Every country has its way of allowing organizations to carry on with their businesses. But it is imperative for them to make them conducive enough for trade to prosper and rake in new companies continually.
Singapore is one of those countries that have aced the idea of allowing MNCs to establish and grow on their land.
Singapore is an ideal destination for businesses looking to relocate their endeavors. In recent years, several MNCs such as the likes of Dyson have relocated their headquarters to the country. The reasons behind it are many, but it is primarily the ease of business and the growing importance of Asia as a business hub.
This article discusses things you need to know before relocating your business to Singapore.
What do we mean by relocating a business?
Relocating business refers to changing locations. It can be shifting to a new place in the same city, across cities in the same country, or from one country to another. The management decides to relocate when they feel that there would be a well-defined improvement (monetary or otherwise) from such a move.
There are several reasons a business would want to relocate, such as –
- High cost of raw materials
- Labor and workforce issues
- Plans for expansion
- The need to upgrade
- The need to improve the quality of life
- The need to curb operational costs or improve cash flow
Why is Singapore attractive for business?
A domestic or foreign entrepreneur can start his business operations in Singapore within two to three days. So there is little doubt why it was ranked second in the World Bank’s Ease of Doing Business report, with the benchmark year as 2019.
Singapore is one of the top-ranked countries in FDI inflows, and experts consider it a gateway to the brewing ASEAN markets.
In addition, here are the reasons that make Singapore a suitable country for relocating your business –
- It offers a clutter-free and investor-friendly taxation caricature with no tax on capital gain and dividend income
- It has a well-thought-out setup allowing easy and strategic access to visas for professionals looking to set up their business in the country
- Skilled and multilingual workforce is abundant in the country
- The geographical location of Singapore gives it an advantage as it connects a plethora of trade and shipping routes
- The law system is considered one of the best in the world and is free from red tape and unwanted hindrances
- Singapore offers an environment conducive to business operations
Factors to consider for relocation of your business
If you are mulling relocation of your business, and that too across countries, here are some factors to consider –
It is one of the vital prerequisites to consider before relocating your business to another country. Depending on where you were and where you plan to shift, it can be a considerable factor impacting your profitability.
Singapore is often considered a tax haven and an ideal place for setting up a business. It is because its corporate tax rate of 17% is one of the lowest across the world. In addition, organizations get tax breaks, partial tax exemption, and many other facilities to help them grow in the country.
Even though this should have been a hassle-free affair, gauging the total cost involved in relocating is often cumbersome. It is because of a lack of transparency and a plethora of hidden costs often involved in the process.
Thankfully, Singapore offers one of the smoothest and clutter-free experiences for businesses looking to relocate. It provides a smooth company formation process that ensures that you do not suffer from unnecessary external bottlenecks while shifting.
But, in most cases, hidden expenses are company-specific, and your management will have to understand the financial surprises that may hit them.
Once you have an idea of the probable expenses, conduct a cost-benefit analysis to understand if the shift is worth your time and resources.
Impact on stakeholders
Stakeholders include everyone who will impact your business decisions, with the most vital being your employees when you think about relocating. Therefore, it is crucial for you to ensure that the locality you plan to shift to is conducive for business and will allow your workforce to optimize their performance.
If your relocation endeavors do not augment your growth capabilities or act against it, the choice of relocating requires a second thought. Also, the focus should be on long-term improvements. Singapore is well-equipped to support you with all the requisite resources to help you undertake constructive growth.
The overall impact on the community
Every business exists because there is a community aiding its growth. So when a company, however small it may be, decides to relocate, it impacts the community as a whole. So it would be best if you kept in mind the likely after-effect of your move while deciding on your shifting endeavors.
List of foreign companies in Singapore
Given the ease of doing business, many companies have shifted their base from other countries to Singapore.
Here are some of the top MNCs with a base in Singapore –
- Ernst & Young
- KFC (Kentucky Fried Chicken)
- BNP Paribas
- HP (Hewlett-Packard)
- JPMorgan Chase
- P&G (Procter & Gamble)
Singapore foreign ownership restrictions
As of now, there are no restrictions on foreign individuals or corporations owning a company in Singapore. But there are specific sector-based rules that limit the entry for foreign investors.
Step-by-step relocation process
Here are the steps for you to relocate your business seamlessly to Singapore –
Choose a business structure
To begin, choose an appropriate business structure that would help you relocate to Singapore. Since 2017, the country’s government has allowed foreign corporate entities (FCEs) to transfer their operations to Singapore.
They can do so by applying for Singapore’s re-domiciliation regime available under the Companies (Amendment) Act 2017 and the Companies (Transfer of Registration) Regulations 2017. However, it does not result in the creation of a new legal entity.
Suppose the organization is unable to apply for it for any reason, they can do so the usual way, i.e., by establishing a parent-subsidiary relationship or by converting your foreign company into a parent company.
For that, establish a subsidiary company in Singapore. After its successful registration, you can transfer the assets and liabilities of the parent to the same. You can then deregister the parent company or let the Singapore subsidiary operate on a standalone basis.
Understand compliance requirements
Like in any other country, your workforce will have to start by understanding how the business landscape operates in Singapore. Failure to understand it beforehand can lead to heavy penalties and several other unwanted repercussions.
To begin, you can expect to do the following –
- Choose an accounting period for your business
- Appoint an auditor
- Have a unique entity number (UEN)
- Obtain a business permit
- Prepare employees’ tax forms
- File corporate income taxes
- Register with the Central Provident Fund (CPF)
- Register for GST (Goods and Services Tax)
- Conduct Annual General Meetings (AGM)
- Fie annual returns
Adhering to the norms would allow you to carry on your business activities seamlessly.
Get work visas or permanent residency
If you want the business to relocate to Singapore, you will have to acquire the requisite work visa to commence your operations in the country.
You can either opt for an EntrePass that allows you to act as the local director of your organization, apply for an Employment Pass, or permanent residency. These would allow you to seamlessly travel and stay in the country and continue the smooth flow of business.
Alternatively, you can appoint a nominee resident director responsible for handling the business operations in Singapore. The appointment should comply with the statutory requirements established by the Companies Act.
Transfer assets and liabilities pertaining to the business
Once you garner an idea of the business landscape in the country and have the requisite documentation in place, you can initiate the transfer process. It would involve transferring all the assets and liabilities of your existing business to the Singaporean entity.
You can then choose to discontinue the foreign entity or allow it to be the holding without hindering the operations in the country.
Every time you relocate, there is a cost of business interruption. It is inevitable for your business to move at a snail’s pace or not move at all for the first few days. In addition, there can be other changes, such as loss of goodwill, that will inadvertently hamper your business.
With Singapore offering a plethora of reasons for expansion and setting up of business, it has become more lucrative than ever for businesses to relocate their base to the country. But every business is unique, so it is imperative for every foreign company to weigh the pros and cons before making the final move.
Disclaimer: The information contained in this blog is for general information purposes only and is not intended as legal advice. While we endeavour to provide information that is as up-to-date as possible, Intime Accounting makes no warranties or representations of any kind, express or implied about the completeness, accuracy, reliability, suitability or availability with respect to the content on the blog for any purpose. Readers are encouraged to obtain formal, independent advice before making any decisions.