fee is SGD 315.
6. Open a Corporate Bank Account
Once your company is incorporated, you will need to open a corporate bank account in Singapore. Choose a bank that suits your business needs and provide the required documents, including the certificate of incorporation and company constitution.
7. Obtain Necessary Licences and Permits
Depending on your business activities, you may need to obtain specific licences and permits. Check the Singapore government’s GoBusiness Licensing portal to determine the necessary licences for your company.
8. Comply with Ongoing Regulatory Requirements
After incorporation, ensure compliance with ongoing regulatory requirements, including:
For Indian startups, incorporating in Singapore offers a multitude of benefits, from tax advantages to a supportive business environment and strategic location. These factors, combined with the city-state’s robust infrastructure and IP protection, make Singapore an ideal destination for Indian entrepreneurs looking to expand their horizons and achieve global success.
Setting up a company in Singapore can be challenging, but with professional support, it can be simple, Counto’s mission is to support your new business, take away the complexities of compliance, and save you time and money throughout the year. Speak to us directly on our chatbot, email us at [email protected], or contact us using this form.
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