The ease of Singapore company registration and access to the public as well as private sector funding could offer respite to Middle Eastern entrepreneurs who are stymied by high business setup costs and seek a business-friendly environment.
According to a recent report on Forbes.com, high licensing and government-related fees are squeezing small businesses of their hard-earned profits and stifling entrepreneurship in the Gulf Cooperation Council (GCC). Affected GCC economies include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (UAE).
According to the report, four factors i.e. 1) business registration fees, 2) paid-up capital, 3) business renewal fees and 4) exorbitant rental rates put GCC entrepreneurs between a rock and a hard place.
- Business registration fees, which include government fees, visas and deposits, ranges from US$5000 in Bahrain to US$15,000 in Saudi Arabia and UAE.
- Paid-up capital of US$15,000 is also required to be deposited in banks in GCC for starting a business.
- The annual business renewal fee of approximately US$10,000 is mandatory irrespective of profit or loss also proves to be a huge burden on new GCC startups, particularly in the first few years of operations.
- Furthermore, high rental rates of commercial real estate and the annual government fee of approximately US$10,000 per branch prevent businesses from expanding their operations.
Singapore company registration specialist Rikvin is optimistic that the Republic offers a more business-friendly environment for entrepreneurship and could provide a respite to Middle Eastern entrepreneurs.
Explaining further, Mr. Satish Bakhda, Head of Rikvin’s Operations said, “It is difficult for entrepreneurs in the GCC region to grow their businesses to the level that they desire or even focus on the future growth path with such conditions in place. In comparison, the cost of opening a Singapore company or running operations in Singapore are testament to the Republic’s consistent top ranking in World Bank’s Ease of Doing Business Index for the past six years.”
Rikvin has recognized five factors that have motivated entrepreneurs to set up a company in Singapore in recent years.
EASE OF DOING BUSINESS IN SINGAPORE
According to the World Bank’s Ease of Doing Business Index, Singapore is business-friendly place due to factors such as the ease of starting a business, the ease of trading across borders and protecting investors. Although the cost of doing business in Singapore is increasing due to inflationary pressures, they are still significantly lower than in the GCC. Additionally, Singapore’s sophisticated business infrastructure and connectivity, stable political environment and sound fiscal policies are some of the reasons why foreign entrepreneurs continually take part in Asia’s growth story by choosing Singapore as their preferred company setup location.
STRATEGIC POSITION AND NETWORK OF TRADE AGREEMENTS
Singapore’s geographical location in the heart of Southeast Asia places it in close proximity to emerging markets such as China, India, Indonesia and Vietnam. Furthermore, with 20 Free Trade Agreements (FTAs) with 27 economies as well as 69 comprehensive Avoidance of Double Tax Agreements (DTAs) under its belt, Singapore facilitates business across borders and makes it less costly for small businesses in Singapore to expand their operations internationally.
Related Article: Is Singapore the ideal location to the Gulf region?
ACCESS TO FUNDING
SPRING Singapore offers a wide variety of funding for Singapore-registered start-ups as well as business incubators and angel investors in order to spur entrepreneurship in the Republic. Funding is offered at different levels of growth, from starting up to building capabilities and for various industries. Other than public sector funding, businesses can tap lower interest rates offered by banks in Singapore.
ATTRACTIVE TAX SYSTEM
With regards to paying taxes in the Republic, Singapore corporate tax and personal income tax rates are progressive and designed to boost entrepreneurship. In addition, Singapore offers every Singapore-registered firm a 400% tax deduction or a 60% cash payout option each year for expenditure made in a wide variety of value-added activities via the Productivity and Innovation Credit (PIC) scheme. Additionally, capital gains are not taxed in Singapore.
“All these factors give Singapore a defining edge in encouraging entrepreneurship and we are optimistic that Middle eastern entrepreneurs are in good stead to benefit from setting up a Singapore company,” concluded Mr. Bakhda.