The legal system in Singapore and Australia is a common law system, ultimately inherited from England. However, the tax and legal differences between Singapore on the one hand, and the UK and Australia on the other, are often surprising to those in the UK and Australia setting up in Singapore.
Here are a few examples.
- Company secretary #1. All Singaporean companies must have a company secretary. However, a company secretary is not needed for private limited companies in the UK and Australia.
- The need for a local director. All Singaporean companies must have a local resident person to act as director. Australia has a similar requirement but the UK has no such requirement.
- The private limited company – different names.
UK Ltd (limited)
Australia Pty Ltd (proprietary limited)
Singapore Pte Ltd (private limited).
- Company secretary #2. All Singaporean companies need a local resident person to act as company secretary.
- Tax residency #1. A company incorporated in Singapore is not automatically a tax resident of Singapore. This contrasts with most other countries, including the UK and Australia – a company incorporated there is automatically a tax resident there.
- Tax residency #2. A Singapore company is only a tax resident of Singapore if it is ‘managed and controlled’ in Singapore. This test is easily satisfied. We will publish a separate blog on this.
- Due diligence. Singaporean banks and service providers are subject to strict ‘know your client‘ anti-money laundering due diligence requirements. At least in practice this is more demanding in Singapore than in the UK and Australia. Some may find the regime tedious – and it can be time consuming.
- Public officer. Neither Singapore nor the UK have the concept of public officer as is found in Australia.
- PAYE/PAYG. Singaporean employers are not required to withhold tax from employees salaries.
- Work visas. The handling of applications for work visas in Singapore tends to be significantly faster than the UK, and dramatically faster than in Australia.
- Territoriality regime. Singapore uses the territorial system of taxation. This compares with the global or worldwide system in use in the UK and Australia. In its pure form all that is taxed in Singapore is income that has its source in Singapore. So a Singapore taxpayer (including individuals and companies) are not taxed on income sourced outside Singapore. There are exceptions of course. (I suppose we should do a blog on this too)!
At Sheltons Accountants Singapore we have extensive experience in setting up and administering operations for overseas-based businesses. We provide a broad range of services, from setting up the entity and opening a bank account, to providing the legally required local director and a full range of tax, accounting, company secretarial and administrative services.
We are also experienced in providing local and international tax advice, advice on tax treaty issues and cross-border tax efficient structures.