Exempt Private Company (EPC) is the most preferred type of company in Singapore. It is basically a private company that has less than 20 shareholders. None of the shareholders are corporations.
Advantages of an exempt private company in Singapore
There are many reasons why foreign entrepreneurs go for this type of company:
Separate legal status
An exempt private company is considered a distinctive entity, which is separate from its members. An EPC can take loans, enter a contract or agreement, buy and sell property in its own name. The shareholders or company’s members do not hold any further liability that goes beyond their share contributions.
Fewer compliance requirements
Almost all companies incorporated in Singapore have to submit their financial statements along with annual returns to ACRA. However, an EPC need not to file financial statements, as long as it is solvent. It only needs to make an online declaration to ACRA.
An EPC in Singapore can be exempted from the audit requirement when meeting 2 out of 3 of the following conditions:
- The revenue is no more than $10 million;
- The evaluation of total assets is not more than $10 million;
- The number of employees is no more than 50.
Tax exemption
Currently, the corporate tax income applied to an EPC in Singapore is 17%. However, the actual payable tax is much lower than that, due to many tax-cut schemes.
Compared to other types of business, an exempt private company is easier to meet the conditions for the Tax exemption scheme for start-ups in Singapore. The conditions are:
- The company is incorporated in Singapore;
- The company is a tax resident for the year of assessment;
- Throughout the basis period, the company has no more than 20 individual shareholders, one of whom must hold at least 10% of the ordinary shares of the company.
The Tax exemption scheme for start-ups allows an EPC to have the following benefits for the first 3 consecutive years of assessment:
- 75% tax exemption on the first $100,000 of earned income;
- Additional 50% tax exemption on the next $100,000 of earned income.
In the fourth year of incorporation, an exempt private company in Singapore will continue to be eligible for the Partial tax exemption for all companies. In particular, an EPC can be entitled to:
- 75% tax exemption on the first $10,000 of earned income;
- Additional 50% tax exemption on the next $190,000 of earned income.
An EPC can also enjoy yearly tax rebates. The rebate rate in 2020 is 25%, capped at $15,000. Prior to these schemes, the company can deduct many expenses from its taxable income.
100% foreign ownership
A company in Singapore can be wholly foreign-owned. You can also move to Singapore to directly manage your company in this country. The two most common work passes for foreigners to move to Singapore are Employment Pass and Entrepreneur Pass.
Requirements to set up an EPC in Singapore
To register an EPC in Singapore, you need to fulfill the following basic requirements:
- Shareholder: there has to be at least one shareholder. The maximum number should be less than 20. No shareholder is a corporation.
- Director: there must be at least one director that is a local resident in Singapore. You can use a nominee service to meet this requirement.
- Paid-up capital: the amount is at least $1.
- Office address: the address of the company must be in Singapore.
- Company secretary: this position cannot be left vacant for 6 months. It means a secretary must be appointed within 6 months after the incorporation.
Process of registering an EPC in Singapore
The first thing you need to do is choose a service provider. That’s what ACRA (the Accounting and Corporate Regulatory Authority) tells foreigners to do. The service provider will register a company on your behalf since they have access to the online registration portal BizFile.
Another reason why you need a provider is that they can help you meet all the requirements with ease. The Singapore company incorporation cost will include a nominee director service, secretarial service, a registered office address in Singapore, and a registration fee.
The registration of a company in Singapore will be simple and fast with a service provider. You only need to supply the company name and the required documents for the company incorporation. These documents need to include the following information:
- Company’s main business activity
- Information of the directors
- Information of the shareholders
- Information of the company secretary (if any)
- The registered office address in Singapore
Once fully collecting the required documents, the service provider will proceed and submit the application to ACRA. It normally takes 24 hours to register a company in Singapore. If your application is approved, there will be a notification email. Attached to it is a business profile of your newly-formed company.
After the incorporation, you need to open a corporate bank account. This will allow your company to make transactions with customers and business partners. The service provider normally further assists you to apply for a bank account, for an additional fee. Now, your EPC is good to start its business in Singapore.
Don’t hesitate to contact BBCIncorp to get more practical advice for your business in Singapore.
