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A Singapore Private Limited Company is a business entity registered under the Companies Act, Chapter 50. Unlike a business firm such as a sole proprietorship or partnership, it has a legal personality i.e. it has rights to own properties, can sue or be sued. It usually has the words 'Pte Ltd' as part of its name.
There are 2 types of Private Company limited by shares: (1.) Private Company - locally incorporated company where the number of shareholders is limited to 50; (2.) Exempt Private Company - which has no more than 20 shareholders and none of the shareholders are a corporation. For such company, the company can choose to file a Certificate of an Exempt Private Company instead of its accounts at the time of filing its annual return, subject to certain conditions such as the annual revenue must not be more than S$5 million.
The Companies Act requires a minimum of one director, who must be a Singapore resident individual, .i.e. a Singapore Citizen, a Singapore Permanent Resident, a person who has been issued an Employment Pass/Approval-In-Principle letter/Dependant's Pass. Any person above the age of 21 years may be appointed as a director. However, some individuals e.g. bankrupts, are disqualified from being directors. A foreigner who wishes to act as a local director of a company can apply for an Employment Pass/Approval-In-Principle letter from the Employment Pass Department of the Ministry of Manpower.
A minimum of one shareholder is required and shareholders may be corporations or individuals. Companies are also required to appoint a resident company secretary, who must be a natural person and Singapore resident.
Directors, Shareholders and Company Secretary information are disclosed to the authorities and are public records.
Accounts must be kept for all companies. Annual audited accounts are required to be filed with the Singapore Registrar unless it is a Exempt Private Company with (1.) an annual turnover of less than S$5 million, (2.) Members of the company do not exceed 20 and (3.) Members of the company are individuals and not a corporation.
The first Annual General Meeting of a company must be held within 18 months of its incorporation. After that, an AGM must be held once in every calendar year and not more than 15 months after the last AGM. As required under Section 197 of the Act, the company must file its Annual Return within 1 month after the AGM.
The Singapore tax structure is pro-enterprise and pro-business - a host of tax schemes and incentives have been put in place to help companies grow their business. The corporate tax rate for Year of Assessment 2009 is 17%. However, the effective tax rate can be reduced significantly (to 15%/10% or even 0%) for businesses that qualify for tax incentives. Foreign sourced dividends, foreign branch profits and foreign sourced service income are exempt from tax, subject to certain conditions. With its extensive tax treaties and unilateral tax reliefs, foreign dividends received in Singapore may generally be redistributed out of Singapore tax-free to the foreign investors.
Singapore has an extensive investment protection agreement and double tax treaty network. This includes most countries in the Asia-Pacific Region and countries in Europe, Africa and the Middle East. These countries include China, Indonesia, Thailand, Malaysia, Philippines, Vietnam, India, Japan, Korea, Australia, New Zealand, South Africa, United Kingdom, Netherlands, Germany, Switzerland, Sweden, France, Belgium, Finland and the United Arab Emirates.
Singapore is also one of the very few countries to have a tax treaty with Taiwan. This explains the popularity of Singapore holding companies for Taiwanese investments in to China and the region.
Full tax exemption can be granted on up to S$100,000 of the normal chargeable income (excluding Singapore franked dividends) of a qualifying company, for any of its first three consecutive YAs (year of assessments) from its incorporation.
The qualifying conditions for the full tax exemption are as follows:
Key Corporate Features