Under the base erosion and profit shifting (BEPS), there is a push towards greater transparency and disclosure and countries are changing their laws to comply with the requirements. Especially countries with no tax or low corporate tax rates (e.g., Cayman Islands, British Virgin Islands, Marshall Islands, Bermuda).
These countries had implemented economic substance regulations for companies incorporated in their respective jurisdictions. Under the economic substance regulations, the companies are required to have adequate employees, operating expenses and undertake income generating activities in their jurisdictions. This results in companies and individuals that had traditionally rely on these jurisdictions to hold their investments and businesses to consider if they should increase their substance, leading to higher cost and inconvenience or restructure their holdings to another location given the future uncertainties in the scope and reach of the economic substance regulations.
While contemplating the suitable location to restructure the existing holdings and arrangements, Singapore should be considered as a preferred location as Singapore is a cosmopolitan city which is also the trading and finance hub of Southeast Asia with an open economy, stable government, no foreign exchange controls, and high-quality workforce.
Although Singapore also has economic substance regulations, the laws and regulatory environment in Singapore is welcoming to foreign investments, making Singapore a leading jurisdiction for wealth management and is use as an investment gateway into Asia, makes it much easier for companies to operate and hire people to meet its economic substance requirements and obtain tax residency status in Singapore.
Furthermore, Singapore has allowed for inward re-domiciliation which enables companies that are incorporated outside of Singapore to move their seat of incorporation into Singapore. But to do this, the country which the company is incorporated must allow for outward re-domiciliation and certain requirements must be met before Singapore will allow the re-domiciliation. You can refer to this article for the inward re-domiciliation conditions.
How NovoPlus can help?
Our team of experience consultants had assisted a number of clients to restructure their holdings in island jurisdictions like Cayman Islands, BVI etc. into Singapore. Our services range from providing restructuring advice covering the regulation and tax implications to implementation of the restructuring plan by:
- Assisting with the inward re-domiciliation application;
- Providing guidance and assisting with meeting Singapore substance requirements and tax residence;
- Director and corporate secretarial services;
- Bookkeeping and annual tax filing; and
- Applying for a Singapore Certificate of tax residence.
If you are interested to understand further on how we can help you, please feel free to contact us at finance@novopluscorp.com or reach out to us on Whatsapp using the button on the right of the website to chat.
Last Updated on 05/06/2024 by Dennis Chew