What You Need To Know About Singapore Private Limited Company

Most experts believe that private limited company provides the most benefits especially

when it comes to bankruptcy protection and taxes, making this the most popular business entity in Singapore.

Compared to sole proprietorship and partnership, a private limited company is considered as a separate legal entity from its owners which means that it can purchase supplies, acquire properties, and charge in a lawsuit using its name instead of naming its shareholders or directors.

One of the most notable advantages of this Singapore company setup is its perpetual existence. This is because its existence does not depend on who are the shareholders and directors while its ownership can be passed down from one individual to another through the selling of shares.

The existence of a private limited company will only cease if the shareholders and directors have decided to dissolve their business or merge with another company.

Another advantage of this business structure is the limited liability protection enjoyed by shareholders. With this arrangement, their personal assets cannot be liquidated to pay the financial losses and liabilities of their company in case of bankruptcy.

And because of the limited liability protection, most corporate lawyers believe that a private limited company is ideal for businessmen and companies operating in a highly speculative market.

Under the Singapore Companies Act, this business entity can have a minimum of one or a maximum of 50 individual shareholders who may be a foreigner or local resident.

In Singapore, a private limited company usually has suffixes Pte Ltd or Ltd as part of its name.

To encourage foreign and local businessmen from setting up a Singapore company, the government is giving tax exemptions to newly incorporated companies, even if 100 percent owned by a foreign businessman, as long as their management is exercised in the country and at least one individual shareholder owns a minimum of 10 percent ownership.

These tax exemptions include Zero Tax on a companys first S$100,000 chargeable income within three years of its incorporation. Another 50 percent tax exemption is given to a companys succeeding S$200,000 chargeable income within the same period.

In addition to these tax exemptions, companies operating in certain industries (e.g., oil trading, finance and treasury center, arts and antique dealer, fund manager, securities company, etc.) enjoy reduced corporate tax rates of 5 to 10 percent.

Another attractive corporate law is the single tier tax system which means that taxes are only deducted at a corporate level while the shareholders dividends are excluded.

by: Diane Enriquez

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