The strategic location of Singapore in the Asia- Pacific (APAC) makes businesses viable to a larger set of audience. The business supportive government, and the corporate income tax rate being fixed at 17% since 2010 are some of the few reasons why establishing a business in Singapore is immensely smooth and beneficial simultaneously.
However, certain laws are required to be kept in mind while conducting business in Singapore. The moment laws are mentioned, business owners begin getting cold feet about the same. Well, business owners, we have it all sorted for you here. Just read through the following and you will be good to invest all of your work hours to your business growth, without fussing about the law too much.
1. GST REGISTRATION
Companies must register for GST if their taxable turnover ( which depends on the value of goods and services are regarded as taxable supplies in the Goods and Services Tax Act) in any calendar year exceeds $ 1 million. The GST registered business should file a GST F5 tax return to IRAS electronically either on a monthly or quarterly basis even if there are no GST transactions in the relevant period. If there is, the GST is to be paid within a month of flailing the F5 return.
2. EMPLOYMENT ACT
The Employment Act (EA) primarily governs the employment terms and which every company needs to follow while hiring. The terms of employment that are agreed upon by the company and the employees are influenced by this Act.
If a company is registered under the EA, it must abide by the following
- Age – The legal age to work in Singapore is 17 years and older, while that of retirement is 62. A company might hire children and younger employees aged between 13-16 years, but there are guidelines on the type of work that is to be assigned to such individuals.
- Normal Hours of Work- The normal working hours are 44 hours a week, which can be either divided into 5 or 6 days according to the employment agreement. Anytime invested by an employee above those 44 hours in a week, deserves overtime payment within 14 days after the last salary period. The amount should be at least 1.5 times more than the hourly rate.
Go through the Employment Act to be aware of the rest conditions.
3. CONTRACT LAW
The contractual relations formed in Singapore are not governed by a single act, rather they are largely inspired by the common law of contract followed in England. Even though most of the law of contract in Singapore depends on the precedents made by the judges in court, there are some aspects of the contract law which is affected by specific statutes. These include the Contracts (Rights of Third Parties) Act, the Application of English Law Act, and the Consumer Protection (Fair Trading) Act, etc. Some of the key principles regarding these acts are
- Capacity to Enter into a Contract
- Offer, Consideration, and Acceptance
- Terms of the Contract
4. FILING TAXES
The Income Tax Act of Singapore primarily governs the statute for corporate taxation. Being one of the most efficient business-oriented tax systems, the law has a single-tier tax system. It means that the company is only to pay tax on the profits earned and not on the capital gains or the foreign incomes on which tax is already paid. The shareholders are also exempted from paying tax on dividends. This keeps the tax rate fixed at 17%v which further gets lowered by the numerous tax incentives and exemptions received by the Singapore based companies. The corporate tax returns are to be submitted with two filings annually with the Inland Revenue Authority of Singapore, (IRAS), which is the main government agency that levies and collects taxes in Singapore.
5. FILING ANNUAL RETURN
The primary law governing the filing of Annual return in Singapore is the Singapore Companies Act. The annual return is supposed to be filed by an appointed officer of a Singapore company or a registered filing agent on behalf of the company as mentioned by the Accounting and Corporate Regulatory Authority (ACRA). It should contain the following information:
- Details of the Company
The basic details that were created during the incorporation of the company in Singapore like – the Unique Entity Number (UEN), the particulars of the company officers, the registered address, etc.
- Capital Structure of the Company
It requires the mention of whether the company is public or private, and what is the distribution of the equity and debt structure of the company.
- Date of Annual General Meeting (AGM) and Financial Year End (FYE)
The date of the AGM and the decisions made should be mentioned in the return along with the date on which the company completes its financial year.
- Submission of Financial Statements
The company should submit its financial information in the Financial Highlights and the XBRL. The annual return should be signed by either the director of the company or the company secretary and submitted within 30 days of holding the Annual General Meeting.
This introductory article will suffice for providing the basic regulatory framework to be followed by every company operating in Singapore.
