Steven, a Malaysian businessman, owns a successful business selling a wide range of electronic products to the local market over the past 20 years. He normally purchases his goods from various suppliers in China. Recently, he did a survey on the demand for some of his products in Singapore. As a result of this survey, he had meetings with some potential customers, who in turn, expressed an interest in purchasing from him. This prompted him to consider incorporating a private limited company in Singapore to conduct his business there. Furthermore, with globalization and rapid changes in the world economy, he believes that his business can get a strong foothold in the International market.
In doing so, he would have the advantages of getting a foothold into a new market and a gateway to the regional markets plus a lower taxation for his trading profits there.
To incorporate a Company in Singapore, you must have at least one local resident director who is above 18 years old. There must be at least one shareholder who can be a local or a foreign person. A foreign person or business entity can own 100% of a Singapore company. The director and shareholder can be the same person. The company must be registered in Singapore. It has to file the company’s accounts with Accounting and Corporate Regulatory Authority of Singapore annually. If it qualifies to be an exempt private company and has an annual turnover of less than S$5 million, then the company can file in the unaudited accounts whereas other companies are required to file in the audited accounts. An exempt private company in Singapore is defined under Section 4(1) of the Singapore Companies Act as a company which has not more than 20 shareholders and its shares are not held by another corporate entity.
When it comes to corporate tax at the moment, all Singapore resident companies are eligible for a tax exemption amounting to a 0% to 8.5% tax rate on taxable income of up to S$300,000 per annum. The taxable income above S$300,000 will be charged at the normal headline of corporate tax of 17%.
With business interests in Malaysia and Singapore, it is advisable for Steven to prepare one will covering assets in Malaysia and another will covering assets in Singapore. This is to facilitate easy and faster application for Grant of Probate in each of the respective countries. At the same time, it is also important to consider setting up a private trust for immediate funding in each of the countries because upon his demise many of his assets, especially his cash, may be frozen and immediate liquidity for his business can be a major problem. Therefore, he must consider setting up an insurance trust because it is considered one of the cheapest funding vehicle. All he needs to do is to execute an absolute assignment in some of his insurance policies into a trust and upon his demise the money from his insurance will flow into the trust for immediate usage.
Peter Lee is an Associate Estate Planning Practitioner (Wills & Trust) with Rockwills International Group. He is also an Islamic Estate Planner providing Wills & Trust services for Muslims. He is based in Ipoh and can be reached at: 012-5078825/ 05-2554853 or email@example.com. Website: http://www.wills-trust.com.my.