The latest data from Singapore’s Accounting and Corporate Regulatory Authority (ACRA) reveals that Singapore company incorporation activity has declined by 3.6% in between Q2 and Q3 2011. The figures further deteriorated by 7% between Q3 and Q4 2011 and only 12,952 Singapore firms were registered during the last quarter of 2011.

Responding to the figures, Mr. Satish Bakhda, Head of Operations, Rikvin, said, “Although incorporation activity has naturally taken a hit as a result of a weakening economic outlook, the decline in incorporation activity is not as drastic as it appears. Furthermore, we need to remember that business activities are cyclical and long-term trends are presenting a stronger case for Singapore incorporation than short-term fluctuations.”

Over the past decade, Singapore’s biomedical sciences sector has grown significantly. Data from ACRA shows that the sector mushroomed from 17 companies in 2000 to 377 companies in 2010. According to the Singapore Indian Chamber of Commerce and Industry (SICCI), there were approximately 5,000 Indian companies in Singapore in 2011, up by 1,000 since 2010. Additionally, recently published data by the Singapore Economic Development Board (EDB) reveals that Singapore has continually seen an increase in fixed asset investments (FAI) year-on-year. In 2011, Singapore received S$13.7 billion in FAI, up from S$11.8 billion in FAI in 2009.

Analysis by Rikvin shows that some entrepreneurs opt to push on and start a Singapore company even in uncertain times because they recognize the long term benefits of investing through Singapore. In terms of dollars and cents, companies, especially those with subsidiaries, have greater potential to save significantly as they grow by registering in a low tax regime such as Singapore. Rikvin has recognized five features of Singapore corporate taxation that continually attracts businesses and investors to set up in the global Asian city – 1) low corporate taxes, 2) Productivity and Innovation Credit claims, 3) extensive network of tax treaties, 4) absence of capital gains tax and 5) no thin capitalisation or Controlled Foreign Corporation regime.

LOW CORPORATE TAXES

At 17%, Singapore’s corporate tax rate allows a spectrum of firms ranging from start-ups to holding companies to operate at a low cost. In the assessment year 2012, Singapore firms are set to benefit from a partial tax exemption scheme on the first $300,000 of chargeable income while eligible start-ups may qualify for full exemption. A holding company that is headquartered in Singapore may stand to enjoy lower corporate tax rates as well.

PRODUCTIVITY AND INNOVATION CREDIT (PIC) CLAIMS

The updated PIC scheme grants every Singapore firm a 400% tax deduction on the first S$400,000 invested in six productivity-enhancing and innovation activities. As demonstrated in Rikvin’s PIC Claims Chart, Singapore firms that plan their productivity and innovation strategies ahead of time could potentially reap up to S$9.6 million in tax savings on their annual taxable income.

EXTENSIVE NETWORK OF TAX TREATIES

Singapore firms stand to benefit from the nation’s extensive network of tax agreements. Singapore has to date established 69 comprehensive and seven limited Avoidance of Double Tax Agreements (DTAs). The Mutual Agreement Procedure (MAP) and Advance Pricing Arrangements (APA) provisions in Singapore’s DTAs in turn assure Singapore companies reduced taxes as they expand or conduct business across borders.

TAXATION OF INBOUND AND OUTBOUND DIVIDENDS

Singapore’s DTAs also have positive implications on the amount of payable withholding tax on inbound and outbound dividends. Singapore firms that receive dividends from their overseas subsidiaries often pay reduced withholding taxes in Singapore. Alternatively, if those dividends are taxed in the source jurisdiction and have a corporate tax rate of at least 15%, then those dividends are exempt from taxes in Singapore. Outbound dividends are exempted from withholding tax in Singapore.

ABSENCE OF CAPITAL GAINS TAX

Many DTAs accord and honor the taxing right of a parent jurisdiction. In the case of Singapore, capital gains are tax exempt. Therefore, Singapore holdings may repatriate overseas capital gains without being liable for taxes in Singapore.

NO THIN CAPITALISATION OR CONTROLLED FOREIGN CORPORATION (CFC) REGIME

Singapore is not a CFC regime. This in turn benefits Singapore holdings as the profits of their foreign subsidiaries will not be subject to Singapore tax. Singapore also does not have any thin capitalisation rules as it is a high-risk business strategy that could have a disastrous ripple effect for businesses and regional economies. The absence of the thin capitalisation rule assures businesses that Singapore is a stable place to do business.

“These tax features are designed to keep Singapore attractive as a business setup location for the long haul. Furthermore, during the recent World Economic Forum (WEF) talks, Prime Minister Lee Hsien Loong confirmed that Singapore’s upcoming Budget will remain committed to sustaining Singapore’s long-term competitiveness. Rikvin anticipates positive amendments that will complement these tax features and further buoy businesses through this year,” added Mr. Bakhda.

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The survey, which aims to calculate the member countries’ Potential Net Migration Index (PNMI), was conducted among 350, 000 people in some 148 countries from 2007 to 2010.

To calculate each country’s PNMI, Gallup has subtracted the number of adults who wish to leave the country to the estimated number of people who wish to immigrate and work there.

Survey results showed that Singapore’s population would increase by 219 percent from 4.8 million to 15 million if everyone who wishes to work in the country were allowed in by the government.

Meanwhile, Rikvin, a Singapore company formation and migration specialists, which assists professionals in securing their work visa, said the influx of tourist will have a positive impact on the labour market in Singapore especially casino operators and industries which target visitors from abroad.

One of the major considerations cited by the respondents in choosing Singapore is its impressive gross domestic product (GDP) growth rate in the past five years, Gallup noted.

Singapore was followed by New Zealand (+184 percent), Saudi Arabia (+176 percent), Canada (+160 percent), and Australia (+148 percent) in the worldwide rankings.

On the other hand, the United States, which ranked 14th on immigration list, was still the preferred destination among workers. However, the concentration of people would definitely have less impact on the employment status of the would-be immigrants, the survey added.

Singapore’s neighbouring economic superpower Malaysia failed to make it to the Top 20 countries in the world as workers shy away from its lacklustre economy and worsening social divide.

The population of Malaysia, which ranked 21st in the overall immigration survey, would only increase by some 23 percent to more than 34 million, if the government will allow everyone to leave and enter as they pleased.

Also, Malaysia ranked only fourth in the most popular destination country in the Asia-Pacific region next to New Zealand (top two worldwide) and Australia, which ranked second and third most popular, respectively.

Meanwhile, despite strong economic output in the past three years, Asian economic superpowers like China and India registered a relatively low appeal to migrant workers, losing at least six percent or more than 1 billion of its population if workers were allowed to move freely by their respective governments.

The other Southeast Asian countries that were tagged as the worst destination for migrant workers include Laos (-9 percent), Vietnam (-21 percent), and the Philippines (-22 percent)

Due to decades of war and poor economic condition Sierra Leone, Haiti, and Zimbabwe were placed as the bottom three in the survey and could potentially lose more than half of its total population if migrants were allowed to move freely.

In view of the above, Rikvin predicts Singapore will open up its doors in 2011 to welcome the professionals and entrepreneurs to ensure that the country continue to have sustainable growth, and at the same time increase its productivity to ensure wages rises to a level where it is considered lucrative to workers and affordable to employers. Rikvin has successfully helped thousands of foreign entrepreneurs who wish to migrate to Singapore to run their company operation by securing their work visas using employment pass route once they have incorporated a Singapore company. Alternatively, professional who are interested to work in Singapore can apply for personalised employment pass (PEP), which is the most preferred route as they are not tied down to any employers.

For more information on company incorporation for foreign individual, visit http://www.rikvin.com/incorporation/ to learn more on work visas for Singapore, visit http://www.rikvin.com/immigration-work-visas/.

Rikvin provides cost-effective Singapore company formation, subsidiary incorporation, branch setup, representative office registration and related offshore company formation services in Singapore including accounting, tax, immigration, corporate bank account and related Company compliance services. Our services are designed to be efficient and cost-effective. Our aim is to relieve you of the burdens of statutory compliance and enable you to focus on running and growing your company business. If you do have queries, our friendly consultants are available to assist you with determining the best course for your business. Call us at +65 64388887 or email us.

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The rental rates for residential units are scaling the peaks in property prices, with rents for condominiums boosting a price hike of 5.8 per cent over the first half of 2010.
The Urban Redevelopment Authority (URA) has release data showing the surge in median rentals of non-landed residential properties to $32.41 per square metre (PSM) in May from $30.54 psm in January, while rental for units in the central region stands at an even higher price of $36.89 psm. Currently, the maximum monthly rental for non-landed residential properties in central Singapore stands at $114.58 psm.
Across Singapore, maximum rental swerves between $33.65 psm to $60.87psm. while minimum rentals varies between $10.18 psm to $14.36 psm.
Market watchers commented that this surge in residential rents is a direct result of an economy that is picking up as well as a strong property market. The rising number of property owners who increase rent in a bid to earn higher returns could be another contributing factor to the rental surge.

Mr James Nuben of Rikvin Corporate Services said that factors such as the increase in housing demand by more foreign individuals who incorporate a Singapore company, and relocate to the country, also adds to the rise in rental figures.

Rikvin Corporate Services specialises in Singapore company incorporation and the application of Employment Passes or EntrePasses for foreign individuals and companies.
“We get a large number of foreign businessmen looking to incorporate a company in Singapore and wanting to move here to run their operations because the quality of living is very good. Plus, more international companies are also setting up a presence in Singapore and bringing in more foreign talent, who will require accommodations,” said Mr Nuben.
“Business have started to relocate to Singapore and are bringing in a lot of foreign workers, which have increased demand for residential housing, as compared to the first half of last year, when companies were shedding staff,” confirmed Donald Han, managing director of Cushman and Wakefield.

However, Mr Colin Tan, head of research and consultancy at Chesterton Suntec International thinks otherwise – that the rental hikes are due to a sharp drop in housing supply. The number of demolitions conducted in the fourth quarter last year saw 1,441 units torn down compared to the 1,400 units available.
Mr Tan said that this is because there were more collective sales, resulting in more units disappearing. The demolitions caused a drop in the number of units – only 1,407 units, available for rent for the first quarter.

“The higher number of demolitions is probably a one-off effect. The numbers of demolished units returned to about 400 units-odd in the first quarter of this year. Rentals will increase as there are fewer units available and there is a high demand for them,” added Mr Tan.

On a brighter note, Mr Tan said he expects the rental hikes to stop climbing in the next few months.  However, Mr Han said Singapore’s economic growth will bolster rental prices, marking an increase of 5 per cent to 8 per cent by the end of the year. This increment makes it a good time for homeowners who want to lease out their properties to guard against volatile markets and inflation.  “Yields have risen slightly to 3 per cent to 3.8 per cent and are likely to go up over 4 per cent at the end of the year. With the low interest rate of 1 per cent to 1.2 per cent, this is a good time for residential yields,” said Mr Han.

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The Infocomm Development Authority of Singapore (IDA) added that it has plans to invest S$1.1 billion in about 350 ICT tenders for this financial year (FY) which ends on 31 March 2011.

IDC senior market analyst Gerald Wang said this increase in spending is certainly good news for the industry.

Mr Wang said that he expects 50 per cent of the new tenders released in 2010 to multiply business opportunities for a wide range of vendors, as these small projects are less than S$500,000 each.

Mr James Nuben of Rikvin Corporate Services says that the number of foreign individuals incorporating a Singapore company to run ICT-focused businesses such as building and releasing online micro-transaction games for social networks, or provide cloud-computing services, has also been steadily increasing.

“The growth potential for foreign investors setting up companies to expand the ICT industry is very huge and Singapore is a great place to incorporate a company because it provides a very safe environment for businesses to grow,” said Mr Nuben.

Rikvin Corporate Services specialises in Singapore company formation and staff relocation services, including work visa applications for foreigners.

Even though the Government appears to be spending less by awarding S$1.6 billion and S$1.12 billion worth of ICT contracts in FY2008 and FY2009 respectively, the figures do not reflect the actual increment.

Instead, the figures appear to drop because they included huge one-time projects that include the Standard ICT Operating Environment (SOEasy) and the Next-Generation National Broadband Network (NGNBN). The regular ICT expenditure has actually been increasing consistently when the huge projects are not included in the spending numbers.

“After deducting the NGNBN project’s sum of S$250,000, the S$1.1 billion projected spending for this year is significantly more than last year’s S$870 million. I expect future government projects in Singapore to focus on building upon what has already been built before,” said Mr Wang.

ICT spending with a focus on cloud computing, social networking, business analytics and technology will help the Government strengthen their collaboration with citizens and reach out to citizens.

“Proposals that will allow the government agencies to reduce huge upfront capital expenditures and manage operational expenses will be the most well-received,” said Mr Wang.

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Rikvin announced the launch of an online Singapore Business Portal on its website at www.rikvin.com for entrepreneurs worldwide interested in setting up their business in Singapore. The portal provides you with comprehensive information on how to incorporate your Singapore business and provides you with in-depth information on Singapore Migration Visas. An extensive FAQ section, guides and documents will leave very little unanswered.

Singapore is ranked 1st for the ease of doing business in Asia (World Bank report: “Doing Business 2007: How to Reform”) and 1st for being the least bureaucratic place for doing business in Asia (Political and Economic Risk Consultancy, June 2006). These are remarkable testimonial to Singapore’s reputation as the ideal location for any business

Our online incorporation service was the first of its kind in Singapore, and has proven to be an invaluable tool for professional intermediaries who require a swift incorporation process.

Singapore Office

According to Ragini Dhanvantray, CEO of Rikvin Consultancy , Singapore is fast becoming the business city of choice, having had the recognition of excellent business infrastructure, political stability, and close economic ties with many of the world’s leading economies, there has never been better time than now, to set up your business in Singapore.

We are very excited about the total one stop solution portal for new service. The new forum will become an invaluable source of Singapore business for entrepreneurs worldwide.

One Stop Singapore Incorporation & Visa Portal

Rikvin specializes in providing company incorporation, registration and administration processing for all business types and sizes in Singapore and throughout the world. In addition, we facilitate the incorporation of our clients’ businesses and manage their statutory affairs. We provide the best company formation service, management and administrative facilities with maximum efficiency and productivity.

Rikvin Consultancy, a Singapore-domiciled company established in 1995, is now a part of the Rikvin Group of Companies providing corporate solutions to entrepreneurs worldwide.

Established in 1995 and well recognized for its service quality, Rikvin Consultancy specializes in providing Singapore company incorporation, foreign company business registration, and related business advisory services in Singapore.

Rikvin consultancy provides highly professional company incorporation services, both in attractive standard packages as well as customized services. Online incorporation being a hallmark service, other services of Rikvin include:

• Offshore Incorporation
• Work Visas
• GST Registration Service
• Accounting Services
• Tax Planning & Consulting

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Preparing the Annual financial statement is a tedious task which needs meticulous processing of records of financial transactions. At Rikvin our experts can minimize the pressure on your in-house resources by helping you in

• selecting and applying suitable accounting policies
• preparing financial statements in line with the International accounting standards
• presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information
• providing additional disclosures to enable clear understanding of transactions, other events and conditions on the entity’s financial position and financial performance

Companies are legally obliged to include a Directors Report in their annual financial statement. The report must give a fair review of the company’s financial and operational results and condition and also include additional information such as dividend recommendation, reserved earnings, details of directors and their interest, principal risks and uncertainties etc.

Directors Report is an important communication medium for a company to interact with various interest groups such as investors, creditors, government bodies, business analysts etc. Therefore it is essential to ensure that the report includes all the relevant information succinctly yet without any ambiguity. Rikvin can help you draft a Directors Report that is fairly simplified yet comprehensive in addressing the key elements.

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What Is A Hedge Fund?

The Singapore Code on Collective Investment Schemes (issued under the Securities and Futures Act 2001 and administered by the Monetary Authority of Singapore (MAS)) defines hedge funds in the following way:

There are different characteristics and investment strategies that define hedge funds. In general, a hedge fund seeks to deliver an “absolute” return independent of the directional move of equity, fixed income or cash markets. In considering whether a fund falls within these guidelines, MAS (Monetary Authority of Singapore) would consider, but not restricted to the following factors:

1. Strategies that use leverage, short-selling, arbitrage, derivatives and
2. Investment in non-mainstream asset classes (investments other than listed equities, bonds and cash)

Hedge Fund Structures

Based on the domicile, hedge funds are classified as

Domestic (Onshore) funds
Foreign (Offshore) funds

Domestic or Onshore funds are Singapore domiciled funds, therefore are governed by the Hedge Fund Guidelines set out in the Code on Collective Investment Scheme (the “Code”) issued by the Monetary Authority of Singapore (MAS). Trust and Company are typical structures used by Onshore Funds but from 2009 Limited Partnership is also an available fund vehicle.

Foreign or Offshore funds are funds established in jurisdictions other than Singapore.

Domestic funds can be offered to both domestic and foreign investors but conventionally it is marketed to the domestic investors only. Subject to certain conditions Offshore Funds can be marketed to domestic investors.

Distribution of hedge funds to retail investors is generally through distributor banks and licensed financial advisors. Distribution of non retail hedge funds is through private banks and other exempt institutions

Licensing Requirements

Fund managers operating with not more than 30 qualified investors are exempted from licensing.  A “qualified investor” includes a fund (e.g. the hedge fund) which is (i) offered in Singapore only to accredited investors, meaning an individual with net assets exceeding S$2 million or a corporation with net assets exceeding S$10 million, or (ii) if offered elsewhere, such offer or invitation is made only to accredited investors, or investors in an equivalent class under the laws of the country or territory in which the offer is made. Therefore a qualifying hedge fund would count as “one” qualified investor. This is an option adopted by hedge fund managers/sub-managers in Singapore

The fund managers planning to market a fund to retail investors will have to obtain a Capital Markets Services (CMS) License from the Monetary Authority of Singapore (MAS) under the Securities and Futures Act (Chapter 289) (SFA). A minimum capital requirement must be met to qualify for the CMS License. Hedge funds offered to retail investors and constituted in Singapore are called Authorized unit trusts.

Offshore Fund Managers promoting to Singapore investors must be licensed or regulated in the jurisdiction of its principal place of business and be fit and proper. Offshore hedge funds offered to retail investors in Singapore are called Recognized unit trusts.

The investment adviser promoting a fund would need a Financial Adviser’s license (“FA Licence”). An exemption is available on the basis that a person resident in Singapore who acts as a financial adviser to not more than 30 accredited investors is exempt from licensing. This option is only viable if the Offshore fund manager qualifies as an accredited investor.

The following activities are regulated by Securities and Futures Act (SFA) and require a Capital Markets Services (CMS) License from the Monetary Authority of Singapore (MAS)

• Dealing in securities
• Trading in futures contracts
• Leveraged foreign exchange trading
• Advising on corporate finance
• Fund management
• Real estate investment trust management
• Securities financing
• Providing custodial services for securities

The following activities are regulated by Financial Advisers Act (FAA) and require a Financial Adviser’s license (“FA License”)

• Marketing of unit trusts
• Offering of life insurance products
• Advisory services on investment products including life insurance policies, foreign exchange contracts, etc.
• Issuance of investment reports

Unless specifically exempted and funds with less than 30 qualified investors all other schemes and persons engaged in any of the above stated activities must obtain the appropriate license.

Overview of Regulations

Regulations of Marketing to Retail Investors

Promotion of hedge funds to retail investors is allowed if it is either an authorized or recognized funds.

The minimum subscription requirements are the same for Onshore and Offshore funds offered to retail investors and they are

• Single hedge funds: S$100,000
• Hedge fund-of-funds (FOHF): S$20,000
• Capital protected/guaranteed hedge funds: No minimum

A prospectus in compliance with the SFA must be lodged and registered in the case of funds offered to retail investors. In the case of authorized Offshore Funds the foreign prospectus can be used if it contains all the information required under the SFA.

Ample measures are in place to protect the interest of retail investors, and there is substantial emphasize on disclosure of risks and uncertainties of the returns.  Therefore the prospectus must state the material differences between the hedge fund and other types of collective investment schemes and must state that only relatively little information on how the hedge fund and underlying hedge funds are managed will be available, that there is limited liquidity and that most of the underlying hedge funds are subject to minimal regulation etc.  Similarly marketing materials must highlight the risks involved and reveal information such as the fees and charges payable. Appendix 4 of the Code on Collective Investment Schemes contains a list of common examples (not exhaustive) of such disclosures.

In the case of Offshore funds that are recognized for retail subscription there must be a representative for the scheme in Singapore to act as a liaison between investors and the foreign manager. The representative must be an individual, a company incorporated in Singapore, or a foreign company registered in Singapore under the Companies Act. The Offshore Fund manager (together with its related companies) must manage at least S$500 million of discretionary funds in Singapore.

Recognized Offshore funds, for retail subscription are not subject to the investment guidelines set out in the Code of Collective Investment Schemes however are approved on the basis of sufficient regulatory oversight in the home jurisdiction. The MAS has the discretion to determine if a foreign jurisdiction’s regulatory framework is acceptable and would at the least require that the applicable regulatory framework is similar to that of Singapore.

In the interest of the retail investors the Onshore Funds authorized for retail subscriptions are subject to the following regulations

Regulation of Managers

The manager of a single hedge fund should have expertise in managing such schemes. Where investment decisions are outsourced to a sub-manager or adviser, the sub-manager or adviser should have expertise in managing such schemes. The professional experience, qualifications, assets under management and performance history of the manager or its sub-manager or adviser will be taken into account for assessing the expertise.  The manager should have at least 2 executives who each have at least 5 years of experience in the management of hedge funds. In the case of FOHF, out of the 5 years at least 3 years must be in the management of FOHFs

Regulation of Investment

A Singapore single hedge fund may invest in another single hedge fund which is not a feeder fund. A Singapore FOHF may invest in another FOHF which should only invest directly in other hedge funds and not through another FOHF or a feeder fund.

In the case of Fund of Hedge Funds (FOHF) it should have diversification as one of its key objectives. The manager should have in place strategies to achieve adequate diversification and ensure that the fund is in line with the diversification strategy at all times. An FOHF should be diversified across at least 15 hedge fund managers or have not more than 8% allocated to a single hedge fund manager.

Regulation of Liability of Investors

The liability of investors must be limited to their investment. For this purpose, the constitutive documents of the hedge fund should contain a provision limiting the liability of investors to their investment in the scheme.

Regulation of Reporting

The manager should prepare and furnish to the trustee the annual audited accounts and reports, semi-annual accounts and reports, and quarterly reports for each of the four quarters of each financial year. The trustee must audit and send or cause to be sent the reports to the participants as stipulated in appendix 4a of the Code on Collective Investment Schemes. The reports should disclose the portfolio statement and top 10 holdings but this requirement is waived, if such disclosure is prejudicial to the interests of the scheme. Alternatively, the aggregate exposure for the scheme categorized according to country, industry, asset class and/or credit rating of debt securities should be disclosed. The performance fees paid or payable by the scheme for the period under review should be disclosed.

Regulation of Leverage

A single hedge fund may be leveraged up to the extent disclosed in the prospectus. An FOHF may borrow only for the purposes of meeting redemptions and short-term (not more than 3 months) bridging requirements. Aggregate borrowings for such purposes should not exceed 25% of the deposited property of the FOHF at the time the borrowing.

Regulations of Marketing to Accredited Investors

Restricted authorized (Onshore) hedge funds and restricted recognized (Offshore)hedge funds can be offered only to accredited investors. Onshore hedge funds offered to accredited investors (and other relevant persons) can only be offered to certain types of investors as defined under Section 305 of the SFA. These investors require a minimum total net asset size or annual income exceeding a certain amount (as set out in Section 4(A) of the SFA) or at a minimum of SGD 200,000 per transaction. The same applies to Offshore recognized schemes.

But unlike funds offered to retail investors, the restricted Offshore and Onshore Funds offered only to the accredited investors are not required to comply with any investment guidelines. Unlike offers to retail investors, there is no requirement for any prospectus or other offering document.

Regulations of Marketing to Institutional Investors

For both Onshore and Offshore funds marketed to institutional investors, there are no minimum subscription requirements for all funds (including hedge funds). As defined in section 4A of the SFA are exempted from all authorization and prospectus requirements under the SFA.

Taxation

An Onshore fund will generally be liable to Singapore income tax if it derives income sourced or deemed to be sourced in Singapore or receives foreign-sourced income in Singapore. A domestic fund is generally required to file an annual tax return with the Singapore tax authorities. Onshore funds which are established as Singapore-resident companies can generally avail of Singapore’s double tax agreements provided these funds can fulfill the relevant substance requirements.

Tax exemptions are available under the Singapore Income Tax Act (SITA) for foreign-sourced dividend, foreign branch profits, and foreign-sourced service income received or deemed received in Singapore, subject to conditions. Gains or profits which are capital in nature are not subject to Singapore income tax.

A foreign or Offshore fund distributed in Singapore which are not managed/ advised by a Singapore resident fund manager/ investment adviser are generally not subject to tax in Singapore and are not required to file an annual tax return to the Singapore tax authorities. However Offshore Funds are deemed to have permanent establishment in Singapore by virtue of their Singapore based fund managers, therefore are deemed to generate earnings from Singapore therefore are invariably subjected to tax. In this case, the foreign fund may be required to file a tax return with the Singapore tax authorities. In cases where no income is subject to Singapore tax, there could be reporting requirements for a foreign fund.

Tax Incentives

Exemption for Offshore Funds

A person in Singapore who manages a fund on a discretionary basis (whether Offshore or Onshore) will create a taxable presence for the fund in Singapore. However there are some exemptions available.

An Offshore fund managed by a Singapore-based fund manager will be exempt from tax on specified income from designated investments if the fund is a qualifying fund. For a fund to be a qualifying fund, in general, it

• should not be resident in Singapore and
• cannot be 100% owned by Singapore investors. Designated investments include investment like stocks, shares, securities, etc. It must be noted, immovable property in Singapore is excluded from the list.

But for an investor to derive tax exemption on incomes from qualifying funds, the investor must be

• An individual investor
• A foreign corporate body without presence or other forms of business activity in Singapore. In the case of foreign company, with permanent establishment in Singapore, it must not use Singapore generated funds to invest in qualifying funds
• specific Singapore government entities
• A Singapore resident corporate investor that owns not more than 30% (or 50% if the fund has 10 or more investors) of the qualifying fund.

Exemption for Onshore Funds

The above stated exemptions for offshore funds are also made available to Singapore funds with the introduction of Singapore Resident Fund Scheme, to encourage fund managers to base their fund vehicles in Singapore, by giving the same tax exemptions. To avail the exemptions a Singapore constituted fund must meet the following conditions:

• It must be approved by MAS
• The fund vehicle must particularly be a company

The key advantage that a Singapore fund has over an offshore fund is the access to Singapore’s large tax treaty network with over 50 countries.

Enhanced Tier Fund Management Scheme

This scheme was introduced to provide greater flexibility to the managers to source investors. There is no restriction on the residency of the investors or the fund vehicles. For funds under this scheme there is no cap on the percentage of Singapore investors. In order to qualify under this scheme the scheme must be approved by MAS and include a minimum fund size of SGD50 million at the time of application. The enhanced tier is open to fund vehicles in the form of companies, trusts and limited partnerships.

Fund Management Incentive Scheme

The FSI-FM scheme aims to promote fund management sector in Singapore. This incentive provides a concessionary tax rate of 10% for fund management and investment advisory activities, subject to certain conditions. For new applicants to qualify for a minimum 5 year award, the applicant:

• must be licensed or exempted from having a CMS license in respect of its fund management or investment advisory activities
• must have at least three professional staff engaged only in fund management or investment advisory services. Such professionals must earn a basic monthly income of more than SGD 3,500, and is engaged substantially in qualifying activities.

It must be noted that MAS will asses other factors such as growth targets in terms of assets under management, business spending etc while considering the applicants under this scheme

Investors are increasingly considering hedge funds as a source of diversification.  Singapore implements the appropriate responses to build strong foundations for the fund administration and domiciliation activities. The strong fundamentals will enhance Singapore’s status as the Asian magnate of the fund management industry attracting capital, talent, managers and opportunities to build a thriving industry ecosystem.

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Increase the quantum of tax deduction for expenditure incurred on research and development (R&D) done in Singapore from 100% to 150%. This means that for every SS$100,000 of local R&D expenditure incurred, SS$150,000 may be claimed as a tax deduction. This higher deduction will be available from Year of Assessment (YA) 2009 to YA 2013.

Allow a company’s locally-done R&D expenses that are not related to the company’s existing business to qualify for tax deduction. This will take effect from YA 2009 to YA 2013.

(A2) R&D Tax Allowance for All Companies (main benefits for SMEs)

Introduce a new incentive to grant companies R&D Tax Allowance for YA 2009 to YA 2013, amounting to 50% of the first SS$300,000 of chargeable income for each YA. This allowance can be utilised against incremental expenditure on ongoing R&D that the company does in Singapore. This allowance has to be used within three YAs from the year in which the allowance is granted.

(A3) R&D Incentive for Start-Up Enterprises (RISE)

Allow start-ups that have yet to make taxable profits within their first three YAs to convert up to SS$225,000 of the company’s losses that arise from tax deductions for R&D which the company does in Singapore into cash grants of up to SS$20,250 from the Government. To qualify for this new incentive, the start-up company needs to incur at least SS$150,000 of expenditure on ongoing R&D done in Singapore in the basis period for each YA of claim. The company will have to give up the losses that have been converted, viz. not be able to carry them forward to set-off future chargeable income of the company. This incentive, named the R&D Incentive for Start-Up Enterprises (RISE), will be available from YA 2009 to YA 2013.

The three schemes above (A1-A3) will provide a significant incentive for all companies, small and big, to do R&D. Start-ups which do not yet have taxable profits will benefit from reduced costs when they do R&D. A small company that is around the 80th percentile of taxpaying companies, and which spends an additional S$150,000 on R&D, would find its effective tax rate being reduced from around 9% currently to almost zero. For a medium-sized company, around the 90th percentile, its effective tax rate will come down from about 15% to 10%.

(B) Enhancing Business Competitiveness

For All Companies

(B1) Tax Incentive for Fixtures and Fittings (main benefits for SMEs)

Grant an allowance to all companies for expenditure incurred on fixtures, fittings and installations, except those relating to structure or expansion of building space, up to a maximum expenditure of S$150,000 every three years per business entity. This new five-year incentive will take effect on qualifying cost of fixtures, fittings and installations incurred after 15 February 2008.

(B2) Foreign Tax Credit for Foreign-Sourced Income

Extend the unilateral tax credit claim for foreign income taxes incurred to all types of foreign-sourced income earned in countries with which Singapore has yet to conclude an Avoidance of Double Taxation Agreement (DTA). This is to encourage businesses to expand regionally and globally. This takes effect from YA 2009.

(B3) Overseas Talent Recruitment Scheme

Extend the Further Tax Deduction for Overseas Talent Recruitment Scheme, which grants double tax deduction for recruitment and relocation costs of hiring top global talent, for another five years to 30 September 2013.

(B4) Equity Remuneration Incentive Scheme (ERIS)

ERIS (All Corporations). To liberalise the qualifying condition for ERIS (All Corporations) such that companies only need to issue stock options or share awards to at least 25% of their employees, instead of the 50% currently required. For large companies that would like to use equity remuneration for key employees to encourage them to take risks and grow the company, it will now be easier to do so.

ERIS (Small and Medium Enterprises), i.e. ERIS (SMEs). Rename the Entrepreneurial Employee Equity-based Remuneration Scheme as ERIS (SMEs).

ERIS (Start-Ups). Introduce ERIS (Start-Ups), which allows employees of qualifying start-up companies to be exempted from personal income tax on 75% of the gains derived from equity-based remuneration granted by qualifying start-up companies. The equity-based remuneration must be granted within the first three calendar years of the company’s incorporation. Employees can claim tax exemption on 75% of up to S$10 million of qualifying gains arising over a period of 10 years.

To qualify for ERIS (Start-Ups), the company needs to a) be incorporated and conducting a trade in Singapore; b) have gross assets with a market value of S$100 million or less at the time of being granted the equity-based remuneration; and c) have at least one individual shareholder owning at least 10% shareholding in the start-up company. ERIS (Start-Ups) will be available for stock options or share awards granted between 16 February 2008 and 15 February 2013 in the first three years of incorporation of the qualifying start-up companies.

ERIS will take effect from YA 2009 on stock options or share awards granted after 15 February 2008 by qualifying companies. Gains that employees of a qualifying company derive from qualifying stock options or share awards are to be incentivised only under one tier or ERIS, and the company has to meet the qualifying conditions applicable for the tier.

Related posts:

• Singapore Budget 2008 – Key Corporate Tax Reliefs At a Glance
• Singapore Budget 2010
• Tax And Other Benefits Enjoyed When You Register a Singapore Company

Singapore is India’s largest trading and investment partners in ASEAN. The increasingly close relations between India and Singapore in recent years have been underpinned by a dramatic growth in bilateral trade and investment linkages. India is looking for infrastructure investments, critical technologies and export markets. Singapore has surplus capital and could be a useful partner in infrastructure development in India as well as investment in Indian companies. At the end of last year, there were nearly 2,600 Indian firms in Singapore, about 2.3 times more than the number in 2001, Indian companies is one of the largest contingent of foreign companies in Singapore.

Singapore is India’s largest trading and investment partners in ASEAN. The increasingly close relations between India and Singapore in recent years have been underpinned by a dramatic growth in bilateral trade and investment linkages. India is looking for infrastructure investments, critical technologies and export markets. Singapore has surplus capital and could be a useful partner in infrastructure development in India as well as investment in Indian companies. At the end of last year, there were nearly 2,600 Indian firms in Singapore, about 2.3 times more than the number in 2001, Indian companies is one of the largest contingent of foreign companies in Singapore.

Trade activity between Singapore and Russia has been steadily increasing. Our bilateral trade has grown 43% from S$1.32 billion in 2005 to S$1.89 billion in 2006. Since 2000, bilateral trade has increased more than three-fold. Russia is now Singapore’s 33rd-largest trading partner, up from 38th position in 2005. ‘With Russia’s phenomenal growth since 1999 – more than 5 per cent annually – and growing influence in the global economy, there is renewed interest in the Russian market. On 15 August 2006, Singapore signed a Memorandum of Understanding on Economic Cooperation in Special Economic Zones with Russia. This successful collaboration constitutes a significant government-to-government platform for bilateral engagement and paves the way for closer economic cooperation. Singapore remains a fully committed partner in Russia’s development and expansion abroad. Russia intends to bring its deep expertise in science and technology, and an increasing number of technology-based enterprises into the world market.

More than 700 British companies are represented in Singapore. Opportunities for British companies to do business exist in a broad range of sectors and across the spectrum of consumer and capital goods. Opportunities also exist in project design. Singapore is one of the UK’s key markets in Asia Pacific, just as the UK is one of Singapore’s key markets in Europe.

In tandem with the intensifying business relations between the countries, and strengthening government-to-government ties, expanding regional economic and commercial alliances, and increasing interest in the emerging Asia Singapore is becoming the most preferred host for basing the operations of the companies. They can strike partnerships with Singapore’s vibrant ecosystem of diverse enterprises from all over the world and leverage on Singapore’s extensive linkages with global markets, sophisticated manufacturing capabilities, robust intellectual property protection regime and pro-business environment to internationalize.

Rikvin has kicked off a massive expansion plans in line with the escalating demand for one stop incorporation services in Singapore and business management services; Ms. Ragini Dhanvantray says

We are keen on offering comprehensive solutions to our existing as well as prospective clients, so we are widening our service offerings. We are currently seeking alliance from similar business management consultancies from India, Russia, UK and other EU countries. It will be a mutually symbiotic relationship, by which we will service the overseas prospects referred by our partners and in turn we will be referring our clients who wish to enter the overseas markets, to our network partners. We are looking forward for a synergetic relationship from consultancies commanding high caliber of professionalism and commitment to serve the clients. Our ultimate goal is to ease out two way entry procedures for aspiring enterprises and entrepreneurs to set their global foot print

Related Links

• Singapore Company Registration Requirements
• How-to Guides on Setting Up Individual Types of Business
• Singapore Corporate Services

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Singapore Office

According to Ragini Dhanvantray, CEO of Rikvin Consultancy, Singapore is fast becoming the business city of choice, having had the recognition of excellent business infrastructure, political stability, and close economic ties with many of the world’s leading economies, there has never been better time than now, to set up your business in Singapore.

Rikvin Singapore has recently launched a set of comprehensive Singapore incorporation packages at special prices to meet the needs of entrepreneurs and companies wishing to incorporate and do business in Singapore. Each package is designed for the needs of specific category

The standard Singapore Company Incorporation Express package consists of pre- and post- company incorporation procedures, including name check and reservation, preparation of memorandum and articles of the company and other incorporation documents, preparation of registration forms, professional and filing fees, e-certificate of incorporation, preparation of corporate compliance kit, minutes of first board meeting and resolution to open a bank account of customers.

Foreign entrepreneurs wishing to setup a new business and move to Singapore can take advantage of the package that covers all necessary formalities including preparation of a business plan, entrepreneur’s visa (EntrePass), and Employment Pass application filing including visas for their immediate dependents, Singapore company incorporation with virtual office services. Rikvin can also provide assistance for entrepreneurs who need their foreign employees to be relocated to Singapore.

“Our prospective clients will be very pleased with the new specially priced total packages,” said Ragini Dhanvantray, CEO of Rikvin Singapore.

“Rikvin is the market leader for the speed and excellence of its Singapore incorporation services and we are constantly looking for ways to further improve the overall value proposition to our clients. Singapore was recently rated as #1 in ease of doing business globally by World Bank and our clients get to experience it first-hand through our organization.”

One Stop Singapore Incorporation & Visa Portal

Rikvin specializes in providing company incorporation, registration and administration processing for all business types and sizes in Singapore and throughout the world. In addition, we facilitate the incorporation of our clients’ businesses and manage their statutory affairs. We provide the best company formation service, management and administrative facilities with maximum efficiency and productivity.

Established in 1995 and well recognized for its service quality, Rikvin Consultancy specializes in providing Singapore company incorporation, foreign company business registration, and related business advisory services in Singapore.

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• Rikvin Offers Special Packages for “Representative Office in Singapore”
• Rikvin Announces New Singapore Company Incorporation website
• Rikvin Announces Singapore Company Incorporation & Visa Application Portal