Why Do Indian Startups Incorporate in Singapore?
The laws of India and Singapore allow Indian citizens to easily incorporate businesses in Singapore. But what are the benefits for an Indian business owner? This guide helps answer that question. It describes business scenarios where a Singapore-based company structure can be useful for Indian entrepreneurs and businesses.
If you’re interested in registering a company in Singapore, click “Get Started” below. Otherwise, read more to learn the benefits of incorporating in Singapore.
India and Singapore are important trading partners and their trade relationship is deepening. Singapore is one of India’s largest trade and investment partners in the ASEAN region, and their economic and commercial ties have significantly expanded over the last decades.
Both trace their social norms and values to the South Asian Indo-Chinese cultural patrimony, but they have followed widely divergent routes since their independence. While India has followed a somewhat meandering yet democratic path from a close socialist economy to a market-based economy, Singapore's resolve to compete in the global market has been steadfast.
The two countries offer vastly different business environments and have adopted distinct approaches to regulating their economies. While Singapore promotes a light-touch, compliance-based regulatory framework, India still operates a complex, heavy-touch "license raj".
Thanks to Singapore's business-friendly environment, infrastructure, connectivity, and the presence of a large Indian community, ithas emerged as a major financial and investment hub for many Indian businesses.
Key Advantages of Incorporating in Singapore over India
That’s why a number of well-known Indian entrepreneurs, including Flipkart, Milaap, Mobikon, InMobi, and Medialink have chosen to incorporate in Singapore. Additionally, a large cohort of new Indian tech startups is following the same path. India Briefing stated that the list of Indian companies registered in Singapore is over 8,000 since 2000. Many of them register their businesses online in Singapore without even coming to the country.
Indian entrepreneurs have become well recognized in Singapore. Not only have they achieved professional success and accolades. They have also achieved enormous wealth. Many are now featured on Forbes Singapore's Richest List.
Launching a Startup in India vs. Singapore
We understand there are many things to consider when choosing where to launch your startup. That's why we prepared a comparison guide for you to evaluate both options and find the one that works best for you!
Scenarios for Indian Businesses
Launching a startup
Incorporate a subsidiary of Indian company in Singapore
Incorporate a holding company for Indian business
Incorporate a trading company in Singapore
Wealth management for an Indian high-net-worth individuals
Singapore immigration by setting up a business
Optimizing intellectual property transfer pricing for Indian businesses
Hiring international staff for India-based business
Facilitating international travel for Indian executives
Managing currency risk for India-based business
Investing in an Indian Business
If you are considering making an investment in a company that is based in India, you should consider making the investment through a Singapore-based company.
This is certainly the right strategy if you are a non-Indian investment firm or a non-Indian person. But even for Indian investors or for India-based investment firms it may make sense to make such an investment through a Singapore-based entity.
Singapore: the biggest investor in India
What’s the main attraction for MNCs to invest through their subsidiaries in Singapore?
There are inherent advantages of incorporating in Singapore over India. Additionally, the bilateral tax treaty between the two countries makes it easier to do business in Singapore. India and Singapore entered into a Comprehensive Economic Cooperation Agreement (CECA) in 2005. Under the agreement, a foreign shell company in Singapore can enjoy capital gain tax exemption, provided its annual expenditure on operations in Singapore is more than S$200,000 in two years and it is listed on the Singapore Stock Exchange. Under the Singapore–India DTAA, capital gains from the alienation of shares in a company are not taxable in the country where the company is located. Such gains are instead taxable in the country where the seller of the shares is a resident.
This provision can also create significant tax savings if the parent is a US company. Furthermore, US taxation of the India subsidiary profits may also be avoided if these profits are kept with the Singapore holding company for future investments in Asia. For instance, if profits from the Indian subsidiary are routed through the Singapore holding company to a Thai subsidiary (and no cash moves through the US parent company), no Singapore tax is imposed on dividends from India or Thailand due to Singapore's foreign-sourced income exemption scheme. No adverse tax consequences are likely to result for the US parent company either. Thus, such a structure can provide the investor with the most tax-efficient route to grow their investment.
A Singapore company can be a useful and versatile platform for an Indian business or an Indian person in many ways. Many sophisticated Indian entrepreneurs (including Binny Bansal, the founder of FlipKart) are have already made this move. Whether you plan to register your small business in Singapore or would like to register an online company in Singapore from India, our team can help you take the next steps in your journey.
CorporateServices.com empowers global entrepreneurs with information and tools necessary to discover Singapore as a destination for launching or relocating startup ventures. We offer a complete range of company incorporation, immigration, accounting, tax filing, and compliance services in Singapore.
FAQs for Registering a Company in Singapore from India