In recent months, a number of prominent Indians (such as, FlipKart founder Binny Bansal) have disclosed plans to shift their operations to Singapore. We recently published an article that describes the various ways in which a Singapore company can be useful for clients from India. The article summarises information that we have developed based on our experience working with India-based clients and companies.
India and Singapore have a similar cultural and historical background, but they have followed very different paths to economic development since their independence. While India is a large, lumbering economy that continues to suffer from nepotism and poor infrastructure, Singapore has quickly moved into the top ranks of world’s well-run, modern countries. It is often cited as an example of political stability, rule of law, and multicultural harmony. Consequently, a number of Indians have either immigrated to Singapore or established strong economic relations with the country. While their motivations for doing so are varied, Singapore’s business-friendly system, its “soft-touch” regulatory framework, excellent education system, high quality of life, no tax on dividends, no tax on capital gains, vast double-taxation avoidance tax-treaty network, and low corporate tax rates are often cited. You can find a comprehensive review of Singapore’s advantages here.
The new article provides guidance on various scenarios in which a Singapore incorporated company can be useful for an Indian entrepreneur. Some of these are:
- Launching a startup in India. A large number of Indian start-ups, including some of the most renowned, are incorporated in Singapore. There are numerous reasons for this strategy, such as access to foreign investment, avoiding taxes on dividends and capital gains. For example, Flipkart’s move to Singapore helped its owners seek Foreign Direct Investment (FDI). Besides, the Singapore Government’s sovereign wealth fund, GIC, decided to back Flipkart Singapore as well. Several other well-known Indian start-ups, such as Zipdial, Wotabout, and Practo, also established a similar structure.
- International Expansion of India-based Business. Singapore is a perfect option for a successful business that is searching to expand overseas, due to its liberal tax treatment of foreign-sourced income, transparent regulations, world-class infrastructure, openness of foreign investments, and efficient legal system.
- Holding Company for India-based Business. This structure may be useful for companies that are growing and undertaking unknown risks. It can provide efficient risk management and tax benefits to the owners. Many large organizations use a Singapore-based holding company as their corporate structure. In this way, Flextronics, Wilmar, Trafigura, and Temasek enjoy Singapore’s well-functioning legal system, and risk isolation for their subsidiaries while they growth with no tax penalty.
- Investing in an Indian Business. Making an investment through a Singapore-based company is the optimal way to invest in a company that is based in India. Several factors promote this strategy. One of the most significant is the agreement between Singapore and India that was designed to avoid double-taxation of the same income in two countries. This treaty helps to create huge tax savings and provides the most tax-efficient route to make an investment.
- Export of Products or Services from India. Incorporating a Singapore company can be a suitable solution for an Indian business that is serving foreign clients with its products or services. The India-Singapore treaties, easy import-export rules in Singapore and the minimal limitations on receiving income from abroad simplify the overall business operations and provide numerous tax benefits.
- Import of Foreign Products into India. The above-mentioned scheme also works for an Indian import-oriented company. It reduces the need to deal with Indian bureaucracy and simplifies the transfer of imported products and funds between the two countries.
- Optimizing IP Transfer Pricing for an Indian Business. To maximize the long-term economic value of your intellectual property, you should hold it in a Singapore firm. The tax-optimized licensing fees, no tax on capital gains, and ease of the eventual sale of the IP asset are only some of the reasons that attract IP owners to Singapore.
- Hiring International Staff for India-based Business. One of the most efficient ways to engage senior-level international executives is by hiring them through a Singapore subsidiary. It can significantly improve the after-tax take-home pay for the executive.
- Facilitating International Travel for Indian Executives. A Singapore work visa can facilitate the process of international travel for an Indian passport-holder and reduce the number of travel restrictions they have to face.
- Managing Currency Risk for India-based Business. Because of the high volatility of Indian Rupee, Indian businesses run a huge currency risk if the target foreign currency moves in the opposite direction. Creating a Singapore subsidiary provides the option to maintain the company’s holdings in a stable currency and thus reduce the currency risk.
- Setting up a Family Office for an Indian HNWI. In the last decade, Singapore has become one of the best locations for Ultra-High Net Worth Individuals (UHNWIs) to establish their family business. It is easily explained since Singapore has one of the lowest levels of bureaucracy, a stable political environment, business-friendly policies, attractive tax regime and one of the highest qualities of life in Asia. Prior to establishing your family office, you need to determine your objectives, investment strategy, succession planning tools, identify the profile of your office and whether you are eligible to apply for the Enhanced Tier Fund Tax Exemption Scheme.
- Immigration to Singapore by setting up a company. Singapore offers a good quality of life, safety, world-class infrastructure and diversity of cultures. No wonder that many Indian entrepreneurs decide to immigrate to Singapore.
In summary, Singapore is a superb choice to launch your business venture, particularly if you are based in India. With its supportive business environment, efficient tax system, and rich culture, it offers outstanding opportunities for your growth and success. Furthermore, the process of incorporation of a new Singapore company is simple and inexpensive. You can review our guidelines for incorporating a Singapore venture by a foreigner to learn how quickly a new company can be registered.
If any of the scenarios described in our article are suitable for your situation, please contact us. We will be happy to review your needs and assist you with the setup of a suitable new Singapore company or the transfer of your existing company’s administration to us.
Headquartered in Singapore, CorporateServices.com, empowers global entrepreneurs with information and tools necessary to discover Singapore as a destination for launching or relocating their startup venture and offers a complete range of company incorporation, immigration, accounting, tax filing, and compliance services in Singapore. The company combines a cutting-edge online platform with an experienced team of industry veterans to offer high-quality and affordable services to its customers. Contact Us if you need assistance with setting up a new Singapore company or if you would like to transfer the administration of your existing company to us.
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