For business leaders looking to expand internationally, Singapore is an attractive destination. Its competitive, high-income economy offers enticing growth prospects for new companies, and its tax and regulatory systems are purposefully designed to benefit foreign investors.
However, starting a business in Singapore can be complex, especially if you are new to the region. This is why it is crucial to appoint a highly skilled company secretary who can help set you up for success.
A company secretary with extensive tax expertise or who works closely with a tax advisor, can provide tailored advice on the ideal business structure while also ensuring your new entity meets its regulatory requirements and manages compliance risks from the outset.
In this article, we speak with Eunice Hooi, Head of Corporate Secretarial for BoardRoom Singapore, about the role of the company secretary in business today and the immense benefits of appointing a company secretary with strong taxation knowledge when setting up your business.
The role of a company secretary in Singapore
Throughout the lifecycle of a business, company secretaries undertake many important duties across various business functions. Top-tier company secretaries with tax expertise or who work with a team of tax professionals are an invaluable asset to your executive team.
Three core responsibilities that lie with the company secretary are as follows.
1. Ensuring a seamless incorporation process
When setting up an entity in Singapore, there are defined sets of pre-incorporation requirements and post-incorporation obligations you must satisfy per the Singapore Companies Act and related regulations.
An experienced company secretary can guide you through every stage of incorporation, providing specialist advice on the various business structure options as follows:
- What are the different business structures available in Singapore
- How to choose an appropriate business structure
- What are the legal and tax implications involved in selecting the appropriate business structure
- What are the available tax incentives and exemptions for the chosen business structure
As an example, Eunice explains “the introduction of Variable Capital Company (VCC) legislation in January 2020 has made Singapore an attractive destination for asset management in the Asia Pacific region. In addition to supporting with incorporation requirements, VCC’s in Singapore may qualify for a tax incentive application, subject to meeting certain qualifying conditions.”
In addition, the experienced company secretary can guide you in choosing the company’s financial year-end (FYE). The company’s financial year-end represents the final day of its accounting period. You may choose any date, but the common choices in Singapore include 31 March, 30 June, 30 September and 31 December.
Eunice explains that there are three key reasons why this is a critical decision for companies incorporating in Singapore:
“Therefore, you may consider choosing the first FYE to fall on the last day of the 11th month from the date of incorporation to maximise the coverage of the SUTE benefits,” says Eunice.
For example, if the company is incorporated on 15 May 2023, they may choose its first FYE date as 30 April 2024. This means that the company’s first set of accounts will close on 30 April 2024. As a result, the company’s basis (tax) period will be from 15 May 2023 to 30 April 2024.
2. Staying up to date with local regulations
By staying informed across all the local laws, rules and regulations pertaining to your organisation, a company secretary helps you remain fully compliant for the life of your business.
Good company secretaries are extremely familiar with the Companies Act and regulations set by the Accounting and Corporate Regulatory Authority (ACRA), as well as the listing rules and reporting requirements of the Singapore Stock Exchange. They are responsible for ensuring the timely submission of regulatory reports and providing astute advice to directors and senior managers on company compliance matters.
As a result, your company’s risk of being penalised for non-compliance is drastically reduced.
To remain informed about shifting regulations, company secretaries usually take the initiative to engage with regulatory authorities on a regular basis and/or participate in the consultation papers issued by authorities. In doing so, they gain a solid understanding of changes in advance and can assist your organisation in achieving compliance before the changes come into effect.
3. Maintaining productive relationships with stakeholders
Effective company secretaries maintain close relationships with the key stakeholders in an organisation (for example, directors, regulators and senior management). Depending on your company’s unique structure, operations and needs, these relationships will look different.
Considering the high-level advisory role your company secretary will need to perform, appointing a provider with exceptional interpersonal communication and relationship management skills is essential.
An overview of corporate tax in Singapore
On the World Bank’s global Ease of Doing Business ranking, Singapore consistently comes in second. One reason for this is the nation’s investor-friendly tax system.
Singapore also offers a variety of incentive schemes that cater to different types of businesses. Currently, and as long as you satisfy the necessary criteria, some notable schemes your business could take advantage of include:
- Start-up tax exemption (SUTE) – a tax exemption for new start-up companies of a 75% exemption on your first $100,000 of normal chargeable income* and a further 50% exemption on the next $100,000 of normal chargeable income* for the first three consecutive tax years.
- Partial tax exemption – a 75% tax exemption on your first $10,000 of normal chargeable income* and a further 50% exemption on the next $190,000 of normal chargeable income* [*Normal chargeable income refers to income that is subject to tax at the prevailing Corporate Income Tax rate of 17%.]
- Global Trader Programme (GTP) – a concessionary tax rate of 10% or 5% for well-established companies that have set up their regional trading base in Singapore
- Regional/International Headquarters Award – a concessionary tax rate of 10% or 15% apply to the qualifying income of companies that establish their headquarter activities in Singapore.
The Singaporean government regularly introduces new tax incentives to spur economic growth and build corporate resilience, with many exciting initiatives recently announced in the Singapore Budget 2023.
The benefits of appointing a company secretary with strong tax knowledge
If you engage a company secretary whose expertise is limited to company incorporation, you may fail to capture all the valuable growth opportunities available. Company secretaries with robust tax knowledge, or work side by side with an in-house tax expert, can add more value to your new business venture by:
- explaining the different legal vehicles you can incorporate as, including how they work and their suitability for your situation;
- developing a tax-efficient corporate structure based on your wider operating model and supply chain arrangement, ensuring your business group pays the lowest fair share of tax while extracting maximum profit;
- determining your eligibility for available tax incentives; and
- liaising with executive staff and regulatory bodies to develop a group-wide governance framework that incorporates beneficial, fully compliant tax and transfer pricing strategies.
If you are branching into Singapore and your existing company has a large, complicated structure, these value-add opportunities can help minimise confusion during the incorporation process while also ensuring a bright, prosperous future for your new entity and wider corporation.
How to choose the right company secretary
Your choice of company secretary can significantly impact the short- and long-term performance of your business in Singapore. To ensure the support and advice you receive is of the highest quality, ensure your company secretary has professional qualifications and a wealth of experience to their name.
If you have plans to grow your business throughout the Asia-Pacific region, consider engaging a global company secretary services provider who:
Providers who fit the above criteria can provide prompt, highly customised advice and support for all your business functions via one point of contact, resulting in a smooth, clear and productive service experience.
For more than 50 years, BoardRoom has been helping businesses flourish in Singapore and beyond. Contact our specialists today to discuss how BoardRoom’s world-class corporate services can help you reach your growth goals.
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