Every year a few thousand foreign-owned businesses are registered in Singapore. Thanks to the liberal laws for foreign entrepreneurs in the country, Singapore has become one of the hottest destinations for setting up an offshore company. Out of the thousands of foreign-owned companies being registered in Singapore each year, quite a number of them choose to act as offshore companies while others are treated as resident companies.
Although the registration process for both are the same and have very similar laws, there are a few differences between the two.
Resident companies are essentially companies that are catering to the Singapore market. These are usually private limited companies and may have foreign shareholders. Foreigners are allowed 100 percent ownership in Singapore companies and hence they can easily set up a resident company in the country.
It is possible for both the shareholder and the director of the company to reside overseas. However, there is always one local director in the firm that must live within Singapore. These companies are treated the same as a local company, they sell their products and services in the local Singapore market and have the same annual filing requirements as local owned companies.
Offshore companies are similar to foreign-owned resident companies in Singapore. They also can have foreign shareholders and both the shareholder and director can reside overseas. However, in this case, even though the offshore company is required to maintain at least one local director, their services or products are marketed in an overseas market and not within Singapore. Offshore companies have their owners reside overseas and also have their business activities in another country.
The moment they try to cater to the local Singapore market, they would be treated as a resident company and the laws for local companies would be applied.
Offshore companies have the possibility of zero taxation when registered in Singapore. This is because Singapore does not tax foreign-sourced income as long as that income has not been brought inside of Singapore. While resident companies would have the need to remit foreign-sourced income to a Singapore bank account, offshore companies by virtue of having their entire business activities overseas may not need to remit any money to Singapore at all.
However, even if an offshore company in Singapore does not have any tax obligations, they would still have to file their annual returns and annual tax returns in the country.