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Can Foreigners Start a Business in Singapore?

Singapore has always been one of the top choices for foreigners to invest in and start businesses due to its strategic location. As one of the countries which provides plenty of resources and avenues for businesses, Singapore has become an important gateway to the Asia market. Not only that, Singapore’s corporation tax rate is fixed at 17%, with exemptions available to lower the taxable amount.



Types of Business Entities in Singapore

There are five types of business entities in Singapore: (1) Sole Proprietorship, (2) Partnership, (3) Limited Partnership (LP), (4) Limited Liability Partnership (LLP), (5) Company. Each business structure has a different number of owners, legal status, set up fee, tax rate, business continuity, and methods of business closure.


(1) Sole proprietorship (SP)

A sole proprietorship business is owned by one individual and the fee for setting up a SP costs $115 for 1-year registration and $175 for 3-year registration. While the business’ profits will go towards the sole proprietor entirely, the individual will also be liable for any debts or legal actions associated with the business. The profits will also be taxable on the owner’s personal income.

Foreigners who wish to register their business as a sole proprietor must appoint a trusted representative, who is either a Singaporean, Permanent Resident, or EntrePass holder, to assist with the registration. The representative is required to bear responsibility for the business’ operations in Singapore and will be receiving notices on behalf of the foreign owner.


(2) Partnership

Businesses operating under a partnership are owned by 2 to 20 partners. Similar to SP, the cost of setting up a partnership business ranges from $115 to $175. Partners in the business also have unlimited liabilities and are considered to be the same legal entity as the business. In simple terms, partners will be liable for each other’s debts and losses incurred.

Similar to SP, the business owner must appoint an authorized representative if the business owner is not a Singapore resident. As such, foreigners will be able to set up a partnership even if they are not in Singapore.


(3) Limited Partnership (LP)

Limited Partnership consists of at least two partners – a general partner and a limited partner. The general partner has unlimited liability and will be liable for debts and losses of the limited partnership. On the other hand, a limited partner is only liable for any debts and obligations up till the agreed contribution amount. Businesses operating under LP are unable to own properties under the firm’s name, and non-residents who wish to start a LP must appoint a local resident as the local manager.


(4) Limited Liability Partnership (LLP)

Partners in LLP are considered to be a separate entity from the firm and they have a limited liability for the firm’s debts. However, partners are still liable for their own debts which stemmed from their actions. LLP firms can also own properties in the firm’s name.

An advantage of LLP is that the firm will continue to exist until it is wound up or struck off. In the event where a partner passes away or resigns, the firm will not be affected and can continue to run its business. The benefit of continuity is not available for Sole Proprietorships, Partnerships, and Limited Partnerships.


(5) Company

A company is considered a separate legal entity from its directors and shareholders; they will not be personally liable for any debts or legal action of the company. There are three types of companies – exempt private company, private company, and public company.

As a foreigner who wishes to start a company in Singapore, you must either be relocating to Singapore under a work visa, or appoint a local resident as the director if you choose to not relocate. In addition, the following requirements must be met to start a company in Singapore:

· 1 shareholder

· 1 resident director

· 1 company secretary

· $1 paid-up capital

· Local registered office address

To set up a company in Singapore, the foreigner must first apply online on BizFile+ and appoint a local resident as the director. The company will need to apply for an Employment Pass from the Ministry of Manpower (MOM) for the foreigner to relocate to Singapore. Upon the successful application, you will be able to personally handle your business in Singapore and the resident director’s role will be transferred to you.

The following criteria must be met to apply for an Employment Pass:

· Fixed monthly salary of at least $8,000 SGD

· Qualifications from reputable universities

· Has the high-ranking role such as CEO, CFO, and Managing Director

In the event where the foreigner does not want to relocate to Singapore, the local resident director will act as an authorized representative to manage the business. The representative can be a citizen, permanent resident, or EntrePass holder.

Foreign entrepreneurs who want to start a company in Singapore can do so by applying for an Entrepreneur Pass (EntrePass) from MOM. The Entrepass is open to all nationalities, on the condition that both criteria are met:

1. Planning to start, or have started, an ACRA-registered private limited company which owns innovative technologies or is venture-backed.

a. The company must be less than 6 months old on the date of EntrePass application (if the company is registered)

b. You can register for the company after the application outcome (if the company was not registered)

2. Meet the criteria as an investor, innovator, or entrepreneur. More details can be found here.

Foreigners holding the EntrePass are able to choose between setting up a sole proprietorship, partnership, or company, and they will be entitled to apply for Dependent’s Passes for their spouse and children.


Which business entity option is the best for me as a foreigner?

Foreigners who wish to start a business in Singapore are often recommended to apply for an EntrePass or Employment Pass. The benefits of holding these passes will enable one to run their business smoothly even if they wish to not relocate to Singapore.

The process of incorporating a company in Singapore can be made simpler by consulting our professional team through our contact form. With our service, you will be able to register and run your business effortlessly within weeks. Drop us a message today!

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