As we all know, Offshore CorpServe Pte. Ltd. is a company registered in Singapore. It makes absolute sense or maybe no choice for us to be registered in Singapore. The owner of Offshore CorpServe is a tax resident in Singapore. Therefore, there is no need for Offshore CorpServe Pte. Ltd. to appoint another director to keep the company going.
Somehow I find it no sense for a foreigner to incorporate a Singapore company in Singapore. Why is that so?? We will examine the reasons one by one and see if we can provide alternative solutions.
- Corporate tax rate at 17%
- There is a need to get a local director and it is not cheap to get one
- No such things as confidentiality
- Potential high administrative cost
- Many sector requires license to operate
Singapore tax rate is 17% and it should be considered cheap compares to its US and Europe counterparts. But what is the problem here? There are cheaper elsewhere. If you look at Hong Kong, the tax rate is 16.5%. There are a lot more offshore jurisdictions that do better than this. Although there is a tax incentive, there are conditions to it. The conditions are:
- The company must be incorporated in Singapore;
- The company must be a tax resident in Singapore for that YA;
- The company must not have more than 20 shareholders throughout the basis period for that YA where:
- all of the shareholders are individuals "beneficially and directly" holding the shares in their own names; or
- at least one shareholder is an individual "beneficially and directly" holding at least 10% of the issued ordinary shares of the company.
Well, there are exceptions as well. The exceptions are:
- A company whose principal activity is that of investment holding; and
- A company whose principal activity is that of developing properties for sale, investment, or both.
So what does that conclude? If you are thinking of using Singapore company as a vehicle to hold all your assets, you may forget it.
In many jurisdiction, the function of nominee director is fantastic. When the ultimate beneficiary wants to have some form of privacy, the ultimate beneficiary will request for nominee director service and it cost about US$1,000-$1,500 a year. Let's face it, it is optional and if we are seriously using the offshore company for proper use, we will have nothing to hide and there is no need to establish too many proxies shareholders or directors. The alternative solution will be to set up a Trust.
In one of the blog posting that we featured, we mentioned that there is a need to get a local director. Usually, these directors will collect an annual fee and a "deposit". This "deposit" will serve as an expenditure if the foreign director disappears in thin air. There is no such thing as sleeping director. I suppose these deposit may some up to SGD$2,000-SGD$5,000 but the yearly fee is usually lower than that.
There is no such thing as confidentiality if we are talking about Singapore companies. For those who are interested to "buy" your competitors' information in Singapore, please click here to buy. You have a whole list of information to enjoy yourself.
If you click here and you will find that Singapore company has a long list of things to follow. I personally will feel dizzy after reading. So maybe Offshore CorpServe Pte. Ltd. should not be even a Singapore company.
We look through a few Financial Service Commission sites, the popular ones. We found that a lot of all these jurisdictions only regulate some specify sectors, mainly the financial sector. But when I did a search in Singapore, I was surprised to see. Click here to look at the list of licenses/permits you have to apply. So be careful if you are dealing with any one of these sectors. You have to do a check if what business you are going to do it in Singapore before you sign up a company.
So in order for these problems and costs to look negligible to a foreigner/foreigner company. Make sure that you are really sizable enough and make sure that there is a need to establish a Singapore entity. If that is not the case, it maybe wise to stick with other jurisdictions.