Singapore has long been a preeminent destination for setting up a regional headquarters and other foreign company structures to pursue business opportunities across ASEAN and Asia.
The country’s status as a preferred investment destination in Asia can be attributed to its legal and tax regimes – one of the most business and investor-friendly in the world – as well as its financial system, which is highly integrated with international financial markets.
This business landscape has enabled international investors to take advantage of Singapore’s access to some of the largest combined free trade areas through ASEAN, which include ASEAN-China, ASEAN-Hong Kong, and the ASEAN-India free trade agreements (FTAs).
There are, however, a wide variety of factors that add up to make Singapore an ideal location for companies that want to do business in the region.
Extensive tax incentives for businesses
Companies setting up in Singapore are eligible for various fiscal and non-fiscal incentives if their business is deemed beneficial to the country’s economic development. Applicants must fulfil rigorous requirements, which include committing to certain levels of investments, introducing leading-edge skills, technology, as well as contributing to the growth of research and development and innovation capabilities.
Favorable corporate tax regime
Singapore’s corporate tax regime is one of the most attractive in Asia. Businesses can take advantage of the flat 17 percent corporate income tax rate for profits above S$300,000 (US$217,000) and 8.5 percent for profits up to S$300,000 (US$217,000).
Moreover, as the Singaporean tax system operates on a territorial basis, companies are not taxed on most types of foreign-sourced incomes (such as from dividends or branch profits) that are remitted into Singapore, provided they pay tax in the source country with a rate of at least 15 percent. There is also no capital gains tax.
Strong DTA and FTA networks
One of the biggest benefits of relocating a company to Singapore is its network of 85 double taxation agreements (DTAs) and 24 FTAs.
There are two types of DTA in Singapore: comprehensive and limited.Comprehensive DTAs cover all income types and allow for the exchange of tax information, whereas limited DTAs cover income from shipping and air transport. These DTAs also include treaties with ASEAN’s 10 member states, providing businesses with a greater competitive edge when entering this market.
Furthermore, Singapore also has exclusive access to the largest combined free trade areas due to its agreements with ASEAN as well as its FTAs with China, Hong Kong, India, and the EU. The country is also negotiating new FTAs with the Pacific Alliance-Singapore and Eurasian Economic Union (EAEU).
Strategic location as a gateway to ASEAN
Nestled between Malaysia and Indonesia, Singapore’s strategic location in the heart of southeast Asia provides unrivalled access to transport and trade links to the rest of south east Asia and beyond. It’s central location makes it an extremely attractive place from which to springboard to some of the world’s most exciting and fastest-growing markets.
The country’s Port of Singapore is one of the busiest and best-connected seaports in the world, with links to more than 600 ports in 120 countries. Meanwhile, Singapore Changi Airport is one of Asia’s biggest transport hubs, recording over 68 million passengers and over two million tons of air freight movements in the pre-pandemic year of 2019.
Highly skilled English-speaking workforce and favorable labor schemes
Singaporeans share various cultural and linguistic connections with ASEAN members, while English is the main working language. The country’s highly-skilled labor force is equipped to act as intermediaries for investments in Asia while maintaining the capacity to communicate with investors from abroad. Singapore’s workforce was ranked number one in Asia Pacific and number three in the world in the 2020 INSEAD Global Talent Competitiveness Index. Singapore’s workforce also scored highly on the World Economic Forum’s (WEF) 2020 Global Competitiveness Report for digital skills, and it is the one of the countries with the highest adoption rates of information and communications technology (ICT) in the world.
Companies can also benefit from government schemes aimed at boosting employment and wages of local workers. The government’s Wage Credit Scheme enables the government to co-fund the wage increases of Singaporean employees earning a gross monthly wage of up to S$4 thousand (US$2,945), whereas the Job Support Scheme enables the government to co-fund monthly wages for every local worker.
Transparent legal system and ease of doing business
The transparent nature of Singapore’s business and legal regulations means most of the information a business needs are readily available online. This makes it much easier for overseas decision-makers to learn more about the market during the entry process.
The efficient and transparent business environment is part of the reason why Singapore has consistently ranked in the top three in the World Bank's Ease of Doing Business report, in which it ranked second in 2020. Singapore was ranked third in the WEF’s 2020 Global Competitiveness Report digital legal framework, which indicates that the country’s legal framework is well adapted to digital business models.
The majority of bureaucratic procedures for companies, from establishing to managing to dissolving a company, can be done online through the Accounting and Corporate Regulatory Authority’s (ACRA) online business filing portal BizFile, which also provides detailed information on the information and documents required for various procedures, and step-by-step guides for how to complete them.
Strong IP protection system
Singapore has a strong and transparent legal system for protecting intellectual property (IP) rights, which is overseen by the Intellectual Property Office of Singapore (IPOS). The country has a specialized IP court to handle complex IP cases, as well as a WIPO Arbitration and Mediation Center, the only office of the World Intellectual Property Organization (WIPO) outside of Geneva.
Trademarks, patents, and copyright are protected under the Trademark Act, Patent Act, and Copyright Act respectively, IPOS also offers an efficient system for registering trademarks, patents, and copyright, which can be done online or in person, and enables registration both in Singapore and internationally through the through the Madrid Protocol, WIPO’s international registration system of trademarks.
The government also provides financial support for intellectual property and patent filing with incentives such as the Market Readiness Assistance (MRA), which provides Singapore-based companies seeking to expand abroad funding of up to 70% of costs for eligible activities, including filing of foreign IP applications.