Set Up Your International Headquarters in Singapore

 

In recent years, a great number of corporations are moving their international or regional headquarters to Singapore. Political stability, excellent information and communications infrastructure, as well as the availability of skilled professionals are some of the popular reasons for the move, but one other critical factor has been the enormous tax benefits that are offered to businesses.


Key Benefits of International (IHQ) and Regional Headquarter (RHQ) Program

Companies that meet requirements to setup IHQ or RHQ in Singapore will enjoy a concessionary tax rate of 15% (versus headline corporate tax rate of 17%) for 3+2 years on incremental qualifying income from abroad, which is defined as Income from approved qualifying activities less the base income (annual net profit before tax as shown in the company’s audited accounts) with the purpose of supporting the company’s international growth. If the minimum requirements are fulfilled by the end of the third year within the incentive period, the concessionary tax benefit could be extended for another two years.

Corporations that are applying to setup a Regional Headquarter (RHQ) in Singapore are required to meet all the minimum requirements as follow to be considered for concessionary tax rates provided under the EEIA (Economic Expansion Incentives Act) on their qualifying income.


To be able to enjoy these incentives:

  1. The company should have paid up capital of S$ 200,000 at the end of year one and S$500,000 at the end of year 3 of the incentive period.

  2. By the end of the third year, the company needs to have set up an entity such as a subsidiary, sister company, branch, joint venture, franchise or representative office in three countries outside of Singapore. These entities should receive at least 3 types of service from the headquarters.

  3. For the duration of the incentive period, at least 75% of the staff should be skilled, meaning that they should at the very least have received NTC2 (National Trade Certificate II) certification.

  4. By the end of the third year, the company should have grown to the point that it will have employed an additional 10 professionals in Singapore with at least a diploma certification

  5. By the same time-frame, five of the top executive positions should be receiving an average remuneration of S$100,000

  6. By the same time-frame, corporates have to have an additional S$2million in total annual business spending within Singapore. This refers to the sum of operation cost less the cost of subcontracted work outside of Singapore, cost of acquiring knowledge overseas, royalties, packaging, raw materials and necessary tools and equipment.

 

Corporations looking to set up their International Headquarters (IHQ) in Singapore may apply for the International Headquarters Award, which gives concessionary tax rates as low as 5%-15% on the qualifying incremental income. Applicants for International Headquarters Award must be incorporated or registered locally in Singapore, and must commit to exceed the minimum requirements of Regional Headquarters Award.


Criteria for Setting Up An International Or Regional Headquarter in Singapore

The conditions laid out by the government for corporations to be able set up their headquarters in Singapore are as follows:

  1. The company must be recognised within the industry or sector of operation, have extensive capacity with regard to human resource, assets, capital and market share.

  2. The headquarters should be the organisations hub for the senior management of principal operations with well defined management and control procedures.

  3. The company should be moving the bulk of their headquarter operations into the Singapore office. These operations may consist of

a.     Marketing Control, Planning and Brand Management

b.     Strategic Business Planning and Development

c.     Research, Development and Test Bedding of New Concepts

d.     General Management and Administration

e.     Shared Services

f.      Intellectual Property Management

g.     Technical Support Services,

h.     Corporate Training and Personnel Management

i.       Sourcing, Procurement and Distribution

j.       Economic or Investment Research and Analysis

k.     Corporate Finance Advisory Services

    4. Finally, the management, professional, technical and supporting staff employed by the company to run the operations of the headquarters should be Singapore-based.

If you are ready to tap into the 600-million-people Asean market with Singapore as a base, speak to our consultants and get a heads start in weeks!

 

Frequently Asked Questions

  • Singapore accounting standards are considered transparent and credible because they are based on the International Financial Reporting Standards (IFRS). IFRS are a set of accounting standards that are used by companies all over the world.

  • Singapore is deemed perfect for business headquarters due to a multitude of reasons. The country provides a robust infrastructure, a strategic geographical location and a highly skilled workforce. Moreover, the stable political climate and robust economy attract foreign investments. Additionally, Singapore holding companies benefit from a comprehensive range of excellent legislation that encourages international trading. This includes low corporate tax rates, double tax agreements with over 80 jurisdictions and non-controlled foreign company rules. Given its strategic advantages, Singapore is indeed a promising place to headquarter your business.

  • The corporate tax rate in Singapore is 17%. However, many tax incentives are available to qualifying companies, such as the headquarters Incentive and the Development and Expansion Incentive. These incentives can reduce the effective tax rate to as low as 5%.

  • In Singapore, domestic and international companies must adhere to specific filing deadlines.

    • Annual Return (AR) Filing: As per the Singapore Companies Act, all companies, including international headquarters, must file an Annual Return (AR) with the Accounting and Corporate Regulatory Authority (ACRA) within one month of their Annual General Meeting (AGM). The AR provides essential particulars about the company, such as details of its officers, registered address, and more.

    • Income Tax Return Filing: Companies in Singapore are also required to file their Corporate Income Tax Return (Form C-S/ Form C-S (Lite)/ Form C) for the Year of Assessment (YA). The deadline for filing is November 30th.

    • Foreign Companies: For foreign companies, which might include international headquarters, ACRA requires an annual filing within 60 days of the AGM of the foreign company's head office. In some cases, a one-off extension of up to two months may be granted.

    • Notice of Assessment: Once the tax assessment is issued, the tax generally is due and payable within one month after the date of issue of the notice of assessment.

    Please note that penalties apply for late filing or non-compliance with these requirements.

  • Singapore is deemed perfect for business headquarters due to a multitude of reasons. The country provides a robust infrastructure, a strategic geographical location and a highly skilled workforce.

    Moreover, the stable political climate and robust economy attract foreign investments.

    Additionally, Singapore holding companies benefit from a comprehensive range of excellent legislation that encourages international trading. This includes low corporate tax rates, double tax agreements with over 80 jurisdictions and non-controlled foreign company rules.

    Given its strategic advantages, Singapore is indeed a promising place to headquarter your business.

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