In Singapore, only public accountants or accounting firms approved by the Accounting and Corporate Regulatory Authority (ACRA) can act as company auditors.

A public accountant is a person who is registered in accordance with the Accountants Act (Chapter 2) as a public accountant.

To be a Public Accountant (Company Auditor) in Singapore, the accountant must be:

• a member of The Institute of Singapore Chartered Accountants (ISCA), formerly the Institute of Certified Public Accountants of Singapore (ICPAS), which is the national professional body for accountants in Singapore;
• Must be registered as a public accountant with Accounting and Corporate Regulatory Authority of Singapore (ACRA);
• Chartered Accountant of Singapore (CA); and
• One with relevant membership in any professional accountancy body or organisation with practical experience in audit related field.

There is distinction between Chartered Accountants and Public Accountants. It is important to note that not all Chartered Accountants are Public Accountants. Only a Public Accountant can be appointed as company Auditor.

The role of auditors is to report on whether the company’s financial statements:

• Comply with financial reporting standards; 
• Provide true and fair view of the company’s financial position and performance;
• To ensure compliance with established internal control procedures by examining records, reports, operating practices and documentation;
• Verifies assets and liabilities by comparing items to documentation; and
• Completes audit workpapers by documenting audit tests and findings.

The auditor's primary responsibility is to express an opinion on whether management has fairly presented the information in the financial statements are properly drawn up in accordance with the provisions of the Companies Act, Chapter 50 (the Act) and Financial Reporting Standards in Singapore (FRSs) so as to give a true and fair view of the financial position of the company.

The statutory duties of an Auditor can be summarised as follows:

1. To make a report on the accounts of a company to members;
2. To express “true and fair” opinion:
   • On matters required by Section 201; and
   • On the balance sheet and profit and loss account
3. To express “Compliance with the Companies Act” opinion as to whether:
   • The annual accounts are prepared in accordance with Companies Act; and
   • The annual accounts are prepared in accordance with prescribed Accounting Standards
4. To consider specific points before forming an opinion as to the following:
   • Whether the Auditor has obtained all the information and explanations that is required;
   • Whether proper accounting and other records, including registers, have been kept by the company as required by the Companies Act;
   • Where consolidated accounts are prepared otherwise than as one set of consolidated accounts for the group, whether he or she agrees with the reasons for preparing them in the form in which they are prepared, as given by the directors in the accounts;
   • Where consolidated accounts are prepared, whether procedures and methods use by holding company and subsidiary are appropriate; and
   • If there are deficiencies in the accounts, the Auditor shall state that information in the report.
5. To conduct an audit in accordance with the Singapore Standard on Auditing;
6. To issue a qualified report if accounts do not comply with the Singapore Financial Reporting Standards unless the Auditor agrees with the departures;
7. To act in the client’s best interest and preserve confidentiality; and
8. To give holding company Auditors (Group Auditors) such information and explanation necessary for the purpose of audit.

In addition;

1. in the course of conducting an audit or review the Auditor has reasonable grounds to suspect that a contravention of the Companies Act has occurred, and that the contravention has not been or will not be dealt with adequately by including it in the report or bringing it to the attention of the directors, the Auditor must notify the ACRA in writing.
2. if an Auditor of a public company or a subsidiary of a public company has no reason to believe that a serious offence involving fraud or other dishonesty has been committed against the company by officers or employees of the company, the Auditor has to report to the Minister or the Monetary Authority of Singapore (MAS).

To enable the Auditors to carry out their statutory duties effectively, the Auditors are given the following rights:

1. Access to books and records at all times;
2. Attendance at general meetings, receipt of all notices, and the right to be heard at any general meeting that he or she attends;
3. Duty to report to third parties for:
   • Breach of any provisions of Companies Act, the Auditor has a duty to report to the Registrar; and
   • Fraud or dishonesty committed by employee against a public company or its subsidiaries, the Auditor has a duty to report to the Minister.
4. In the performance of his or her duty, the Auditor is entitled to require from the company’s officers any information and explanation;
5. If the company appoints another Auditor, then the Auditor had the right to make certain written subsidiary and their Auditors; and
6. The right to resign at any time by giving notice to the company.

Auditors are specialists who review the accounts of companies and organisations to ensure the validity and legality of their financial records. They can also act in an advisory role to recommend possible risk aversion measures and cost savings that could be made.

A summary of audit work scope, and Auditors’ duties that comprise of but are not limited to the following:

• Review of general risk and specific risk assessments of the company which includes performing analytical reviews, internal control review and review of error and misstatements, etc and the audit response;
• Auditing Balance Sheet and Profit and Loss items general based on assertions and by relevant Singapore Standard on Auditing;
• Obtaining relevant, reliable and sufficient audit evidence and documenting those evidences;
• Reviewing the financial statements to check whether there are in compliance with the relevant FRS and management response to our query and inherent weakness and response; and
• Draw up an audit conclusion and issuing an appropriate audit opinion on the financial statements to the members of the company.

Auditors’ usually issue an engagement letter detailing the scope of their work for audit engagements and other assurance related jobs.

The following does not come under the scope of Auditors’ duty (but rather the responsibility of the company’s directors):

• Assisting in the drafting of the company’s Financial Statements which consist of the directors’ report, statement by directors, policy notes, line notes to the accounts and risk assessment notes.
• Assist in the review of the compliance with the Financial Reporting Standards (“FRS”).

Accountancy work is not part of audit work and if required by client, are usually done as separate work request and will be billed separately. Some of the accountancy work may include the following:

• Advising client on accounting treatments that conform to FRS;
• Advising client on treatments of financial assets under appropriate classifications;
• Assisting clients in computation of fair value adjustments;
• Assisting clients in the preparation of schedules on balance and profit and loss items;
• Assisting clients in the preparation of consolidated accounts of the group;
• Other accounting related matters (examples where there are changes in FRS which may require restating prior year figures, etc) if any.

Audit fees refer to the amount of fees received by auditors for their professional services rendered to client. The amount of fees depends, among others, the risk of the assignment, the complexity of the services provided, the level of expertise required to carry out the services of proficiency level, the cost structure of the firm concerned, including other professional considerations.

In most cases, prior to commencement, an auditor will consider the scope of the work involved by reviewing the company’s accounts, relevant records, risk involved and provide an estimated audit quotation for client’s approval.

A company shall appoint an Auditor within 3 months from the date of its incorporation, unless a Company is exempted from audit requirements the Companies Act. 

Initial appointment of Auditors is made by the directors within 3 months after incorporation of the company.

Thereafter, the Auditors are appointed or re-appointed at each annual general meeting by the members of the company.

If the directors do not appoint Auditors as required by Section 205 of Companies Act, the Registrar may do so on the written application of any members.

Under the Companies Act Section 205(14) provides that an Auditor of a company may only resign:

1. If he or she is not the sole Auditor of the company; or
2. At a general meeting.

The Auditor will send the resignation letter to the company and on receipt of such a notice; the directors may call for General Meeting of the company as soon as is practicable. The resignation shall take effect at the General Meeting upon the appointment of another Auditor.

The audit exemption is applicable for financial years beginning on or after the change in the law (1 Jul 2015).

Qualification Criteria

Currently, a company is exempted from having its accounts audited if it is an exempt private company with annual revenue of $5 million or less. This approach is being replaced by a new small company concept which will determine exemption from statutory audit. Notably, a company no longer needs to be an exempt private company to be exempted from audit.

A company qualifies as a small company if:

1. it is a private company in the financial year in question; and
2. it meets at least 2 of 3 following criteria for immediate past two consecutive financial years:
   1. total annual revenue ≤ $10m;
   2. total assets ≤ $10m;
   3. no. of employees ≤ 50. 

For a company which is part of a group, to qualify to the audit exemption:

1. the company must qualify as a small company; and
2. entire group must be a “small group”

For a group to be a small group, it must meet at least 2 of the 3 quantitative criteria on a consolidated basis for the immediate past two consecutive financial years.

Where a company has qualified as a small company, it continues to be a small company for subsequent financial years until it is disqualified. A small company is disqualified if:

1. it ceases to be a private company at any time during a financial year; or
2. it does not meet at least 2 of the 3 the quantitative criteria for the immediate past two consecutive financial years.

Where a group has qualified as a small group, it continues to be a small group for subsequent financial years until it does not meet at least 2 of the 3 the quantitative criteria for the immediate past two consecutive financial years.

The audit exemption will be applicable for financial years beginning on or after the change in the law (1 Jul 2015). Transitional provisions have been provided for the first two years after the change in law.

To determine if a company qualifies as a small company in the first 2 financial years commencing after the exemption takes effect, the company must assess if it fulfils the requirements in each of the years. E.g. in order to determine whether a company would qualify in FY2016, the company should look at whether it is a private company in FY2016 and whether it meets the 2 out of 3 quantitative criteria in FY2016. If it does not qualify for that year, it will still get a chance to qualify for FY2017, if it is a private company and meets the 2 out of 3 quantitative criteria in FY2017.

To determine if a company qualifies as a small company in its first 2 financial years after its incorporation, the company must assess if it fulfils the requirements in each of the years. E.g. if a company is incorporated after Jul 2015, in order to determine whether a company would qualify in its first financial year, the company should look at whether it is a private company and whether it meets the 2 out of 3 quantitative criteria in than year. If it does not qualify in that year, it will still get a chance to qualify in its second financial year, if it is a private company and meets the 2 out of 3 quantitative criteria in its second financial year.

The total revenue and total assets of a company would be determined by the accounting standards and what appears as the total revenue or total assets in the financial statements of the company.

The number of employees is based on the number of full-time employees employed by the company at the end of the financial year.

There is no longer a requirement that the company has to be an exempt private company (one of the requirements for which is that there is no corporate shareholder) to qualify for the audit exemption. A private company which has corporate shareholders but fulfils the criteria can be entitled to the small company audit exemption.

In order for a subsidiary to be able to qualify for the small company exemption, the group to which it belongs would have to qualify as a small group and fulfil the thresholds on a consolidated basis. Therefore, even if the subsidiary is able to qualify as a small company, but the group to which it belongs is not a small group, and the holding company has to audit the consolidated financial statements, the subsidiary would not be able to enjoy the benefits of audit exemption.

The small company audit exemption only applies to Singapore incorporated companies. However, for the purposes of determining whether the group to which a company belongs is a small group, all entities within that group are taken into account, including foreign entities, in determining whether the consolidated total revenue and consolidated total assets of the group meet the thresholds.

Even where the holding company is a foreign company, a Singapore subsidiary will need to determine whether the group to which it belongs qualifies as a small group, to determine if it can qualify for the small company audit exemption. Where the holding company has prepared consolidated financial statements, the “consolidated total assets” and “consolidated revenue” of the group shall be determined in accordance with the accounting standards applicable to the group. Where the holding company does not prepare consolidated financial statements, the consolidated total assets should be determined by the aggregation of the total assets of all the members of the group, and the consolidated revenue should be determined by the aggregated revenue of all the members of the group.

No. The obligations for filing financial statements are determined by whether the company is a solvent exempt private company. There are no changes to the current criteria for determining the obligation for filing financial statements.

A company will also be exempt from audit requirements if:

• It has been dormant from the time of its formation; or
• It has been dormant since the end of the previous financial year.

A company is dormant during a period in which no accounting transaction occurs. Dormant companies will cease to be considered dormant once such an accounting transaction occurs.

If the company does not have more than 50 shareholders, it's called a private company. 

Whereas, an Exempt Private Company (EPC) is one which has a maximum of 20 shareholders, no corporation is a shareholder and the Minister has deemed it to be an EPC under the Companies Act.

The Registrar may require the company to lodge its audited accounts and the Auditor’s report with the Authority if:

• he is satisfied that there has been a breach of certain provisions of the Companies Act; or

• it is otherwise in the public interest to do so.

Even if a company is exempt from audit requirements, the Registrar may still require the company to lodge its audited financial statements and an auditor’s report if the Registrar is satisfied that the company has breached laws relating to the:

• Keeping of accounting records (section 199 of the Companies Act); or

Laying of its financial statements at its AGM (section 201 of the Companies Act).

Companies need not engage an Auditor to have its accounts audited but it still has to prepare financial statements for statutory filing and comply with other requirements of the Companies Act; example;

•   the company must send to all shareholders copies of the company’s financial statements or consolidated financial statements, except that the members need not be furnished of the Auditor’s report or a copy of the report on yearly basis;
•   Company’s financial statements must be lodged with the Registrar together with the annual return of the company.

Regardless of audit exemption. A company still needs to submitted it unaudited financial statements with the tax department   together with relevant returns.

According to the Singapore Financial Reporting Standard (SFRS), a complete compilation of financial statements should comprise the following documents:

1. A statement of financial position (otherwise known as a balance sheet), which includes the company’s assets, liabilities and equity.
2. A statement of comprehensive income, which includes the revenue, capital gains and losses, financing costs of the company as well as other comprehensive income.
3. A statement of changes in equity, which includes the different classes of shares issued by the company, changes to the company’s share capital at the beginning and end of the financial year, and transactions between the company and its shareholders.
4. A statement of cash flows, which includes cash or cash equivalents flowing in or out of the company due to its operating, financing and investing activities.
5. Notes on significant accounting policies and other explanatory information.
6. Comparative information of the above statements and notes on the preceding period.
7. Detailed income statement (for management purpose)

If the company has changed its accounting methods retrospectively, or is making a retrospective restatement of items in its financial statements, a statement of financial position (reflecting this change) as at the beginning of the previous period is also needed.

In addition, the Director(s) report and Statement by director(s) will accompany the financial statements.

An opinion is the end product of an Auditors’ work and it is based upon all the test, procedures and follow up work that the Auditor has conducted in like with legislation and SSAs. 

The following are types of Auditor’s opinion usually issued by an Auditor;

Matters that do not affect the Auditor’s opinion

1. Unqualified
2. Emphasis of matter

An unqualified opinion implies that:

• Financial information was prepared using acceptable accounting policies which have been consistently applied;
• Financial information complies with relevant regulations and statutory requirements;
• View presented by the financial information as a whole is consistent with the Auditor’s knowledge of the business of the entity; and
• Adequate disclosure of all material matters relevant to the proper presentation of the financial information

Matters that do affect the Auditor’s opinion

1. Qualified opinion,
2. Disclaimer of opinion, or
3. Adverse opinion.

Qualified Opinion

A qualified opinion should be expressed when the Auditor concludes that an unqualified opinion cannot be expressed but that the effect of any disagreement with management, or limitation on scope is not as material and pervasive as to require an adverse opinion or a disclaimer of opinion. 

A qualified opinion should be expressed as being ‘except for’ the effects of the matter to which the qualification relates.

Disclaimer Opinion

A disclaimer of opinion should be expressed when the possible effect of a limitation on scope is so material and pervasive that the Auditor has not been able to obtain sufficient appropriate audit evidence and accordingly is unable to express an opinion on the financial statements.

Adverse Opinion

An adverse opinion should be expressed when the effect of a disagreement is so material and pervasive to the financial statements that the Auditor concludes that a qualification of the report is not adequate to disclose the misleading or incomplete nature of the financial statements.

There is an expectation gap between the role of an Auditor and what the general public thinks an Auditor should do. In order to avoid such misunderstanding, the Audit report will include both the managements and auditors’ responsibilities clearly.

The role of the Auditor is to express an opinion as to the truth and fairness of financial statements; this implies that:

• The accounting principles are appropriate in the circumstances;
• The financial statements, including the related notes are informative of matters that may affect their use, understanding and interpretation;
• The information presented is classified and summarised in a reasonable manner (neither too detailed or condensed); and
• The financial statements reflect the underlying events and transactions in a manner that presents the financial position, results of operations and changes in the financial position.

General Limitations

1. The purpose of the audit is NOT to ensure that the financial statements are 100% correct or to find any fraud that may be present in the company. 
2. The Auditor’s opinion is not a guarantee of the future viability of the entity, nor an assurance of the management’s effectiveness and efficiency.
3. Auditors do not bear any responsibility for the preparation and presentation of the financial statements as these are management’s responsibility.

There is a common misconception that companies only invest in audit because they are required to do so by law. 

There are compelling commercial reasons for both large and small companies to invest in audits which are as follows; 

1. Satisfy stakeholders, such as employees, customers, suppliers, shareholders or minority shareholders and other interest groups; 
2. Bankers will require audited accounts for loan processing;
3. Enable them to comply with banking requirements covenants;
4. Potential investors will want to review audited accounts for investing or sales purposes;
5. Facilitate the purchase and sale of business;
6. Audited accounts will be useful for tendering of both government and private contracts;
7. Audit provides more credible and quality financial information;
8. Help deter and detect material fraud and error, usually perpetuated by employees;
9. It also represents an opportunity for the company accountants to get updates of latest FRS and relevant changes in Companies Act from the Auditor; 
10. Facilitate the payment of corporate tax, goods and services tax, and other taxes on time and accurately, thereby avoiding interest, penalties and investigations;
11. Take advantage of the spin-off benefits such as advice or suggestion on the structure and operations of systems from the Auditors; and
12. Demonstrate good corporate governance and prestige.

Besides the above, smaller companies that make investment in an audit will find the following additional services worthwhile:

1. The cost of audit is often affordable for small companies; particularly where the Auditors are is involved in the preparation of the statutory accounts on behalf of management.
2. Small companies who prepare their own accounts often need help in arriving at adjustments, such as those for obsolete stock, depreciations, bad debt, reviews of accruals and other provisions.
3. The close involvement of the Auditor provides companies with comfort faced with tax and regulatory investigations.
4. Utilise the spin-off benefits of an audit (Auditor usually advise on other areas like latest tax changes, GST, account preparation, personnel tax matters, corporate secretarial matters etc,)

As there are exemptions from small companies from audit, business owners can still engage an audit firm to prepare the financial statements and review of their accounting records on management behalf.

An Auditor or a CA can be engaged for the following;

1. To compile and prepare the financial statements of a company without issuing any reports;
2. To review and compile financial statements and issue a Compilation report;
3. To review and compile financial statements and issue a Review report,  
4. Other agreed upon procedures

Compilation includes the preparation of financial statement, such as a balance sheet, profit and loss account, statement of equity, statement of cash flow and notes the financial statements. The job may also include the collection, classification and summary of other financial information for financial statement disclosure purpose.

The procedures employed are not sufficient to enable the public accountant to express any assurance on the financial information. That means, the public accountant will not say that the statements give “a true and fair view” for example.

A review of financial statements engagement provides more assurance to other users of the financial statements as compared to the compilation of financial information alone.

In effect, this review gives a “negative assurance” as the public accountant will state whether anything has come to his attention that cause him to believe that the financial statements are not prepared in accordance with the financial reporting framework.

A company would ask for this service if it wanted to apply to a bank for loan, for example.

An agreed-upon procedures engagement may involve the public accountant reviewing individual items of financial data, for example, accounts payable and sales of a segment of an entity, a financial statement such as a balance sheet or even a complete set of financial statements.

This engagement may be performed for example, at consignor’s request to check the balance of stock at an overseas warehouse or review on compliance on certain grants, etc. 

As the public accountant simply provides a report of the factual findings of agreed-upon procedures, no assurance is expressed.

1. You are getting an expert to review and prepare your financial statement on your behalf, which will give greater weight age on the financial statement.
2. Less costly than an audit.

The distinguishing factor between fraud and error is whether the underlying action that results in the misstatement in the financial statements is intentional or unintentional. 

Unlike error, fraud is intentional and usually involved deliberate concealment of the facts. Fraud is a broad legal concept; the Company’s shareholders should be concerned with fraudulent acts that cause a material misstatement in the financial statements. Also, Auditors do not legally determine if fraud has taken place.

Should a material misstatement be found due to the possibility of fraud, it may cause the Auditor to question management’s integrity and the reliability of evidence obtained from management in other areas of the audit.

• 100% shares can be held by foreign or local corporation or individual shareholder
• Minimum initial paid-up share capital is $1.00
• Minimum 1 shareholder, 1 director and 1 company secretary
• Sole shareholder can also act as sole director
• Sole director cannot act as company secretary
• Company secretary must be Singapore Resident (we can be the named company secretary, if required)
• At least one director must be a resident of Singapore (i.e. Singapore Citizen, Singapore Permanent Resident, Employment Pass / Entrepass / Dependant Pass holder)
• Directors must be a natural person of “full age” and capacity (must be 18 years old and above)
• Directors cannot be an undischarged bankrupt or convicted of any offence involving fraud or dishonesty whether in Singapore or elsewhere.

• Proposed name of company
• Principle activities for the proposed company (maximum 2 types of activities)
• Number of shares to be issued to each shareholders
• Photocopy or scanned copy of Passport and/or Identity Card of all shareholders and directors (if Shareholder is a company, please provide the Company Incorporation certificate or official company profile and a company resolution or Power of Attorney to appoint a representative for signing of the company incorporation documents)
• Proof of address of all directors and shareholders (i.e. latest utility bill or phone bill or credit card bill)
• Registered office address
• For Documents signed outside of Singapore, Notary Public witnessing is required
• Documents in other languages must be translated to English by certified translator

The time frame for incorporation (with local director/ shareholder) is usually around 3 working days (1 day for name reservation and 2 days for incorporation, subject to all requested information made available to AM Corporate Services beforehand and receipt of payment on our invoice). However, if the documents have to be sent overseas for execution by the directors / subscribers, the time taken will depend on when these documents can be returned to us for submission to ACRA. Please note that with effect from 13 January 2003 the ACRA does not issue hardcopy of Form 9 (Certificate of Incorporation). Only an E-Notice confirming incorporation will be transmitted to the applicant’s email address. If you require a hardcopy of certificate of confirmation of incorporation from ACRA, this can be purchased from ACRA at S$50.00.

None. Director and shareholder can be the same person. The only restriction is that you have to appoint a qualified company secretary.

Yes, the owner of the sole proprietorship business can be the sole director and the shareholder of the company. You will need to appoint a qualified company secretary.

Generally most banks have the following requirements for opening a corporate bank account for Singapore companies:

Documents required for opening of corporate bank account

• Account opening forms which will be provided by the respective banks (to be signed by authorised signatories)
• Directors’ resolution for the opening of the account indicating the authorised signatories for the account (most of the banks have their own format for you to sign)
• Company’ profile from the ACRA
• Company’s Memorandum and Articles of Association (we will provide this)
• Passport / Identity Card of directors / authorised signatories for bank’s verification
• For single director companies some banks requires the company secretary to be present for verification purpose
• Proof of residential address of Directors (i.e. latest Utility bill, phone bill etc.)
• The banks may require additional documents on a case by case basis

Document Signing Requirements

Most banks will require the authorised signatories and majority of the directors to be physically present in Singapore for the signing of forms and documents for the opening of the corporate bank account. However, some banks will accept the signing of these forms and documents at one of their overseas branches or in front of a Notary Public or before a Singapore Embassy in the country where you reside.

• Business license: Certain business requires one or more licenses and you can check by visiting http://www.business.gov.sg/EN/StartingUp/LicencesNPermits/index.htm., fortunately, very few business activities in Singapore require business licenses. We can assist with application of relevant business licenses if required for your business.
• Opening of bank account soon after your company formation. This will help you with injecting funds into the company, receiving payments from customers, and paying your company bills. We can assist with the bank account opening process.
• You will need to decide whether you should register for Goods & Services Tax (GST). GST registration is not mandatory unless your annual turnover exceeds S$1 million. We can advise and assist you to register for GST, if required.
• In you are importing and exporting goods, you will need to obtain a Central Registration (CR) number. The CR number is for use in all import, export and transhipment permits, certificates and any other documents issued by the Singapore Customs. We can help obtain a CR number for your company if required.
• You should get basic stationary and marketing materials ready for your company as soon as possible. These include such items as business cards, letter heads, website, brochure, etc.
• If you plan to bring any foreign employees, you will need to apply for their employment pass (EP) before they can commence their employment with your newly formed Singapore Company. We can advise and assist you with EP applications.
• Renting an office space and acquiring office equipment to commence your business.
• Holding the first board of directors meeting within 3 month of the company’s incorporation to ratify pre-incorporation matters such as confirmation of registered address, adoption of company’s common seal, issuance of subscribers shares, appointment of directors/ company secretary/ company auditor and other routine matters.
• Review and sign the terms of engagement of the company secretary, company auditor, tax agent, bookkeepers, if you require all or some of these services.

• Give us a call at +(65) 6443 6502 or complete an E-Form Quotation.
• Once we receive your form and the duly completed incorporation questionnaire, we will reach out to you to clarify any outstanding details.
• Upon the receipt of the questionnaire and your payment, we will be able to commence our services immediately.

Yes, we will be able to assist with PR application. The most common way to obtain PR in Singapore is through the Professional, Technical Personnel and Skilled Worker scheme. If you are a holder of the Employment Pass, EntrePass or S Pass, you and your spouse and unmarried children (under the age of 21) are eligible to apply for permanent residence. The Global Investors Program (GIP) is administered by the Singapore Economic Development Board to bring direct foreign investment into Singapore. Under this scheme, there are two options that an investor can choose. First option is that an investor can either invest S$2.5 million in a new business start-up or expansion of an existing business operation. The second option is that the investor can invest S$2.5 million in one or more GIP-approved funds (up to a maximum of 3 funds). The investor is also required to maintain the investments for a minimum period of 5 years commencing from the date of final approval of Permanent Residency. The Foreign Artist Talent Schemeis administered by the National Arts Council and Immigration and Checkpoints Authority of Singapore to attract foreign artists with exceptional talents to move in to Singapore. For more information on PR application procedures, do drop us and email and we will revert to you accordingly.

Basis period and Year of Assessment

A company is taxed on the income earned in the preceding financial year. This means that income earned in the financial year 2019 will be taxed in 2020.

To assess the amount of tax, IRAS looks at the income, expenses, etc. during the financial year. 

This financial year is known as the "basis period".

The basis period is generally a 12-month period preceding the YA.

Examples based on different Financial Year Ends

Financial Year End	Basis Period	YA
31 Mar of each year	1 Apr 2018 to 31 Mar 2019	2020
30 Jun of each year	1 Jul 2018 to 30 Jun 2019	2020
31 Dec of each year	1 Jan 2019 to 31 Dec 2019	2020

The same rule applies to new companies.

For taxation purposes, a "Company" includes:

A business entity incorporated or registered under the Companies Act or any law in force in Singapore. It usually has the words "Pte Ltd" or "Ltd" as part of its name; or 

• A foreign company registered in Singapore such as a branch of a foreign company; or 
• A foreign company incorporated or registered outside Singapore.

A company does not include sole-proprietorship and partnership businesses registered in or outside Singapore

Regardless of tax-residency status, all companies are required to pay corporate tax under the Income Tax Act on any chargeable income derived from Singapore or foreign income remitted into Singapore.

However, Singapore tax-resident companies enjoy several benefits over non-tax resident companies.

A company will be considered tax-resident in Singapore if its control and management had been exercised in Singapore for the preceding YA.

The YA is a 12-month period in which the company’s income will be assessed. For example, for YA 2020, the 12-month period would generally be from 1 January 2019 to 31 December 2019. 

In determining where the company’s control and management is exercised, it is more dependent on the location where its strategic decisions are made (this will generally be the location of the company’s board meetings), rather than the company’s place of incorporation.

With effect from YA 2010, a company is taxed at a flat rate of 17% on its chargeable income regardless of whether it is a local or foreign company. However, with the various level of tax exemption provided by the Singapore government, the effective tax rate for companies can be significantly lower.

A partial tax exemption and a three-year start-up tax exemption for qualifying start-up companies are available.

(i) Partial Tax Exemption for all companies

All companies including companies limited by guarantee can enjoy the following tax exemption:

YA 2020 onwards

• 75% exemption on the first $10,000 of normal chargeable income; and
• A further 50% exemption on the next $190,000 of normal chargeable income.

YA 2010 to 2019

• 75% tax exemption on the first $10,000 of normal chargeable income; and
• A further 50% exemption on the next $290,000 of normal chargeable income.

(ii) Tax exemption for New Start-Up Companies – for the first three consecutive YAs where the YA falls in):

YA 2020 onwards

• 75% exemption on the first $100,000 of normal chargeable income; and
• A further 50% exemption on the next $100,000 of normal chargeable income.

YA 2010 to 2019

• Full exemption on the first $100,000 of normal chargeable income; and
• A further 50% exemption on the next $200,000 of normal chargeable income.

The start-up exemption is not available to property development and investment holding companies.

For further details on the tax exemption schemes and qualifying conditions, please refer to the following links:

All other companies

https://www.iras.gov.sg/irashome/Businesses/Companies/Learning-the-basics-of-Corporate-Income-Tax/Corporate-Tax-Rates--Corporate-Income-Tax-Rebates-and-Tax-Exemption-Schemes/

For new start-ups

https://www.iras.gov.sg/irashome/Businesses/Companies/Learning-the-basics-of-Corporate-Income-Tax/Common-Tax-Reliefs-That-Help-Reduce-The-Tax-Bills/

Singapore adopts a one-tier corporate tax system, under which all dividends paid by Singapore-resident companies are tax-exempt in the shareholder’s hands. There is no withholding tax on dividend, if it is remitted to non-resident.

A COR is a letter certifying that a company is a tax resident of Singapore, i.e. the control and management of its business is exercised in Singapore.

Companies need this certificate to claim tax benefits under the Avoidance of Double Taxation Agreements (DTAs) or Limited Treaties that Singapore concluded with foreign jurisdictions.

You will be treated as a tax resident for a particular Year of Assessment (YA) if you are a: 

1. Singapore Citizen or Singapore Permanent Resident (SPR) who resides in Singapore except for temporary absences; or
2. Foreigner who has stayed / worked in Singapore (excludes director of a company) for 183 days or more in the year preceding the YA.

Otherwise, you will be treated as a non-resident of Singapore for tax purposes.

Singapore's personal income tax rates for resident taxpayers are progressive. This means higher income earners pay a proportionately higher tax, with the current highest personal income tax rate at 22%. From YA 2017 onwards, tax rate is:

Chargeable Income	Income Tax Rate (%)
First $20,000 Next $10,000	0 2
First $30,000 Next $10,000	- 3.50
First $40,000 Next $40,000	- 7
First $80,000 Next $40,000	- 11.5
First $120,000 Next $40,000	- 15
First $160,000 Next $40,000	- 18
First $200,000 Next $40,000	- 19
First $240,000 Next $40,000	- 19.5
First $280,000 Next $40,000	- 20
First $320,000 In excess of $320,000	- 22

Taxes on Employment Income

The employment income of non-residents is taxed at the flat rate of 15% or the progressive resident tax rates, whichever is the higher tax amount.

Taxes on Director's fee, Consultation fees and all Other Income

From YA 2017, the tax rates for non-resident individuals (except certain reduced final withholding tax rates) has been raised from 20% to 22%. This is to maintain parity between the tax rates of non-resident individuals and the top marginal tax rate of resident individuals.

GST is a consumption tax that is charged on the supply of goods and services in Singapore and the import of goods into Singapore. GST is an indirect tax currently at 7 percent. This tax is applied to nearly all supplies of goods and services provided by GST registered business in Singapore.

GST tax is charged to the end consumer therefore GST normally does not become a cost to the company. Businesses merely act as collecting agents on behalf of Singapore tax department. In other countries, GST is known as the Value-Added Tax or VAT.

When a GST-exempt business decides to register for GST voluntarily, it will need to satisfy any of the below-mentioned criteria:

• Your business makes taxable supplies;
• Your business makes only out-of-scope supplies. Out-of-scope supplies mainly refer to sales of goods which did not enter Singapore and goods in transit; 
• Your business makes exempt supplies of financial services that are also international services; or
• Your business procures services from overseas service providers and you would not be entitled to full input tax credit even if you were GST-registered.

For companies who opt for voluntary GST registration must complete 2 e-learning courses, "Registering for GST" and “Overview of GST” as well as pass a quiz. Do note that the Comptroller may also impose other conditions on your GST registration. These e-learning courses are not required if:

• You have experience of managing other existing GST registered businesses; or
• The person who prepares your GST returns is an Accredited Tax Advisers (ATA) or Accredited Tax Practitioners (ATP); or
• The business is applying to be registered under the Overseas Vendor Simplified Pay-only Registration Regime. 

The cost of being GST-registered may outweigh the benefits that you can enjoy. As voluntarily registered businesses must remain registered for two years, you should assess the cost and benefits over a two-year period before registering and the following are the areas you should consider:

• More responsibilities of being GST-Registered 
• Have to invest time and resources to train staffs in GST accounting
• Possible hefty penalties for non-compliance (e.g., failure to file on time)
• If your customers are not GST registered, you may find it more difficult to increase your selling price to include the GST chargeable, especially for price sensitive customers with possibility of losing them

Registration is compulsory once your total taxable turnover exceeds $1 million. 

However, if you are certain that your total taxable turnover for the next 12 months will not exceed $1 million because of specific circumstances (e.g. large-scale downsizing of business) and can substantiate this with documentation, you will not be required to register for GST. 

If zero-rated supplies make up more than 90% of your total taxable supplies and being registered will lead to you claiming GST refunds, you may choose to apply for exemption from GST registration.

Your effective date of GST registration will be backdated to the date you ought to have been registered. 

You are required to pay the GST on taxable supplies made from the date of registration even if you did not collect any GST from your customers.

No. The business is liable to pay GST and IRAS will compute based on the Revenue generated by the business ought to have been registered.

No. GST should only be charged on sales made on or after the effective date of GST registration. Once your application is approved, a letter bearing your GST registration number and the effective date of GST registration will be sent to you.

If I have collected GST prior to my application for registration, what should I do?

If you have wrongfully charged/collected GST from your customers, you should notify the Comptroller of GST in writing with the following attachments: 

• • Summary of sales for which GST has been wrongfully collected (i.e. invoice date, value of sale and GST collected) 
  • Copy of invoice issued 
  • Cheque made payable to “Comptroller of GST” for the amount of GST wrongfully collected

Your responsibilities and obligations range from filing returns and paying for GST on time to keeping proper business and accounting records.

There following are the main types of business structures to choose from:

• Sole Proprietorship 
• Partnership 
• Limited Liability Partnership 
• Limited Partnership 
• Private Limited Company

BUSINESS ENTITIES COMPARISON

IN A NUTSHELL

Generally, the structure of a business determines its legal, financial reporting and tax status. Choosing the most appropriate business structure to meet your business needs requires careful consideration. Some of the factors you should consider carefully before deciding on the best suited structure:

• Your commercial objectives of setting up the business
• Amount of capital that you are prepared to invest
• The level of control you desire to have in the business 
• Number of owners in the business
• To what extent are you prepared to shoulder liabilities and responsibilities in the business 
• The extent of risks you are prepared to take
• Tax implications
• To consider the annual administrative and compliance cost of running the business 
• The pros and cons of the different business structures 
• How easily can the business can be terminated

Majority of companies we have registered for clients fall within the following time frame:

Footnotes:

^{* 1} The above is applicable provided no further referral to other government authority is involved.
Also, dependent on the return of the duly completed incorporation questionnaire and due diligence documents listed in the verification list.

^{* 2} The time frame for actual incorporation is usually around 2 to 3 working days,
subject to all requested information made available and due diligence completed. However, if the documents have to be sent overseas for execution,
the timeframe mainly depends on how fast the duly executed documents are returned for lodgement with ACRA.

Generally, most banks have the following requirements for opening a corporate bank account for Singapore companies:

Documents required for opening of corporate bank account:

• account opening forms which will be provided by the respective banks (to be signed by authorized signatories)
• Directors’ resolution for the opening of the account indicating the authorized signatories for the account (most of the banks have their own format for you to sign)
• Company’ profile from the ACRA 
• Company’s Constitution 
• Passport / Identity Card of directors / authorized signatories for verification by bank
• Proof of residential address of Directors (i.e. latest Utility bill, phone bill etc. – not older than 3 months)
• The banks may require additional documents on a case by case basis which they will inform during enquiry stage

(Note: For single director company, banks will also require the company secretary to be present for verification purpose)  

Signing of documents requirements 

Most banks will require the authorized signatories and at least 2 directors to be physically present in Singapore for the signing of forms and completion of formalities relating to the opening of the corporate bank account(s). 

However, some banks will accept the signing of these forms and documents at one of their overseas branches or in front of a Notary Public or before a Singapore Embassy official in the country where you reside. With the worldwide pandemic, some banks have also turned to video conference / video calls for due diligence verification processes.