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Setting Up an Offshore Company in Singapore

Author Syahirah Aiman AbbasSyahirah Aiman Abbas

14 min read
Better Business

Thinking about setting up an offshore company in Singapore? benefits for small business owners who are looking to expand their operations into a tax-efficient, financially stable melting pot of opportunity and innovation.

Setting Up an Offshore Company in Singapore

Singapore offshore company setup is simple if you’ve got the right support along the way. There are benefits for small business owners who are looking to expand their operations into a tax-efficient, financially stable melting pot of opportunity and innovation.

Here’s all you need to know about managing the process of setting up your offshore company in Singapore. When you’re ready to get started, we’re here to help make it simple.

What Is an Offshore Company?

A business that’s registered and run from a region different to that of its principals and investors or primary business operations is considered an offshore company. In a general sense, these types of offshore companies are incorporated outside the country of central business operations (which is often outside the country where the company was formed.

Offshore can also refer to a specific jurisdiction or physical territory in a country that affords specific business regulations such as simpler corporate reporting and governance, low or reduced tax schemes and company asset protection. These offshore regions can make foreign company incorporation an attractive and beneficial prospect for entrepreneurs. Now we’ve covered the definition, let’s explore what else you need to know about setting up a Singapore offshore company.

Why Should I Set Up an Offshore Company in Singapore?

  1. Less Taxes

One of the main reasons many business owners think about setting up an offshore company in Singapore is the flexible tax system and appealing incentives for foreigners. Not only is it flexible but Singapore’s standard corporate tax is one of the lowest in all of Asia, at a flat rate of 17%.

  1. Easy offshore company incorporation

Another benefit of setting up an offshore company in Singapore is that the actual incorporation process itself is known to be simple and straightforward. An outside citizen can complete the incorporation of a new offshore business in Singapore in just days because there’s no red-tape and the entire process is focused on efficiency. No wonder this city-state is known as one of the easiest places to do business.

The process of offshore incorporation in Singapore is all done digitally and is laid out in two important streams of activity (which we explore in more detail further down). The first is the selection and approval of your new company name and the other involves the more administrative side of documentation submission. Business registration and company incorporation are our speciality, so reach out to our team for any pointers.

  1. Political and economic stability

Singapore has been rated as one of Asia’s least bureaucratic and most politically stable countries. The government of this Asian city-state has a reputation of being transparent, corrupt-free, and pro-business, with a just and reliable legal system. Sound legal parameters reduce the risk of setting up a Singapore offshore company. This is made possible through regulations and strict rules of adherence when it comes to business operations, the protection of IP, commerce, HR and asset management.

  1. Eligibility for foreigners to own a company

Offshore company formation in Singapore isn’t a business activity limited to locals. Foreigners or those who live outside the region, are still eligible to set up an offshore company in Singapore. There is no need to get on a plane when all can be done from an office anywhere in the world with ease.

Set up requires the services of a corporate secretary, a nominee director, and a registered address. The foreign ownership policies are liberal and open so business owners thinking about setting up a company in Singapore will be glad to know there are no restrictions on the permitted fields of business activity, and you also won’t need prior approval from authorities in Singapore. Some other key benefits include the fact that 100% foreign shareholding is allowed and you’re also allowed to have corporate bodies or individuals as shareholders.

  1. Credible image for your company

As Singapore is a trusted name and a reputable and recognised place of running and incorporating businesses, having a Private Limited in this city-state will give your company a credible image. This serves as an advantage when it comes to prospective investors and future business growth and expansion.

An offshore company setup in Singapore is not within a tax haven, rather, it denotes both credibility and stature as a legal corporate entity. Being taken seriously by stakeholders means building a solid foundation with the professionals, bankers and employees you will cross paths with in the future.

  1. Modern banking facilities

Banking services will need to be heavily relied on during the process of offshore company formation in Singapore. The good news is that you’re doing business in the leading financial centre of the Asia Pacific region so you can expect modern, efficient and accessible features. This, along with an extensive and reputable selection of foreign and local banks, makes setting up a Singapore offshore company even less of an hassle.

You can expect features such as ease of moving funds, multi-currency accounts, credit and trade financing, internet banking and more. There are banks that will allow you to set up your account remotely, so you can find what’s best for your business, achieve what’s best, and get on your way to financial freedom.  

Opening a business bank account is a must when you start a company, to keep your accounting in order. We have partnered with a few business account providers that enable you to open a company and a business account in Singapore within the same day from anywhere in the world. No visits to the bank, and no paperwork required at all.

  1. Strong and stable Singapore dollar

For any business owner, the ability to trade is important and that’s what makes Singapore’s strong and stable dollar so attractive. It’s one of the stronger currencies in Asia and within the top 15 of most-traded currencies globally. Setting up an offshore company in Singapore could put you in a good position to tackle prospects like investments and growth opportunities in the future. There’s also been an assuringly low rate of inflation recorded over the decades which has further instilled confidence in businesses looking to explore offshore ventures in Singapore.

  1. Venture capital and funding options

Private Equity Funding

If you’re doing business in Singapore, this is the most robust option at your disposal if you’re lacking the funds or access to credit you need to get a leg up. Private equity funding in Singapore is actively encouraged by the government as they want private investors to also invest in the various startups in this region. Along with the tax incentive schemes, you can see why Singapore is considered an attractive region for venture capitalists and private equity activities. In this case, you would sell ownership equity in your company in order to get a cash investment injection. This equity is usually in the form of your startup’s shares. Offshore company setup in Singapore can be a lot more costly when going down the route of a bank loan or a debt finance application, which is why potential investors deem it a better option to pay in the form of dividends on shares and go the private equity funding route instead.

Angel Investors

Offshore company setup in Singapore is also possible through angel investment. In this model of business funding, capital is not the only thing that is contributed. Along with financial support, angel investors will also often offer their own related skill sets as a way to contribute hands-on business expertise. This exchange is also based on a startup handing over a substantial share in the company in order to access these ongoing benefits. Not all angel investors are the same and you can select whether you’d like to go for an investor who is more actively involved or, alternatively, a sleeping partner who’s less actively involved. A common trait is that all angel investors seek companies who look, sound, and sell themselves as promising entities.

Private Funds

Another option for funding when considering setting up an offshore company in Singapore is that of private funds. These sources are traditional institutions that are privately run, including things like investment houses, financial bodies and banks.

Unlike an actively involved angel investor, there is little involvement in the business in this method. A return on the borrowed amount (interest rate ranging from 7 – 12%) is agreed on and thereafter there’s no participatory correspondence from a bank.

These funds are more likely to be released or accessible to those more established businesses that can prove a track record of high revenue. They could also forecast high growth potential or provide evidence of a good credit track record. Private funds are therefore an option better suited to businesses who are not just starting out. Smaller offshore company startups can seek other options to get loans from institutions like OCBC, DBS, UOB, and the Standard Chartered Bank through the Singapore government.

Venture Capital

Professional investors with a more direct role in your business are referred to as Venture Capitalists. When these investors agree to a stake in your offshore company, they do so with the vested interests of their own clients. Like angel investors, if you’re an offshore company setting up in Singapore, a venture capital funding opportunity could also mean training and access to business advice and mentorship in your field. It’s worth knowing that the timeframe of partnering with a venture capitalist is generally limited to a timeframe. They are usually only involved for a period of between 2 and 5 years, with a 25% return rate sought to manage delivery of profits to their clients.

This finance model has proven to be both viable and popular for verticals that offer innovative potential or a competitive edge worth investing in. Things like nanotechnology, artificial intelligence, biotechnology and many streams of IT all fall part of the type of business setups that have a structure matched to a venture capitalists’ interests. There’s a relatively small venture capital industry (100+ firms) in Singapore when compared to that of Europe and the US.

When Should You Consider Setting Up an Offshore Company in Singapore?

  1. When you are expanding your business

Setting up an offshore company could be something to consider when your business starts seeing growth which in turn sees you getting an increase in interest for investment and shareholder buy-in. If these investors you attract prefer to invest through an offshore jurisdiction, it would be worth looking into the benefits of setting up an offshore company in Singapore. This is most often the case with institutional investors who are looking for viable avenues of investment in business.

  1. When you are retaining assets to gain income

Not all businesses follow the same model or structure. Perhaps your company is into investment holding. This is often the case in real estate as the main purpose of retaining assets (like property, for example) is to use them to gain further income or to use them as assets to invest in. There is substantial relief from Stamp Duty and Capital Gains which is one of the benefits of setting up an offshore company in Singapore.

  1. When you are developing an Intellectual Property

If part of your business entails developing an Intellectual Property which you’re intending to use in different countries, Singapore is ranked second in the world and top in Asia for having the best IP protection in the World Economic Forum’s Global Competitiveness Report 2019. Overall, Singapore is ranked first as the world's most competitive country so it’s easy to see why opening ap an offshore company can be such an attractive prospect for international entrepreneurs.

How To Set Up an Offshore Company in Singapore

As a foreign investor, you’ll have the same rights as residents but will be granted different types of incentives for setting up an offshore company in Singapore.

Here are they key steps involved in offshore company setup:

  1. Company name: This should follow the legal requirements which outline that it has to be different from any existing company’s name, does not contain offensive or sensitive phrasing or conflict with any Singaporean government agency.
  2. Company structure & profile submission: You’ll need to decide what type of company structure you’re going to open (Sole proprietorship, private/public limited liability company, or subsidiary/branch/representative office). Make sure to understand the difference between branch and subsidiary office and choose the best option for your future plans.

For offshore companies, usually the private limited is chosen because of the ease of raising capital, limited liability, credibility as a corporate structure, and tax benefits and incentives available in Singapore.

Foreign entrepreneurs would require professional firms or local agents for Singapore offshore company incorporation:

  • Prepare incorporation documents: most important of which is the Company Constitution;
  • Translate and notarize business incorporation documents and owners’ identification papers;
  • File all documents with ACRA and obtain business license and company’s business profile;
  • Registering with the Inland Revenue Authority of Singapore for taxation purposes and to obtain a GST number.

What you need to prepare before the offshore company setup

What You Need To Prepare Before Company Registration

The following are the requirements for setting up a private limited company in Singapore. These are to ensure that your business operations remain legal and in line with Singapore’s regulations.

  • At least one shareholder (100% of foreign ownership shareholding is allowed and the shareholders you choose can be both foreign or local individuals or companies.
  • At least one ordinarily resident director who resides in Singapore.
  • At least one company secretary appointed within 6 months of setting up your offshore company, who is a permanent resident or Singaporean citizen.
  • Minimum of $1 as initial paid-up share capital at the time of your offshore company incorporation.
  • A registered physical office address in Singapore (P.O. Box address is not valid, it’ll need to be registered as a commercial or residential address).

Steps to take after you've set up an offshore company

After you’ve registered your company there may be further documents required for submission by the registered filing agent. This is all an online process, which you can register and complete digitally on the Singapore government’s website, BizFile+. Setting up an offshore company in Singapore requires you to have a digital identity, which is assigned to residents and citizens. This digital identity is referred to as a SingPass, and is used to log in to the BizFile+ website.

Those foreign individuals or businesses registering for the first time in Singapore won’t have this account, however there is a way to obtain it through Accounting and Corporate Regulatory Authority (ACRA), the governmental body that oversees business registration in Singapore using an accredited incorporation service to help you along the way. After the incorporation of your offshore Singapore company is approved, you’ll be provided with a Unique Entity Number (UEN), which will serve as your new company’s standard identification number.  

When setting up your offshore company, you are also required to register with different authorities, such as:

  1. Registration for Singapore Goods and Services Tax aka GST (requirement for paying taxes associated with hiring employees)
  2. Registration for the Skills Development Levy aka SDL (requirement for paying taxes associated with hiring employees)
  3. Application for required business licences, depending on the nature of your operations
  4. Opening a corporate bank account
  5. Registration for the Central Provident Fund (CPF)

Administrative things you have to do annually

  • All annual unaudited financial statements should be submitted to the IRAS, together with the tax filing.
  • An offshore business incorporated in Singapore must update details of its company to ACRA’s public register. Names and addresses of all directors, address of the principal place of business, and details of all share-holdings should be updated yearly.
  • The company must appoint a resident company secretary and a resident director and maintain a legal registered Singapore offshore business address. Professional agencies would offer these services.

The process of deregistering a Singapore-based offshore company will take at least 6 months, during which you’ll need to maintain the resident company secretary and the legally registered office.

What Do Offshore Company Owners Need To Know About Tax?

If certain conditions are met, such as having legal control outside the country and conducting no business or banking in the country, your new offshore company in Singapore may benefit from tax exemptions. Singapore follows a territorial basis of taxation which means that you will only be taxed on the income that is gained, accrued or received in Singapore. A Singapore offshore company is subject to zero corporate tax if the company is controlled overseas, has no local corporate bank account and only has overseas business operations.

Despite having zero corporate taxes, these jurisdictions are not labelled as “tax havens” because the companies are subject to a high level of accountability, due diligence and reporting requirements. Each company registration will go through a Know-Your-Customer process to ensure that all companies incorporated here and financial transactions flowing into Singapore are not from suspicious activities.

Some types of foreign-sourced income received in Singapore, and any foreign-sourced income not banked into Singapore are also exempted. Here are some types of income that will be exempted and below that, we’ll elaborate how dividends and service income from foreign sources will be exempt from tax.

  • Foreign-sourced dividends
  • Foreign-sourced service income
  • Foreign branch profits

Foreign-sourced service income

There are 3 conditions that need to be met in order for your offshore company to qualify as tax-exempt, foreign-sourced income remitted to Singapore. Don’t worry if it all sounds a bit complex, we’ve also included an example to make it even easier to digest.

  1. The base tax rate of the foreign jurisdiction is at least 15% at the time the foreign income is received in Singapore.
  2. The foreign income was taxed in the foreign jurisdiction the rate at which the foreign income was taxed can be different from the headline tax rate.
  3. The Singapore government is satisfied that the tax exemption would be beneficial to the person resident in Singapore.

Azure Pte. Ltd. is a fictional Singapore offshore company. If they derived and received the following incomes: locally from Singapore and from two other foreign countries - Lithuania (sample tax rate 20%) and Georgia (sample tax rate 5%), during the financial year 2023 [i.e. Year of Assessment (YA) 2022]:

Amount Foreign tax paid Expenses applicable to foreign income
Service Income – Singapore $300,000 - -
Service Income – From Lithuania $50,000 $10,000 -
Deductible expenses & capital allowances for service income $15,000 - -
Foreign income – interest (From Georgia) $20,000 $1,000 $100

Azure Pte. Ltd. is entitled to claim the foreign tax credit on the service income of S$50,000 from Lithuania and interest income of S$20,000 from Georgia. This income is not granted tax credit as the headline tax rate, or tax rate suffered is not more than or equal to 15%.

Tax Computation for YA 2020

Service income - Singapore 300,000
Service income - Lithuania 50,000 (A)
Total service income 350,000 (B)
Less: Deductible expenses and capital allowances (15,000)
335,000 (C)
Interest (Georgia) [20,000 - 100] 19,900 (D)
Total statutory income 354,900 (E)
Less: Approved donations (assumed) (1,000)
Chargeable income (before exempt amount) 353,900
Less: Partial tax exemption (152,500)
Chargeable income (after exempt amount) 201,400
Tax payable @ 17% 34,238.00 (F)
Less: Foreign tax credit (5,616.87) #
Less: Corporate income tax rebate (25% X $28,621.13) (7,155.28)
Net tax payable 21,465.85

# Calculation of Foreign Tax Credit

Singapore tax payable on service income from Lithuania [A/B x C/E x F] 4,616.87
Foreign tax paid in Lithuania 10,000.00
Foreign tax credit = lower of Singapore tax payable or foreign tax paid 4,616.87
Singapore tax payable on the interest income from Georgia [D/E x F] 1,919.80
Foreign tax paid in Georgia 1,000.00
Foreign tax credit = lower of Singapore tax payable or foreign tax paid 1,000.00

In summary, Azure Pte. Ltd. had a total statutory (combined income after appropriate deductions and exemption) income of S$354,900, received total foreign tax credit of S$5,616.87,and a 25% corporate income tax rebate (as part of the Singapore government's Stabilisation and Support Package due to the coronavirus outbreak) of S$7,155.28, and thus, its net tax payable is S$21,465.85.

Foreign-sourced dividend

If you’re setting up an offshore company in Singapore, you will be following a single-tier tax policy. This means once the income has been taxed at the corporate level, dividends can be distributed to shareholders tax-free.

The corporate income tax rate is approximately 8.5% for profits up to S$300,000 and a flat 17% above S$300,000.

An offshore company, Peninsula Pte. Ltd. (fictional company) has a foreign-sourced income that is kept offshore ("foreign-sourced offshore income"). It wants to transmit the foreign-sourced offshore income from its offshore bank account to Premier Bank Pte. Ltd., its bank account in Singapore, for the payment of one-tier tax-exempt scripless dividends to its shareholders. (Scripless shares are shares which are held in a securities account.)

The foreign-sourced offshore income here is not considered received in Singapore and not subject to tax. This is subject to the condition that the one-tier tax exempt dividend is paid directly into the Premier Bank’s bank account and does not involve any physical remittance, transmission or bringing of funds into Singapore by the dividend-paying company for the purpose of the dividend payment.

  • Financial: Trading, investment, and asset holding
  • Consultancy services in various fields of activity, such as IT
  • Ship management & yacht ownership: Singapore is one of the most important maritime hubs in Southeast Asia due to its strategic geographic position
  • Intellectual property ownership: Singapore is one of the most advanced countries in this area, well-supported by its strong legal and enforcement systems;
  • Real estate: constantly relevant and profitable business sector due to territory

Set up your own offshore company in Singapore with Osome

Our team can help you incorporate a company in Singapore and show you how to set up a business bank account within a day. We’ll make sense of the foreign financial lingo and take the registration admin off your hands.


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