The inward re-domiciliation regime, introduced in the Companies (Amendment) Act 2017, came into effect in Singapore on 11 October 2017. Under this regime, foreign firms, subject to certain requirements, will be allowed to transfer their registration to Singapore, effectively becoming Singaporean companies. Previously, foreign firms would have to set up a subsidiary in Singapore.
This change could result in some significant benefits for both the companies involved and Singapore. Here are five:
Increased economic competitiveness
Singapore is ranked second globally in the ease of doing business rankings. With low taxation, highly efficient government, political stability, skilled workforce and stable legal structure, the City State has become a springboard for companies looking to expand into the wider Asian region. By re-domiciling from a country that makes life harder and more expensive to do business, corporations will be able to save time and money, and be able to attract better-skilled employees – significantly boosting competitiveness.
Little / no disruption
The way the inward re-domiciliation regime is structured, firms will experience little to no disruption when carrying out the change. Instead of going through the process of setting up a subsidiary, foreign firms can simply re-register their company from the original jurisdiction to Singapore, retaining their branding and history, and avoiding the few time-consuming procedural steps that do exist in Singapore.
Law of attraction
This change will particularly benefit larger firms (revenue of more than S$10 million annually or total assets greater than S$10 million) with multiple business operations in different countries. These firms are vulnerable to changing regional regulations, be they Anti Money Laundering (AML) laws or Base Erosion and Profit Shifting (BEPS) regulations, and so redomiciling to a country such as Singapore would help with transparency. Firms from countries such as Canada, Australia and New Zealand, who allow for outward domiciliation, would be more likely to take advantage of this.
Open and welcoming
In a world that seems to be rejecting free and open trade, making it easier for foreign firms to do business in Singapore sends a message that we are ready and open to talent wherever it may come from. Singapore has always relied on international trade, right from the days of Sir Stamford Raffles, who decided that Singapore would be a free port, and so this fits into the pattern of Singapore being an open trade nation.
Private Limited benefits
Companies who redomicile to Singapore will become Private Limited companies, and will be bound by the usual taxation rules that apply to these firms, but also the benefits they enjoy. Firstly, taxation is low anyway, even for firms with revenues of over S$10 million. Furthermore, it is incredibly easy to pay such taxes, as well as handle the numerous other administrative tasks thanks to the electronic transaction system, BizFile+, a one-stop-place for companies to manage various company-related processes, from taxes to incorporation
It is worth noting that as Singapore does not allow for outbound domiciliation, foreign companies that do become Singaporean Private Limiteds will not be able to turn back. However, in an ever-changing world, where stability is becoming a rarity, Singapore offers a stable, prosperous base from which to grow.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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Alain Esseiva is Co-Founder and CEO of Alpadis Group, bringing with him over 30 years of combined experience in wealth planning and fiduciary services. Alain heads the Singapore and Hong Kong offices of Alpadis Group, where he provides multi-jurisdictional corporate and bespoke wealth preservation services across the region.