What is an Offshore Company?
An offshore company or corporation is an organisation type or business structure, where the company is registered in a jurisdiction that is different from where its investors and stakeholders are based. To put it simply, offshore companies are businesses that exist in a different country from their investors, set up for the purpose of conducting business activities. The term ‘offshore’ is only meant to indicate that the company is established in another country—nothing more, nothing less.
The way in which they function as a business is rather straightforward and is not too different from a locally incorporated company. The company operates as a corporate entity that is allowed to conduct trade, hold assets, and conduct regular business activities outside its jurisdiction legally.
Benefits of Setting Up an Offshore Company
Forming an offshore company in Singapore hosts a variety of benefits, some of which include reduced tax liability, ease of incorporation, liberal foreign ownership policy, and political stability.
1. Reduced Tax Liability
In any country, taxes are one of the main considerations when setting up an offshore company. You would want to set up a company that is not only geographically strategic in order to obtain optimum sales, but also a country with the lowest taxes. With the way Singapore’s tax system is designed, business owners can enjoy benefits such as low personal income and corporate tax rates, tax incentives and relief measures, absence of dividend and capital gains tax, and a comprehensive tax treaty network. With that, business owners can benefit immensely from these tax benefits for offshore companies.
2. Ease of Incorporation
In 2018, Singapore retained spot at #2 as the world’s easiest place to do business by the World Bank Group. Until today, the country remains one of the easiest places to do business among many business owners across the globe. With a fully-computerised registration procedure, applicants can register from anywhere in the world and have their company incorporated as early as two working days. Moreover, foreigners who want to register an offshore company in SIngapore don’t require prior approval from Singapore authorities.
3. Liberal Foreign Ownership Policy
With regard to Singapore's foreign ownership policy, it is fairly libreal and open. What this means is that there are zero restrictions on permitted areas of business activity for potential offshore companies in the country. Furthermore, 100% foreign shareholding is permitted across all sectors, where shareholders can either be corporate bodies or individuals.
The Incorporation Process in Singapore
Once you have made the decision to set up an offshore company on Singapore shores, you will need the following requirements in order to complete the incorporation process:
- Company Name Approval: Prior to incorporation, the proposed name of your offshore company must be approved by the Singapore Company Registrar.
- Registered Address: Offshore or not, every company in Singapore must have a local registered address, which can be either commercial or residential. P.O. boxes are not allowed.
- Directors: A minimum of one local resident must be a part of the company’s group of directors. Directors must also be above 18 years of age.
- Shareholders: Likewise, a minimum of one local or foreign shareholder is required for offshore companies. A director and shareholder can be the same or different person, and can be an individual or a corporate body.
- Company Secretary: Along with the directors and shareholders, a company secretary is also compulsory in the incorporation process. However, a director/shareholder cannot act as the company secretary.
- Appointment of Incorporation Agent: Under Singapore law, foreign individuals or entities are not allowed to self-register as an offshore company. Engaging with an external firm is required to register a Singapore offshore company.
- Business Licenses or Permits: Depending on the nature of your business, there may be certain business licenses or permits that you need to obtain before commencing business operations.
Other documents required for incorporation include the passport copies of each shareholder and director, the residential addresses of all shareholders and directors, and the details of the parent company (if the shareholder is a corporate entity and not an individual).
Where do I start?
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