Starting a business: Singapore versus New Zealand
5 minute read
If you’ve got a Kiwi business and you’re considering whether to set up shop in Singapore, this article is for you. We’ll cover the key differences you’ll encounter in Singapore as well as why you may want to consider the country as your gateway to Asia.
- Global ranking
- Incorporation & Ownership
- Workforce and talent
- External Investment
- Infrastructure and resources
- Transparency and governance
- Support for NZ Companies in Singapore
Based on the World Bank’s Ease of Doing Business Report 2018, Singapore is ranked #2 in the world, but New Zealand still has the #1 spot overall. Here’s the breakdown of some key factors:
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What does this mean? That if you’re looking to build a presence in South East Asia, you can do so from Singapore with essentially the same level of efficiency, transparency, and ease as in New Zealand.
In comparison, take a look at other popular hubs in South East Asia:
- Hong Kong at #4
- Malaysia #15
- Thailand at #27
- Indonesia at #73
Singapore is also an obvious choice if you have IP you’re bringing over with you – the World Economic Forum’s Global Competitiveness Report ranked Singapore as having the best IP protection in Asia (and ranked #3 globally).
Incorporation & Ownership
Incorporating a company in Singapore is a very similar process to incorporating in New Zealand. The Singapore equivalent of MBIE’s Companies Office is ACRA – the Accounting and Corporate Regulatory Authority. If you’re based in New Zealand (or overseas generally), and wanting to set up a Singapore company you will need a Filing Agent to submit your incorporation on your behalf.
While businesses may consider other structures such as a branch or representative office, a subsidiary is the most common approach for a company wanting to set up shop in Singapore.
The minimum requirements for a private limited company in Singapore are:
- One shareholder (can be a foreign individual or company)
- One locally resident director
- $1 paid-up capital in any currency
- A registered business address in Singapore
- A company secretary – an appointed individual to manage your company’s reporting deadlines and to help update shareholder and director details when needed.
Having an entity in Singapore is often recommended as part of company and taxation structuring when you want to expand into the SEA region, particularly with its attractive corporate tax rates and double-taxation avoidance agreements with many other countries.
Key features of the Singapore tax system includes:
- A “single-tier” corporate income tax system, which means that tax paid by a company on its chargeable income is the final tax – dividends paid by a company to its shareholders are exempted from further taxation
- There is no tax on capital gains in Singapore
- Corporate tax is capped at 17% and new companies can benefit from tax exemption schemes
Companies in Singapore pay 0% tax on the first $100,000 of normal chargeable income for their first three years of incorporation (Note: this regime is set to shift slightly from the Year of Assessment 2020 onwards – see the table below.)
|YA||Normal chargeable income|| |
More on here on the Singapore Start Up Exemption Scheme.
Workforce and talent
Singapore’s national language is English and boasts a highly developed pool of workers. Average salaries are considerably higher in Singapore than other hubs in Southeast Asia, however its education system is among the world’s best and produces an industry-ready workforce renowned for productivity and efficiency.
In addition to a higher proficiency in English, Most Singaporeans are also effectively bilingual with either Chinese, Malay, or Tamil. This is very beneficial for companies with English-speaking HQs as it can reduce miscommunication. Furthermore, as Singapore has a very diverse population, your business may benefit from the various cultural and commercial ties with other countries such as China, Taiwan, Indonesia as well as strong economies from the West.
If you’re looking to expand into the SEA market and are hunting for capital, the VC scene in Singapore is booming, particularly in the tech industry. Kiwi-based TradeGecko raised US$6.5 million for their Series A in Singapore from local venture capitalists for their cloud based inventory management tool in 2015 and a further US$10m in a Series B round in 2018.
The relative stability of Singapore as well as the government’s moves to create an ecosystem friendly to entrepreneurs has been piquing the interests of VC funds for the last few years. Map of the Money displays the breadth of active investors in Singapore (and can be helpful to entrepreneurs navigating the funding landscape).
Infrastructure and resources
Singapore is a small city-state, leading the government to focus its resources on ensuring high quality of workforce, extensive public transport for ease of accessibility and a high level of reliable internet connectivity.
Kiwis who come across rave about the high-speed internet and the quality of the public transport and ubiquity of ride-hailing services like Grab (the SEA equivalent of Uber) mean that most of the population live and work without owning their own car.
Governance and transparency
Corruption is a major concern for many entrepreneurs and investors in Southeast Asia – but the Corruption Perceptions Index by Transparency International puts Singapore as the highest score of all Asian countries at 84/100 (on par with Sweden) and an oasis of security and hub of safe financial activity.
Support for NZ Companies in Singapore
There are more than 40 New Zealand companies with a local presence in Singapore. These companies are mainly engaged in ICT, food and beverage and specialised manufacturing sectors. The key business organisations supporting Kiwi businesses in Singapore are:
- New Zealand Chamber of Commerce, Singapore
- New Zealand Trade & Investment (NZTE)
- Australian & New Zealand Association (ANZA)
Sleek helps companies as they set up shop in Singapore – from incorporation and registration to accounting and tax compliance. Our 100% online platform means you can effortlessly set up and manage your company’s governance wherever you are.
We’re also proud to be one of the only 6 Platinum Partners of Xero in Asia – a great New Zealand company taking the World by Storm. Our team prides itself on giving practical, on-the-ground advice and we’re happy to help you with any questions you have about getting your company off the ground – just get in touch!