How Foreigners Can Start a Business in Singapore

By Posted on

Singapore has long been recognized as a global business hub, offering excellent infrastructure, a business-friendly environment, and a robust legal system. For foreign entrepreneurs, starting a business in Singapore presents numerous opportunities, but it can also come with challenges.

Whether you are considering expanding your business to Singapore or starting fresh, understanding the regulations, legal structures, and available support is essential. This article provides a step-by-step guide on how foreigners can start a business in Singapore, including the best business structures, costs, benefits, and key resources to make the process seamless.

Why Singapore is Ideal for Foreign Entrepreneurs

Before diving into the process of setting up a business in Singapore, let’s first understand why Singapore is such an attractive destination for foreign entrepreneurs.

  1. Ease of Doing Business: Singapore consistently ranks high in the World Bank’s “Ease of Doing Business” index, offering minimal red tape and fast-track procedures for business registration and operations.

  2. Strong Economy: With a stable and competitive economy, Singapore is an ideal location for investment. The country has a robust financial sector, making it easier for foreign businesses to operate smoothly.

  3. Tax Advantages: Singapore offers attractive tax policies, including low corporate tax rates (17%) and various tax incentives for startups and small businesses.

  4. Strategic Location: Located at the crossroads of major international trade routes, Singapore serves as an ideal gateway to Southeast Asia, with access to over 600 million consumers in the region.

  5. Support for Foreign Entrepreneurs: The government provides substantial support for foreign business owners, including grants, funding opportunities, and a transparent legal framework.

Step-by-Step Process: How Foreigners Can Start a Business in Singapore

Starting a business as a foreigner in Singapore is relatively straightforward, thanks to the country’s streamlined procedures and business-friendly policies. Here’s a step-by-step guide on how to set up your business.

Step 1: Choose a Business Structure

The first step in setting up a business in Singapore is selecting the right business structure. Here are the most common structures for foreign entrepreneurs:

  1. Private Limited Company (Pte Ltd):

    • Description: The most common business structure in Singapore. It limits liability to shareholders and allows foreign ownership (up to 100%).

    • Pros: Limited liability, eligibility for government grants and funding, easy transfer of ownership.

    • Cons: Requires at least one local director, annual filing requirements.

    • Best For: Most foreign entrepreneurs looking to establish a company in Singapore.

  2. Branch Office:

    • Description: A branch office is an extension of the parent company, with no independent legal status.

    • Pros: Relatively simple to set up.

    • Cons: Parent company is fully liable for debts, and profits are subject to Singapore’s corporate tax.

    • Best For: Large international companies looking to expand into Singapore.

  3. Representative Office:

    • Description: A temporary setup to explore the market. It cannot engage in business activities.

    • Pros: Low-cost option for market research.

    • Cons: Cannot conduct commercial transactions.

    • Best For: Companies that want to test the market before committing to a full-fledged branch or subsidiary.

  4. Partnership or Limited Liability Partnership (LLP):

    • Description: A business arrangement between two or more partners.

    • Pros: Flexible management and profit-sharing structure.

    • Cons: Full liability for traditional partnerships; limited liability for LLP.

    • Best For: Small ventures or collaborations with local partners.

Step 2: Register Your Business with ACRA

To start a business in Singapore, foreign entrepreneurs must register with the Accounting and Corporate Regulatory Authority (ACRA), which is the national regulator of business entities.

  • Documents Required:

    • Business name (must be unique and not similar to existing companies)

    • Details of shareholders (foreigners and locals)

    • Proof of residential address of directors

    • Passport and identification details

    • Signed agreement on the company’s registered address (can be a service office)

  • Cost: Business registration fees range from S$300 to S$1,200 depending on the company structure.

  • Process:

    • Register online through ACRA’s BizFile portal.

    • Submit all required documents and pay registration fees.

    • ACRA will issue a Certificate of Incorporation within 1-3 business days.

Step 3: Appoint Local Directors

One key requirement for foreign business owners is to appoint at least one local director who is a Singapore citizen, permanent resident, or holder of an Employment Pass. This ensures compliance with the legal framework of the country.

  • Local Director: A local director can be a professional service provider or a local business consultant. If you’re unable to find a local director, you can hire a nominee director service.

Step 4: Apply for Employment Pass (EP)

As a foreigner, you will need an Employment Pass (EP) to manage your company. This pass allows foreign nationals to work in Singapore.

  • Requirements:

    • Valid passport

    • Job offer from a Singapore company (your business)

    • Salary threshold: S$4,500 (higher for more experienced professionals)

    • Minimum qualifications (a degree, professional qualification, or relevant experience)

Step 5: Set Up a Corporate Bank Account

After registering your business and obtaining your EP, you’ll need to open a corporate bank account in Singapore. Several banks, such as DBS, UOB, and OCBC, offer business banking solutions.

  • Required Documents:

    • Company incorporation documents

    • Passport or identity card of directors and shareholders

    • Company address proof

    • Resolution to open the bank account

Step 6: Apply for Licenses and Permits

Depending on the nature of your business, you may need additional licenses or permits to operate legally in Singapore. For example, food businesses, financial services, and healthcare companies must obtain industry-specific licenses.

Real World Examples of Foreign-Owned Businesses in Singapore

Here are some examples of foreign entrepreneurs who have successfully established businesses in Singapore.

1. Razer Inc.

  • Industry: Technology (Gaming Hardware and Software)

  • Description: Founded by foreign entrepreneurs, Razer has become one of the most recognized brands in the gaming industry.

  • Key Benefit: Offers access to the global gaming market and high brand equity.

2. PatSnap

  • Industry: Technology (Innovation Intelligence)

  • Description: A Singapore-based company offering a cloud-based platform for intellectual property analytics.

  • Key Benefit: Leverages Singapore’s strategic location to tap into the Asian market.

3. Sea Group

  • Industry: E-Commerce, Digital Entertainment, and Fintech

  • Description: Originally founded in Singapore, Sea Group (formerly Garena) is a major player in the gaming and digital finance industry.

  • Key Benefit: Combines expertise in digital services and access to a fast-growing Southeast Asian market.

Comparison Table: Business Structures for Foreigners in Singapore

Structure Use Case Pros Cons Price Range
Private Limited Company Ideal for most foreign entrepreneurs Limited liability, tax benefits Requires a local director, more paperwork $300 – $1,200
Branch Office For large companies expanding to Singapore Simple setup Parent company is liable for debts $300 – $1,500
Representative Office For market research purposes Low cost, no local director requirement Cannot engage in business activities $100 – $500
LLP For partnerships in business Flexible structure Limited liability protection only for LLP $200 – $800

Transactional Information: How to Buy and Where to Buy Services

To start your business in Singapore, you can access all the necessary services from reputable local providers.

  • Business Registration: You can register your company online through the ACRA BizFile portal.

  • Nominee Director Service: Available through professional service providers like Rikvin or OSOME.

  • Employment Pass Application: Apply directly through the Ministry of Manpower (MOM) website, or you can hire consultants to assist you in the process.

  • Corporate Bank Accounts: Available through major banks like DBS, OCBC, and UOB. Banks usually require a personal visit to open the account.

FAQs

1. Can I fully own a business in Singapore as a foreigner?
Yes, foreigners can fully own a business in Singapore, typically through a Private Limited Company structure.

2. What is the cost of setting up a business in Singapore?
The total cost ranges from S$300 to S$1,500, depending on the business structure and professional services you use.

3. Do I need a local partner to start a business in Singapore?
No, you do not need a local partner if you set up a Private Limited Company, although a local director is required.

4. How long does it take to set up a business in Singapore?
The process can take between 1-3 days for a Private Limited Company after submitting all required documents.

5. What are the tax rates for foreign businesses in Singapore?
The corporate tax rate is 17%, but tax incentives and rebates are available for qualifying startups.