How to Start a Business in Singapore from Malaysia?
Every year nearly 4,000 Malaysians register their companies in Singapore. We put together the main questions they have into a simple guide that will help you grab business opportunities and become one of them.
Do I have to come to Singapore to open a company?
Can I move to Singapore if I open a business there?
Is it mandatory to have employees in Singapore?
What do I need to start a business from Malaysia?
Where do I get a resident director?
How much does it cost to set up and run a company in Singapore?
What taxes will I pay?
Next steps
Why is Singapore such a good place to start a business?
Taxes are low, it’s very easy to start a company for both foreigners and locals, a foreigner can own 100% of a Singapore company, and the quality of life is high. The World Bank keeps naming Singapore the easiest place to open a new business.
Do I have to come to Singapore to open a company?
No, you can open and run your business from abroad and you only need to fly in once to open a bank account. For everything else get a local service provider.
Can I move to Singapore if I open a business there?
Sure. There’s a special type of visa called Employment Pass you can receive within 3-6 months. In order to qualify you need to pay yourself a salary. It must be no less than S$3,600 but that is a threshold for University graduates. If you are more mature, your salary should be about S$6,000-S$8,000, especially if you plan to bring family under Dependant Passes.
Is it mandatory to have employees in Singapore?
No, it’s not necessary. A foreigner can open a business in Singapore from abroad and not have a single employee there. As long as you have a resident director and a corporate secretary, you are fine.
What do I need to start a business from Malaysia?
To register a business in Singapore you need to have a local address, a corporate secretary, and a resident director. A Corporate secretary is a person certified under various regulations responsible for lodging and filing in time all necessary documents required by law. As for the director, your company can have as many as you want, but at least one needs to be local. All three services are commonly provided by special agencies.
Where do I get a resident director?
If you do not have someone who can play the role, hire a Nominee Director. For example, there can be two directors: you and the nominee. If you plan to move to Singapore, you only need the nominee service for 3-6 months while you apply for your Employment Pass. After that, you can be the only director.
A nominee formally holds director’s position, without any actual decision-making powers or authority to run the company. He is a company officer on paper, necessary to meet the requirements of the law.
How much does it cost to set up and run a company in Singapore?
Paid up capital can be just S$1 and you can increase it later if you wish, so that is not an issue.
S2,600-S$5,000 is the average cost of incorporation provided by local agencies. It should include company registration, government fees, and the first year of necessary services, such as nominee director, corporate secretary, and local address. The biggest part is the nominee director service. It costs at least S$1,800, plus many agencies ask you to place a security deposit of another S$2,000. The deposit works as insurance for the nominee, you get it back when his contract expires. A cheaper option is to hire someone you know to be the resident director.
S$2,500-S$5,000 is the annual retainer for business management — nominee director, corporate secretary, annual returns filing, and local address.
If you move to Singapore, you’ll also save on the nominee director service, but will pay for Employment Pass (S$800-S$1,500) and Dependant Passes (S$400-S$600).
S$50-S$500 cost licenses required by some businesses like tourism or alcohol sales. Cost varies depending on your industry.
Monthly expenses may include renting an office (S$800) or a co-working space (S$550), hiring employees (S$4,000 for a software engineer or S$1,700 for a security guard) and so on.
What taxes will I pay?
Malaysia and Singapore have a double taxation agreement, so you avoid being taxed twice on the same income. Here are Singapore rates:
- Corporate tax for SME is effectively progressive: from 4.25% on the first S$100,000 to 17% after S$10,000,000.
- Once turnover grows over S$1,000,000 you’ll have to register and pay a 7% GST. Unless you export your goods abroad, then GST is 0%
- Tax on dividends is 0%
- Personal income tax is progressive from 0% to 22%. For example, on salary of S$120,000 it’s S$7,950 (6.6%), on S$250,000 it’s S$30,700 (12.3%). See detailed calculation below.
Corporate tax rate for sme eligible for the start-up tax exemption (SUTE) scheme
| Chargeable income, S$ | Extimated tax, S$ | Effective tax rate |
|---|---|---|
| 100,000 | 4,250 | 4.25% |
| 200,000 | 12,750 | 6.38% |
| 300,000 | 29,750 | 9.92% |
| 400,000 | 46,750 | 11.69% |
| 500,000 | 63,750 | 12.75% |
| 1,000,000 | 148,750 | 14.88% |
| 2,000,000 | 318,750 | 15.94% |
| 3,000,000 | 488,750 | 16.29% |
| 5,000,000 | 828,750 | 16.58% |
| 10,000,000 | 1,678,750 | 16.79% |
Personal tax rate
| Chargeable income (S$1,000) | Estimated tax (S$1,000) | Effective tax rate |
|---|---|---|
| first 20,000 | 0 | 0% |
| next 10,000 | 200 | 2.0% |
| next 10,000 | 350 | 3.5% |
| next 40,000 | 2,800 | 7.0% |
| next 40,000 | 4,600 | 11.5% |
| next 40,000 | 6,000 | 15.0% |
| next 40,000 | 7,200 | 18.0% |
| next 40,000 | 7,600 | 19.0% |
| next 40,000 | 7,800 | 19.5% |
| next 40,000 | 8,000 | 20.0% |
| over 320,000 | 44,550 | 22.0% |