News: Substance in Singapore as a guarantee of business stability

Singapore’s “economic miracle” triggered a trend of redirecting global cash flows. The Asian city-state composed of 63 islands developed from the provincial city on the edge of the world to a priority area of capital concentration. Entrepreneurs from all over the world form companies in Singapore to maximize profits and minimize expenses.

A lot of foreign businessmen form companies without its real presence; thus, they risk to fall under the suspicion of the regulatory authorities.

Substance in Singapore solves the problem of company formation without actual presence.

Trends in a number of countries demonstrate tightening control over non-residents. The Anglo-Saxon model of state structure forces Singapore to remain within the tradition of European law. The EU countries actively monitor the "tax havens", and even resort to application of sanctions to them.

What advantages does substance in Singapore have?

If your company is registered in a country with the offshore status, but does not operate there, you should think about ways to eliminate repercussions. Substance in Singapore is a mechanism for mitigating the risk associated with getting on the list of dummy companies. Enterprises registered as intermediaries for the withdrawal of capital in more lucrative jurisdictions are perceived as fraudulent. Sanction measures may be imposed on them. Not all states consider Singapore as an offshore territory. Whether that is true or not, but the tax system of this country has special features.

In the context of taxes and fees, it should be noted that the fee of 60 SGD is charged when submitting annual reports. At the same time, there is no annual state fee. There is no income tax if it is obtained beyond the country. There is no agreement on double taxation.

The requirements for non-resident companies are as follows:

• at least one shareholder listed in the public register;
• final beneficiary must be known only to the local agent;
• both director and secretary must be residents;
• record keeping and submission of financial statements with the tax return are required.

Indeed, there are exempt companies that are not subject to the requirement of an annual audit. Among these companies are the following:

• with annual turnover of not more than 5 million SGD;
• with 20 shareholders maximum;
• having the status of an individual.

If the firm did not conduct banking transactions during the financial year or did not operate after registration, it is exempt from audit as well. Such a enterprise is referred to as dormant company.

Substance (real presence) in Singapore is a simple procedure

Using the service of substance, you will get:

1. Office with the necessary equipment for your business where the documentation will be stored;
2. Director with the status of resident, whose professional qualification entitles him to hold such a position, and his authorities entitle him to sign contracts and other documents;
3. Corporate communications. Phone or fax through which communication is carried out, as well as e-mail;
4. Secretary with the status of resident of Singapore. A competent specialist who will keep and submit accounting and other documentation;
5. Functioning web-site with domain;
6. Active bank account.

These criteria make it possible for your company not to be regarded as fraudulent. Inspection bodies will be ensured that such a company complies with all rules of the law.

It is important to bear in mind that the service of substance is a complex process allowing to create the visibility of doing a business in the territory of another state.

In the process of registration a number of circumstances indicating the true motives for real presence may arise. Law&Trust International has extensive experience in other countries and will provide services with minimal risk to your money and reputation.