Since Singapore was founded more than 200 years ago, the primary purpose of its existence has been to function as a trading hub. Thus, in 2010 the country was the 14th largest exporter and the 15th largest importer in the world. Almost 30 per cent of all Asian trading is conducted through Singapore.

A newly-formed Singapore company can usually be registered as an importer and/or exporter in just one day, provided that the company has already opened a Singapore bank account.

A Declaring Agent (DA) is required to handle the actual import and export of goods. The Company can choose to be the DA itself, or it can appoint another firm as the DA. As in other countries, the import and export of certain goods are regulated in Singapore. These goods require additional permits before they may be imported into Singapore. The DA is responsible for obtaining such permits.

If Singapore Is not the final destination of the imported goods, the Company can apply to become a Transshipment Agent itself, or it can engage an external Transshipment Agent for the purposes of accounting for the movement of the goods while they are in Singapore.

The headline corporation tax in Singapore is 17 per cent. However, due to several tax incentives and tax breaks, the effective tax rate can be much lower. For instance, a Singapore company is not taxed on dividends received from subsidiaries where such subsidiaries have already been taxed in their jurisdiction of incorporation. This is provided that such jurisdiction is covered by Singapore’s extensive network of Double Taxation Agreements (DTAs).

The same principle applies to other non-Singapore income received by a Singapore company. As a general rule, if that income is taxable in a country with which Singapore has concluded a DTA and the headline tax rate in that country is at least 15 per cent, no further taxation will take place in Singapore. Even in cases where there is no DTA in place with the country in which the income is taxed, the Singapore corporation tax liability on that income may be reduced or eliminated by way of so-called Unilateral Tax Credits granted by the Singaporean tax authorities.

As for capital gains (i.e., investment income) received by a Singapore company, these are not liable to Singaporean taxation at all.

There are no withholding taxes on dividends paid out to shareholders of Singapore companies, even if such shareholders are not based in Singapore. However, certain payments to recipients outside Singapore in respect of such things as interest, rent, royalties, and business management fees do attract withholding taxes. Even so, such taxes only apply to Singapore-sourced income such as payments for services rendered in Singapore. The top rate of withholding tax is 15 per cent. However, shipping companies can avoid withholding tax entirely if they are covered by Singapore’s Withholding Tax Exemption, which is a special exemption available that certain shipping companies may apply for.

All companies incorporated in Singapore must have at least one director in Singapore. This is so that the Singaporean authorities have someone locally in Singapore whom they can hold responsible in case the company in question does not fulfil its legal obligations under Singapore law. That is not to say that only the director in Singapore will be held responsible for the company’s actions, but the local director is often easier for the authorities to contact than directors in other countries and time zones.

The local director may be actively involved in the operations of the company, or may simply be a so-called nominee director who does nothing except fulfil the requirement of the company to have a director in Singapore. A nominee director would not take any action on behalf of the company without being instructed to do so by the owners of the company. It would be up to the owners of the company to determine to which degree they would like the local director to be just a nominee director, or a director involved in the day-to-day operations and management of the company.

A Singapore company is required to file certain information with the authorities at various points during the financial year. The main filings are the following:

• A preliminary tax return to the Singapore tax office (IRAS) detailing the company’s Estimated Chargeable Income (ECI). ECI is an estimate of the total income for the financial year, based on taxable income less tax-allowable expenses. The ECI return must be filed within three months of the Financial Year End. A tax rebate is offered on tax paid on the basis of the ECI. Exempt from the requirement to file an ECI tax return are companies that have no ECI in the year concerned, and annual revenue of not more than SGD 5 million in that year.

• Confirmation to the Singapore company registry (ACRA) that an Annual General Meeting (AGM) has been held within 6 months of the Financial Year End. Unless exempt, the company must hold its first AGM within 18 months of incorporation, and subsequent AGMs must subsequently be held at intervals of not more than 15 months. However, the company can choose to not to hold AGMs by passing a shareholders’ resolution to that effect and filing it with ACRA. In this case, matters normally dealt with at an AGM will instead be settled by way of written resolutions of shareholders.

• A final tax return to the Singapore tax office (IRAS) detailing the final corporation tax calculation (as opposed to ECI, the preliminary corporation tax calculation) for the financial year concerned. The form used for this is either Form C, Form C-S, or Form C-S Lite. Form C is a ‘full’ tax return, including tax computations, financial statements, a detailed profit & loss statement, etc. Forms C-S and C-S Lite are simplified tax returns that require the filing of fewer supporting documents or none at all. These are intended for companies that have only modest annual revenue (SGD 5 million or less for form C-S, SGD 200,000 or less for form C-S Lite), and that have simple tax matters not involving things such as carry-back of current year capital allowances or losses, group relief, investment allowances, foreign tax credits, and/or tax deducted at source in other countries. One of these forms must be filed by 30th November each year, unless the company in question has been dormant, in which case no tax return is required.