Offshore Company: What is It & How to Set Up One in Singapore

What is an Offshore Company?

An offshore company is one which is incorporated in another jurisdiction than where its principals (directors, shareholders, parent company etc.) are located.

Offshore companies are often incorporated in order to take advantage of laws or benefits not available in their home jurisdiction, such as favourable taxation systems or foreign business opportunities.

What activities can an offshore company engage in?

An offshore company can engage in any business activities it wishes, even if these differ from those of the parent company.

However, some business activities (such as running a restaurant) may require special licences from the relevant regulatory authorities. Such licences may be applied through the Singapore government’s GoBusiness Licensing portal.

Can an offshore company operate under a different business name from its parent company? 

Yes, an offshore company can choose to operate under a different business name from its parent company. However, business names are subject to approval by ACRA, which may reject an application if the name chosen is already in use by another business.

You may refer to our article on selecting a business name for more information.

Why Set Up an Offshore Company in Singapore?

Singapore is one of the best destinations in the world to set up an offshore company. Its strategic location along the Straits of Malacca, highly-skilled workforce and pro-business environment allows it to be the ideal regional hub for multinational corporations seeking to expand into the rapidly growing Southeast Asian region.

Some specific benefits of setting up an offshore company in Singapore include:

Favourable tax systems

Singapore has one of the most attractive corporate tax regimes in Asia. The corporate tax rate is set at a flat 17% and only those revenues which are derived from Singapore or remitted into Singapore are considered taxable.

Singapore’s single-tier tax policy also means that the offshore company can distribute dividends to its shareholders tax-free provided that its income has been taxed at the corporate level. This ultimately means that a Singapore-incorporated offshore company may be liable for less taxes than if it were incorporated in jurisdictions with less-favourable taxation systems.

Furthermore, the offshore company may be eligible for a large number of tax benefits if its control and management has been exercised in Singapore for the preceding Year of Assessment (YA, i.e. the year in which the company’s income is assessed). Examples of such tax benefits include protection against double taxation and tax exemptions on certain types of income.

For more information, you may wish to refer to our article on corporate tax in Singapore.

Pro-business regulatory environment

The World Bank has consistently rated Singapore second in the world (out of 190 countries) for ease of doing business. The country is characterised by high levels of political stability, and highly transparent and efficient corporate/financial regulatory institutions, making it easier to access administrative support and public services for the offshore company.

Incorporation of a company can be both simple and quick, and the Singapore government permits 100% foreign ownership of offshore companies in most sectors. This ease of doing business makes Singapore an ideal hub to base an offshore company in.

Global financial hub

As of 2019, Singapore is ranked fourth largest international financial centre in the world, after New York, London and Hong Kong. Over 200 foreign banks and 1,400 foreign financial institutions have chosen to open branches here, using the island as a major regional hub.

An offshore company in Singapore will thus have access to an unrivalled selection of financial services to support its operations.

Singapore is also one of the top fintech hubs in the world, with the Singapore government actively implementing policies to promote new initiatives in the sector. This allows a Singapore offshore company to access a variety of advanced fintech products to suit their financial needs, providing it with a strong competitive advantage in a fast-changing world.

How to Set Up an Offshore Company in Singapore

Incorporating an offshore company in Singapore is done online via the BizFile+ portal managed by the Accounting and Corporate Regulatory Authority (ACRA).

Since a SingPass ID is required to log into BizFile+, foreign companies may need to engage the services of a registered filing agent (e.g. a law firm, accounting firm or corporate secretarial firm) to incorporate the offshore company for them.

The following information is generally required to incorporate an offshore company in Singapore:

• Name of the proposed company
• Brief description of business activities
• Shareholders’ particulars
• Directors’ particulars
• Registered address of the company
• Company secretary’s particulars
• Company constitution
• Any other documentary requirements as may be required by the registered filing agent

It may also be useful to note the following requirements for incorporating an offshore company in Singapore:

• At least 1 of the offshore company directors must be ordinarily resident in Singapore. Directors must be at least 18 years old and must not have been an undischarged bankrupt or convicted of any offence involving fraud or dishonesty.
• The offshore company must have a registered office physically in Singapore where communications or notices may be addressed.
• The offshore company must appoint a Singapore resident to act as the company secretary within 6 months of incorporation.

The entire incorporation process is computerised and can usually be completed within 1 – 2 days.

ACRA charges a $15 name application fee and $300 registration fee for each company incorporated, though the registered filing agent may also charge an additional fee for its services.

For more information, you may wish to refer to our article on incorporating a Singapore company.

What Should I Do After Setting Up an Offshore Company?

Congratulations for setting up an offshore company in Singapore!

Once incorporation is complete, ACRA will send an official email notification containing the company registration number which can be treated as the official certificate of incorporation in Singapore.

Compliance and regulation

At this point, the offshore company is now a separate legal entity from its parent company or shareholders. This means that it must be responsible for its own compliance with regulatory requirements and keep proper financial accounts and records of its transactions.

Unless the offshore company is considered a “small company” under Singapore law, it must also appoint an auditor within 3 months of incorporation.

You may wish to refer to our other article for more information on general compliance requirements for companies.

Set up a corporate bank account 

To facilitate the keeping of proper financial accounts, you may wish to set up a separate bank account for the offshore company.

Most banks in Singapore require the company directors and authorised signatories to be physically present at the bank to open a corporate bank account, though some banks allow companies to open certain types of corporate bank accounts online.

There are also some corporate bank accounts offered by neobanks that can be easily set up online and come with attractive perks. For example, the Aspire Business Account offered by Aspire is free, requiring no minimum deposit and also having no monthly fees or fall-below fees. This business account gives business owners fast and simple access to financial services for their business operations anywhere and at any time through their mobile phones.

Opening an Aspire Business Account can be done entirely online, from anywhere at any time, and the process can be completed in as little as 10 minutes.

You may wish to refer to our other article for the considerations when opening a corporate bank account in Singapore.

Must an offshore company register for GST?

An offshore company is automatically registered for corporate income tax with the Inland Revenue Authority of Singapore (IRAS) upon incorporation.

However, the company may need to separately register for Goods and Services Tax (GST) with IRAS if its expected annual turnover exceeds S$1 million.

For more information, you may wish to refer to our article on GST registration.

How Do I Close an Offshore Company?

The recommended procedure for closing an offshore company will differ depending on whether the company still possesses outstanding liabilities which it has yet to pay off.

In the absence of such liabilities, the offshore company can apply to ACRA to be struck off the register. However, it should be noted that striking off does not relieve the company of its liabilities to existing creditors, who may continue to enforce their claims against it.

Accordingly, an offshore company which has not paid off its outstanding liabilities can only be closed through a full winding up process.

The exact procedure will depend on whether the offshore company has sufficient assets to fully discharge its liabilities (including contingent or dormant liabilities) and a liquidator may need to be appointed in order to facilitate the orderly realisation of assets and distribution to the offshore company’s members and creditors.

For more information, you may refer to our article on winding up procedures in Singapore.

However, please note that the winding up process can be an extended and complex one depending on the quantity and type of assets possessed by the company, as well as the nature of the creditor claims against it.

As a result, we strongly recommend that you obtain independent legal and accounting advice tailored to your particular situation when deciding to wind up a company.

—

Ready to set up your offshore company in Singapore? Get in touch with a professional corporate services firm, which will be able to facilitate the incorporation process for you.

You may also consider opening a business account with Aspire, a neobank that operates under the Monetary Authority of Singapore in accordance with the Payment Services Act (No. 2 of 2019). Learn more about the Aspire Business Account here.