Singapore

1StopConsultant Pte Ltd
One Raffles Place
Tower one, level 24
Singapore 048616
Email: singapore@1stopconsultant.com


Visas
 
The Singapore government controls all immigration matters through the Immigration and Checkpoints Authority (ICA). The ICA monitors and controls the passing of people and goods over Singapore’s borders and is responsible for various immigration and registration functions including the issue of immigration passes and permits to foreign nationals as well as the issue of travel documents and identity cards to Singapore citizens.
 
Under Singapore’s immigration policy, a visa is required by foreign nationals from countries such as the Commonwealth of Independent States, the Middle East states, China and some north African countries. Apart from India and Bangladesh, residents of the Commonwealth, Europe, the United States, Canada and South America generally do not require visas to enter Singapore.

Visitors are generally granted either a 14-day or 30-day social visit pass on arrival, provided they hold passports with a validity of at least six months, sufficient funds to cover their stay in Singapore, confirmed onward/return tickets and entry documentation for any onward destination. A social visit pass permits short stays, enabling attendance at job interviews, short business negotiations, discussions or meetings. For longer stays, see below.

Any person wishing to be employed or to work under a contract of service or employment (or any similar agreement) for a prolonged period in Singapore must obtain an employment pass.

Business visitor
 
A person visiting Singapore for business negotiations or discussions and who needs to stay longer than the 14 or 30 days permitted under a social visit pass may apply for an extension of their pass. The company with whom the business visitor is dealing is required to sponsor the application for the extension, provide details of the applicant’s business visit and guarantee the business visitor’s maintenance and repatriation. If an application is successful, the social visit pass may be extended for up to a further 30 days. All applications are processed by the Visitors’ Services Centre at the ICA, usually within two days.

The Singapore government strongly supports new investors/entrepreneurs in establishing business activities in the country. Through the Singapore Economic Development Board (EDB), the Global Investor Programme (GIP) for foreign investors has been developed under which foreigners are allowed to enter and stay in Singapore through the following means:
    • multiple journey visa (MJV)
    • long-term visit pass for entrepreneurs (lTVP)
    • EntrePass.
An MJV (which is issued for periods of one, two or five years) is normally granted to a foreign individual who frequently travels into Singapore for the purpose of exploring business opportunities or to attend to business and investment matters. An MJV allows the foreign individual to stay in Singapore for up to 30 days per visit and can be renewed. A letter of introduction is required from a Singapore-registered company in support of a MJV application.
 
An lTVP enables a foreign individual to stay in Singapore for six months for the purposes of conducting feasibility studies, exploring business opportunities or completing negotiations and may be renewed for up to one year. In order to obtain an lTVP, a letter of support in the prescribed form must have been issued in support of the application by the EDB.
 
An EntrePass, with an initial validity period of up to two years, is targeted at foreign entrepreneurs who:
 
    • are ready to start a new business/company in Singapore and who will be actively involved in the operation of the business/company
    • own a business which must have been registered with the Accounting and Corporate Regulatory Authority (ACRA) for a maximum of six months at the time of submission of the EntrePass application.
      All new EntrePass applicants must register their companies as private limited companies with at least S$50,000 paid-up share capital and hold at least a 30 per cent shareholding in the company. The Ministry of Manpower (MOM) and the Standards, Productivity and Innovation Board are responsible for processing applications for EntrePasses.
 
Employment pass
 
Employment pass holders are allowed to live and work in Singapore for periods of up to three years at a time. The employer is required to sponsor the application for the pass made by the applicant and applications are usually processed within two weeks by the MOM. The following types of employment passes are available to foreigners seeking professional, managerial or executive and specialist jobs:
    • P1 pass: for foreigners earning a fixed monthly salary of more than S$7,000
    • P2 pass: for foreigners earning a fixed monthly salary of more than S$3,500 and up to S$7,000 and who possess recognized qualifications
    • Q1 pass: for foreigners earning a fixed monthly salary of more than S$2,500 and who possess recognized qualifications.
The S pass is available for mid-level skilled foreigners earning a minimum fixed monthly salary of S$1,800 who possess recognized qualifications.
 
Apart from obtaining an employment pass, foreigners can also apply for dependant passes and/or LTVPs for their immediate family members.

The personalized employment pass (PEP) is available for employment pass holders who have worked in Singapore for some time or overseas foreign professionals whose last drawn fixed monthly salary overseas was at least S$7,000. The PEP allows the holder to remain in Singapore for up to six months between jobs to evaluate new employment opportunities and its validity is not conditional upon the PEP holder keeping his job with the same employer, unlike an employment pass.
 
Permanent residence
 
There are a number of schemes under which permanent residency can be granted, depending on an applicant’s skills and qualifications. These include the Professional, Technical Personnel and Skilled Workers Scheme, the Landed Permanent Residence Scheme, Approval-in-Principle for Permanent Residence Scheme (for Hong Kong applicants), the Foreign Artistic Talent Scheme, and the Global Investor Programme.
 
Permanent residence applications can be lodged either in Singapore with the ICA or, if the applicant is currently residing overseas, an application can be submitted to the Singapore mission in the resident country. Processing usually takes three months.

 

General
Foreign investors have a wide range of business structures to choose from when doing business in Singapore.
 
The most common business entities used by non-residents in Singapore are:
    • representative offices
    • branches of parent companies
    • Singapore subsidiaries
    • partnerships
    • joint ventures
    • trusts.
Representative office
 
When a foreign corporation wishes to explore the Singaporean market to analyses the suitability of the market for its goods and/or services, it may elect to open a representative office. A representative office is permitted and licensed to carry out limited activities including market research, auxiliary or support services (such as the dissemination of market information) and promotional and liaison work for the foreign corporation it represents. It can also engage in customer service to the extent of answering queries on behalf of the foreign corporation.
 
A representative office cannot conduct any business activities of a profit-yielding nature, carry out any trading activities or enter into any contracts in Singapore (other than for the purpose of carrying out any permitted activities), nor is it allowed to open any letters of credit directly or indirectly on behalf of its head office. As a representative office is not revenue producing, it is a cost center to the foreign corporation.

The government authority responsible for registering representative offices for most industries (including manufacturing, business services and commerce) is International Enterprise Singapore (the IES).

Representative offices of banking, finance and insurance businesses have to be registered with the Monetary Authority of Singapore (MAS).
 
A representative office must be staffed by a representative from the foreign corporation’s head office and it can engage Singaporean support staff. Liabilities of a representative office are borne by the foreign corporation.

A representative office would not normally be regarded as a taxable entity in Singapore as it does not generate income. However, unless protected under a tax treaty, in some circumstances, the Inland Revenue Authority of Singapore (IRAS) may take the view that there is some profit element which should be subject to tax (for example, where the representative office regularly secures orders for acceptance by the overseas head office of the foreign corporation). In such circumstances, the IRAS may impose taxes based on a notional profit of 5 per cent of the operating overheads and expenses incurred by the representative office in Singapore. In this case, tax would be levied at the normal corporate rate on the notional profit amount. This is because the IRAS may regard the activities rendered by the representative office to the head office of the foreign corporation as sufficient to amount to a taxable presence in Singapore.

Branch office
 
If a foreign company wishes to conduct business in Singapore but does not wish to establish a separate legal entity, it may register a branch. A branch is a registered legal entity although unlike a subsidiary, a branch is treated as an extension of the foreign company. The name of the foreign company’s Singapore branch must be the same as that of the head office.

A branch must have a registered office address in Singapore and two local agents for acceptance of service of process and notices. Note that the liabilities of the branch are the liabilities of the foreign company which established it.

A branch will not be subject to limitations on the scope of its activities. However, just as with any other business or company operating in Singapore, certain types of business activities will require governmental approvals and licenses. The registered foreign company will then be able to carry on business in Singapore through its branch.

From a taxation point of view, a branch is considered a non-resident entity (because control and management are exercised outside Singapore) and, therefore, is not eligible for tax exemptions and incentives available to local companies in Singapore. The IRAS will impose income tax on the income of the branch accrued in or derived from Singapore. The current applicable corporate tax rate (for the 2010 year of assessment onwards) is 17 per cent on all chargeable income accrued in or derived from Singapore.

Singapore subsidiary
 
Singapore allows 100 per cent foreign ownership in companies. Therefore, a foreign company may incorporate a limited liability company in Singapore and own 100 per cent of its shareholding. One advantage of a subsidiary arrangement is that it “ring fences” the liability of the parent company from operations carried on by the Singapore subsidiary.

A company must be incorporated with a minimum of one member and have at least one director who is ordinarily resident in Singapore. A Singapore citizen, permanent resident or an employment pass holder will typically satisfy this requirement. Subject to compliance with these residency requirements, the sole shareholder and director can be the same person. Every Singapore-incorporated company must maintain a registered office in Singapore and have at least one company secretary who is ordinarily resident in Singapore.

A subsidiary may be either a private or a public company. Professional assistance should be sought to ensure that the most suitable corporate structure is chosen. The majority of companies in Singapore are private companies. Private companies are limited to a maximum of 50 non-employee shareholders. Although it is possible to incorporate a company with unlimited liability, there may be few commercial or other benefits in doing so. In a limited liability company, the liability of the members to contribute to the debts of the company is limited to the amount they each agreed to contribute as capital. Private companies are also subject to fund-raising restrictions and must not offer their shares to the public or engage in any activity that would require the lodgment of a disclosure document (for example, a prospectus). A private limited company’s name in Singapore normally ends with “Private Limited” or “Pte Ltd”.

Public companies are usually listed on a stock exchange and have well-established medium-to-large businesses with a large number of shareholders. Public companies are subject to more stringent rules and regulations as they have the ability to raise funds from the public. A public company’s name in Singapore ends with “Limited” or “Ltd”.

A corporate tax rate of 17 per cent for the 2010 year of assessment applies to Singapore incorporated and registered companies.

Partnership
 
General partnerships are comparatively inexpensive to establish and can be formed quickly. The agreement creating the partnership does not need to be registered. However, if the partnership trades under a business name, that name must be registered.

Each partner is personally liable (on a joint and several basis) with the other partners for the debts and obligations of the partnership incurred while the relevant person is a partner. Each partner can be held responsible for the actions of another partner. Subject to an exception for certain types of professional partnerships, partnerships may not generally have more than 20 members.
 
A partnership must lodge an income tax return (Form P) as if it were an ordinary taxpayer but is not itself assessed for income tax on its taxable income. Instead, the individual partners are assessed on their share of the taxable income of the partnership together with any other personal income they may have. The partners may claim a deduction for any losses that the partnership incurs.

Limited liability partnerships
 
A limited liability partnership (LLP) is a hybrid between a company and a general partnership and was introduced in 2005 through the enactment of the Limited Liability Partnership Act (Cap 163A).

An LLP partner can be an individual or a business entity and retains the desired flexibility of a partnership to the extent that it has less onerous reporting requirements than companies. Further, an LLP partner’s liability is limited (that is, a partner is not liable for liabilities of the other partner(s)).

An LLP must have at least two partners at all times and one manager who is ordinarily resident in Singapore. The manager may be held personally liable for the failure of the LLP to submit an annual declaration of solvency statement.

For income tax purposes, an LLP is tax-transparent (that is, each LLP partner will bear the liability of paying taxes according to its own tax circumstances, which would include its share of profits from the LLP). For treaty purposes, the Singapore tax authorities may not issue a tax residency certificate for the LLP as it is a tax-transparent entity, but may consider issuing the certificate to the LLP’s partners who are individuals or companies resident in Singapore for tax purposes.
 
Limited partnerships
 
Limited partnerships were introduced in 2009 through the enactment of the Limited Partnership Act (Cap 163B) (LP Act) and have become a popular vehicle for private equity and investment funds in Singapore. A limited partnership must consist of one or more general partners and one or more limited partners. There is no prescribed upper limit on the total number of partners. A limited partnership is essentially a general partnership with passive investors participating as limited partners.

A limited partner’s liability is capped at his agreed investment in the limited partnership provided that the limited partner does not participate in management of the limited partnership. If the limited partner does participate in management of the limited partnership, he risks losing his limited liability status for the period of such participation in management. The LP Act helpfully sets out a non-exhaustive list of “safe harbor” activities which do not constitute participating in management of a limited partnership.
 
General partners typically manage the limited partnership and have unlimited personal liability for all debts and obligations of the limited partnership incurred while they are general partners. In consequence, it is common for the general partner to be set up as a special purpose limited liability company.
 
Like a general partnership, a limited partnership has no separate legal personality and, therefore, cannot own assets in its own name.
 
A limited partnership is tax-transparent; all partners are taxed on their share of the limited partnership’s income and gains according to their personal income tax rates.
 
Unincorporated joint ventures and co-ventures
 
This type of business arrangement should be distinguished from a partnership. A joint venture is an association of persons created when two or more parties agree to work towards a common goal. This arrangement is often structured so that it is not a partnership, as the parties to the joint venture do not share the profit of the venture and do not wish to be legally liable for each other’s acts and liabilities. However, notwithstanding the intentions of the parties, Singapore law may, under certain circumstances, regard that business arrangement as a partnership, and legal advice should be sought if the arrangement is not intended to be regarded as such.
 
Careful legal planning is required to achieve the most favorable tax treatment and to avoid any undesired classification as a partnership.
 
Joint venture company
 
This takes the form of a company incorporated to carry on the joint venture on behalf of its shareholders. The company is a separate legal entity distinct from its shareholders and is used where a number of parties wish to carry on business together. The component parties’ liability is limited to their share of capital investment in the joint venture company.
 
Trusts
 
While not commonly used in Singapore, a trust can be utilized as a business vehicle or as an investment vehicle whereby a trustee conducts the trust’s business on behalf of its “members” (legally known as “beneficiaries” of the trust). The trustee may be a company (usually proprietary) created for this purpose. The income generated will belong to the beneficiaries of the trust and the rights and duties of the trustees are set out in the trust deed.
 
A trust is not an independent legal entity. The trustee can assume obligations on behalf of the trust and is allowed to use trust assets to satisfy trust debts as provided for in the trust deed.
 
Business trusts
 
For trusts which are registered under the Business Trusts Act (Cap 21A), the tax treatment applicable to normal trusts does not apply. A registered business trust will instead be subject to tax like a company under the one-tier system and income will continue to be taxable at the trustee level. The unit holders will, however, not be taxed on their share of the statutory income of the trust to which they are entitled and no credit will be allowed to the unit holders for the tax paid by the trustee.
 
Shelf companies
 
Shelf companies are “ready-made” companies available for immediate use. Shelf companies, therefore, offer a solution to an urgent requirement for a company as it usually takes an average of a week to incorporate a company in Singapore. Shelf companies have all the powers of a company under the Companies Act (Cap 50) to carry out any nature of business.

Singapore Exchange
 
Investors may wish to consider raising local equity by listing on the Singapore Exchange (SgX). This avenue is also available to companies incorporated outside Singapore. The SgX serves a wide array of international and domestic investors and end users, including many of the world’s largest financial institutions.

Potential investors should ask their legal advisers for a thorough outline of the current listing rules.

 

General
Foreign investors have a wide range of business structures to choose from when doing business in Singapore.
 
The most common business entities used by non-residents in Singapore are:
    • representative offices
    • branches of parent companies
    • Singapore subsidiaries
    • partnerships
    • joint ventures
    • trusts.
Representative office
 
When a foreign corporation wishes to explore the Singaporean market to analyses the suitability of the market for its goods and/or services, it may elect to open a representative office. A representative office is permitted and licensed to carry out limited activities including market research, auxiliary or support services (such as the dissemination of market information) and promotional and liaison work for the foreign corporation it represents. It can also engage in customer service to the extent of answering queries on behalf of the foreign corporation.
 
A representative office cannot conduct any business activities of a profit-yielding nature, carry out any trading activities or enter into any contracts in Singapore (other than for the purpose of carrying out any permitted activities), nor is it allowed to open any letters of credit directly or indirectly on behalf of its head office. As a representative office is not revenue producing, it is a cost center to the foreign corporation.

The government authority responsible for registering representative offices for most industries (including manufacturing, business services and commerce) is International Enterprise Singapore (the IES).
 
Representative offices of banking, finance and insurance businesses have to be registered with the Monetary Authority of Singapore (MAS).

A representative office must be staffed by a representative from the foreign corporation’s head office and it can engage Singaporean support staff. Liabilities of a representative office are borne by the foreign corporation.

A representative office would not normally be regarded as a taxable entity in Singapore as it does not generate income. However, unless protected under a tax treaty, in some circumstances, the Inland Revenue Authority of Singapore (IRAS) may take the view that there is some profit element which should be subject to tax (for example, where the representative office regularly secures orders for acceptance by the overseas head office of the foreign corporation). In such circumstances, the IRAS may impose taxes based on a notional profit of 5 per cent of the operating overheads and expenses incurred by the representative office in Singapore. In this case, tax would be levied at the normal corporate rate on the notional profit amount. This is because the IRAS may regard the activities rendered by the representative office to the head office of the foreign corporation as sufficient to amount to a taxable presence in Singapore.

Branch office
 
If a foreign company wishes to conduct business in Singapore but does not wish to establish a separate legal entity, it may register a branch. A branch is a registered legal entity although unlike a subsidiary, a branch is treated as an extension of the foreign company. The name of the foreign company’s Singapore branch must be the same as that of the head office.

A branch must have a registered office address in Singapore and two local agents for acceptance of service of process and notices. Note that the liabilities of the branch are the liabilities of the foreign company which established it.

A branch will not be subject to limitations on the scope of its activities. However, just as with any other business or company operating in Singapore, certain types of business activities will require governmental approvals and licenses. The registered foreign company will then be able to carry on business in Singapore through its branch.

From a taxation point of view, a branch is considered a non-resident entity (because control and management are exercised outside Singapore) and, therefore, is not eligible for tax exemptions and incentives available to local companies in Singapore. The IRAS will impose income tax on the income of the branch accrued in or derived from Singapore. The current applicable corporate tax rate (for the 2010 year of assessment onwards) is 17 per cent on all chargeable income accrued in or derived from Singapore.
 
Singapore subsidiary
 
Singapore allows 100 per cent foreign ownership in companies. Therefore, a foreign company may incorporate a limited liability company in Singapore and own 100 per cent of its shareholding. One advantage of a subsidiary arrangement is that it “ring fences” the liability of the parent company from operations carried on by the Singapore subsidiary.

A company must be incorporated with a minimum of one member and have at least one director who is ordinarily resident in Singapore. A Singapore citizen, permanent resident or an employment pass holder will typically satisfy this requirement. Subject to compliance with these residency requirements, the sole shareholder and director can be the same person. Every Singapore-incorporated company must maintain a registered office in Singapore and have at least one company secretary who is ordinarily resident in Singapore.
 
A subsidiary may be either a private or a public company. Professional assistance should be sought to ensure that the most suitable corporate structure is chosen. The majority of companies in Singapore are private companies. Private companies are limited to a maximum of 50 non-employee shareholders. Although it is possible to incorporate a company with unlimited liability, there may be few commercial or other benefits in doing so. In a limited liability company, the liability of the members to contribute to the debts of the company is limited to the amount they each agreed to contribute as capital. Private companies are also subject to fund-raising restrictions and must not offer their shares to the public or engage in any activity that would require the lodgment of a disclosure document (for example, a prospectus). A private limited company’s name in Singapore normally ends with “Private Limited” or “Pte Ltd”.
 
Public companies are usually listed on a stock exchange and have well-established medium-to-large businesses with a large number of shareholders. Public companies are subject to more stringent rules and regulations as they have the ability to raise funds from the public. A public company’s name in Singapore ends with “Limited” or “Ltd”.
 
A corporate tax rate of 17 per cent for the 2010 year of assessment applies to Singapore incorporated and registered companies.
 
Partnership
 
General partnerships are comparatively inexpensive to establish and can be formed quickly. The agreement creating the partnership does not need to be registered. However, if the partnership trades under a business name, that name must be registered.
 
Each partner is personally liable (on a joint and several basis) with the other partners for the debts and obligations of the partnership incurred while the relevant person is a partner. Each partner can be held responsible for the actions of another partner. Subject to an exception for certain types of professional partnerships, partnerships may not generally have more than 20 members.
 
A partnership must lodge an income tax return (Form P) as if it were an ordinary taxpayer but is not itself assessed for income tax on its taxable income. Instead, the individual partners are assessed on their share of the taxable income of the partnership together with any other personal income they may have. The partners may claim a deduction for any losses that the partnership incurs.
 
Limited liability partnerships
 
A limited liability partnership (LLP) is a hybrid between a company and a general partnership and was introduced in 2005 through the enactment of the Limited Liability Partnership Act (Cap 163A).
 
An LLP partner can be an individual or a business entity and retains the desired flexibility of a partnership to the extent that it has less onerous reporting requirements than companies. Further, an LLP partner’s liability is limited (that is, a partner is not liable for liabilities of the other partner(s)).
 
An LLP must have at least two partners at all times and one manager who is ordinarily resident in Singapore. The manager may be held personally liable for the failure of the LLP to submit an annual declaration of solvency statement.
 
For income tax purposes, an LLP is tax-transparent (that is, each LLP partner will bear the liability of paying taxes according to its own tax circumstances, which would include its share of profits from the LLP). For treaty purposes, the Singapore tax authorities may not issue a tax residency certificate for the LLP as it is a tax-transparent entity, but may consider issuing the certificate to the LLP’s partners who are individuals or companies resident in Singapore for tax purposes.
 
Limited partnerships
 
Limited partnerships were introduced in 2009 through the enactment of the Limited Partnership Act (Cap 163B) (LP Act) and have become a popular vehicle for private equity and investment funds in Singapore. A limited partnership must consist of one or more general partners and one or more limited partners. There is no prescribed upper limit on the total number of partners. A limited partnership is essentially a general partnership with passive investors participating as limited partners.
 
A limited partner’s liability is capped at his agreed investment in the limited partnership provided that the limited partner does not participate in management of the limited partnership. If the limited partner does participate in management of the limited partnership, he risks losing his limited liability status for the period of such participation in management. The LP Act helpfully sets out a non-exhaustive list of “safe harbor” activities which do not constitute participating in management of a limited partnership.
 
General partners typically manage the limited partnership and have unlimited personal liability for all debts and obligations of the limited partnership incurred while they are general partners. In consequence, it is common for the general partner to be set up as a special purpose limited liability company.
 
Like a general partnership, a limited partnership has no separate legal personality and, therefore, cannot own assets in its own name.
 
A limited partnership is tax-transparent; all partners are taxed on their share of the limited partnership’s income and gains according to their personal income tax rates.
 
Unincorporated joint ventures and co-ventures
 
This type of business arrangement should be distinguished from a partnership. A joint venture is an association of persons created when two or more parties agree to work towards a common goal. This arrangement is often structured so that it is not a partnership, as the parties to the joint venture do not share the profit of the venture and do not wish to be legally liable for each other’s acts and liabilities. However, notwithstanding the intentions of the parties, Singapore law may, under certain circumstances, regard that business arrangement as a partnership, and legal advice should be sought if the arrangement is not intended to be regarded as such.
 
Careful legal planning is required to achieve the most favorable tax treatment and to avoid any undesired classification as a partnership.
 
Joint venture company
 
This takes the form of a company incorporated to carry on the joint venture on behalf of its shareholders. The company is a separate legal entity distinct from its shareholders and is used where a number of parties wish to carry on business together. The component parties’ liability is limited to their share of capital investment in the joint venture company.
 
Trusts
 
While not commonly used in Singapore, a trust can be utilized as a business vehicle or as an investment vehicle whereby a trustee conducts the trust’s business on behalf of its “members” (legally known as “beneficiaries” of the trust). The trustee may be a company (usually proprietary) created for this purpose. The income generated will belong to the beneficiaries of the trust and the rights and duties of the trustees are set out in the trust deed.
 
A trust is not an independent legal entity. The trustee can assume obligations on behalf of the trust and is allowed to use trust assets to satisfy trust debts as provided for in the trust deed.
 
Business trusts
 
For trusts which are registered under the Business Trusts Act (Cap 21A), the tax treatment applicable to normal trusts does not apply. A registered business trust will instead be subject to tax like a company under the one-tier system and income will continue to be taxable at the trustee level. The unit holders will, however, not be taxed on their share of the statutory income of the trust to which they are entitled and no credit will be allowed to the unit holders for the tax paid by the trustee.
 
Shelf companies
 
Shelf companies are “ready-made” companies available for immediate use. Shelf companies, therefore, offer a solution to an urgent requirement for a company as it usually takes an average of a week to incorporate a company in Singapore. Shelf companies have all the powers of a company under the Companies Act (Cap 50) to carry out any nature of business.
 
Singapore Exchange
 
Investors may wish to consider raising local equity by listing on the Singapore Exchange (SgX). This avenue is also available to companies incorporated outside Singapore. The SgX serves a wide array of international and domestic investors and end users, including many of the world’s largest financial institutions.
 
Potential investors should ask their legal advisers for a thorough outline of the current listing rules.

 

Foreign capital plays a key role in the development of Singapore’s industries and resources. In the Global Enabling Trade Report 2009 by the WEF, Singapore was ranked the most open economy in the world of international trade and investment. With very few barriers to foreign investments and a large number of investment incentives available, foreign investors, both in partnership with local companies or on their own account, are strongly encouraged to pursue opportunities in Singapore.

Those foreign investment restrictions that do exist in Singapore are primarily in the broadcasting and domestic news media sectors, legal and other professional services, multi-level marketing, property ownership and retail banking industries.
 
Government initiatives and incentives
 
General
 
In order to promote economic and industrial development in Singapore, the government has introduced various tax concessions, incentives and development schemes. However, certain conditions may need to be satisfied for these incentives to be available.
 
Incentives
 
The available tax incentives are found mainly in the following legislation:
    • Economic Expansion Incentives (Relief from Income Tax) Act (Cap 86)
    • Income Tax Act (Cap 134).

Broadly speaking, there are two types of tax incentives – incentives to attract specific investments and incentives to promote overseas investment. Most of the tax incentives are administred by the EDB, the MAS or the IES. These incentives extend to a wide range of business sectors.

Some of the financial and tax incentives available are as follows – this is not an exhaustive list; the incentives available may vary from time to time.

 

Corporate tax
 
Singapore’s tax laws tax income of a corporation that is actually or deemed to be derived from a source within Singapore or is actually or deemed to be received in Singapore from outside Singapore. There is no precise definition of “source” in the Income Tax Act (Cap 134) and consequently, each income-generating commercial activity has to be carefully examined to determine its source. Income is deemed to be received in Singapore from outside Singapore if the income:
    • is remitted or transmitted to, or brought into, Singapore
    • is applied in or towards the satisfaction of any debt incurred in respect of a trade or business carried on in Singapore
    • is applied towards the purchase of any movable property which is brought into Singapore.
    • In Singapore, income is assessed to tax on a preceding year basis. Essentially, this means that income earned by a company in a financial year will be taxed in the following tax year, referred to as the year of assessment. For example, income for the financial year ended in 2008 will be assessed in the year of assessment 2009. The Singapore fiscal year is the calendar year. Singapore incorporated companies and Singapore branches of foreign companies are both taxed at the same corporate tax rate, which is currently 17 percent.
Sale of shares
 
Singapore laws do not impose tax on capital gains, but do impose tax on income gains.
 
Accordingly, gains arising from a sale of shares are only subject to tax where the gains are of an income nature and are derived from Singapore or are received in Singapore.

The gains are usually deemed to be of an income nature where the seller engages in or is deemed to be engaging in a business of dealing in or trading of shares and securities. The gains are usually considered to be of a capital nature where the seller is a long-term investor. Whether the sale of shares amounts to income gains or capital gains is dependent on the facts of each case. In determining whether the gains constitute taxable income gains, the factors that the tax authority takes into consideration include:
    • the length of the holding period of the shares in question
    • the frequency of share sale transactions carried out by the seller
    • the reasons for which the shares were acquired
    • the circumstances under which the disposal of the shares was made
    • the nature of business or trade carried on by the seller.
Dividends
 
Dividends distributed by a company resident in Singapore are deemed to be sourced from Singapore. A company is considered as a resident in Singapore if the control and management of its business is exercised in Singapore.

With effect from 1 January 2008, all Singapore companies moved to a one-tier corporate tax system. Pursuant to the one-tier system, the tax paid by a company on its normal chargeable income would constitute a final tax. Also, dividends paid out of “after-tax profit” will be exempt from tax in the hands of shareholders (exempt one-tier dividends). All dividends paid on or after 1 January 2008 are exempt from one-tier dividends.

Under the one-tier system, companies need not maintain a record of corporate tax paid for the purposes of paying dividends. Further, when the company pays an exempt one-tier dividend, it is not required to deduct tax from the dividend paid.

The one-tier system does not alter the tax treatment of foreign dividends remitted to Singapore. Such foreign dividends remain taxable in the hands of the shareholders unless exempted from tax. Expenses incurred by the shareholders to earn the foreign dividends are attributed to and allowed as set-off against such dividends only. The applicable foreign tax credit continues to be granted.

Currently, for Singapore tax-resident corporations, foreign dividends remitted to or received in Singapore will be tax exempt provided the following conditions are met:
    • in the year the foreign dividend is received in Singapore, the headline tax rate of the foreign jurisdiction from which the dividend is received is at least 15 per cent
    • the foreign dividend has been subjected to tax in the foreign jurisdiction from which they were received. This condition may be regarded as fulfilled if no taxes are paid in the foreign jurisdiction due to a tax holiday, or where specific remission is granted for a “look through” treatment – where an operating subsidiary at the end of a holding chain satisfies this requirement.
Withholding tax
 
Withholding tax is a tax-collection mechanism enacted primarily to ensure and facilitate the collection of taxes due on specified categories of income sourced or deemed to be sourced in Singapore where such payments are made by a person in Singapore to a non-resident.
 
Generally, withholding tax applies to the following categories of income or payment:
    • interest, commission, fees in connection with any loan or indebtedness
    • royalties and other payments for the use of, or right to use, movable property
    • know-how payments for the use of scientific, technical, industrial or commercial knowledge/ information
    • technical assistance or service fees
    • management fees
    • rent or other payments for use of movable property
    • directors’ remuneration
    • professional service fees
    • proceeds from sale of real property by a real property trader.
The rate of withholding tax applicable to a payment made to a non-resident is either the prevailing corporate tax rate (17 percent for 2009 year of assessment), or the reduced rate of 15 percent or 10 percent, depending on the nature of the payment. These rates may be reduced under Singapore’s tax treaties with other countries in respect of payments made to residents of such treaty countries. There are also exemptions from withholding tax for specified payments under certain conditions.

Goods and services tax
 
Goods and services tax (GST) is a tax imposed on the supply of goods or services made in Singapore. GST is payable on any taxable supply made by a taxable person in the course or furtherance of any business carried on by him or her and on the importation of goods into Singapore.

A “taxable supply” is a supply of goods or services made in Singapore other than an exempt supply. A “supply” refers to any form of supply made for a consideration. An “exempt supply” generally relates to financial services, leases and sales of residential properties.

GST is only required to be charged on the supply of goods and services made in Singapore. There are different rules for determining the place of supply of goods and the place of supply of services.

Generally, goods are treated as being supplied at the place from where they are “removed”. If a supply of goods involves “their removal” to Singapore (that is, they are imported), these goods are treated as supplied outside Singapore. If the supply of goods does not involve their removal from or to Singapore, the supply is made in Singapore if the goods are “in” Singapore at the time of the supply. If the goods are not in Singapore at the time of the supply, the supply is not made in Singapore.

In the case of services, a supply of services is deemed made in Singapore if the supplier “belongs” in Singapore. A supplier of services will be treated as belonging in Singapore if they:
    • have a business establishment or some other fixed establishment in Singapore and no such establishment elsewhere
    • have no such establishment in any country but their usual place of residence is in Singapore
    • have such establishments in Singapore and elsewhere and their establishment in Singapore is the one that is most directly concerned with the supply.
A “taxable person” is a person who is, or is required to be, registered under the Goods and Services Tax Act (Cap 117A). At present, a person is required to be registered as a taxable person if their annual turnover of taxable supplies exceeds or is expected to exceed S$1 million.
 
Only a GST-registered person can charge and collect GST on all taxable supplies they make (output tax). The person is also entitled to recover any GST (input tax) that they had paid in the purchase of goods and services, provided that the goods and services purchased are directly attributable to the making of the taxable supplies in respect of which the registered person has charged and collected GST (that is, output tax). The amount of GST payable by the GST-registered supplier to the IrAS is the difference between the output tax and the input tax. Where the input tax exceeds the output tax, the IrAS will refund the difference to the registered person.

If a person’s taxable supply is below the S$1 million threshold, they are not required to be registered as a taxable person. However, if the person transacts frequently with suppliers and customers who are GST-registered, they may consider voluntary registration in order to claim credits or refunds for input tax paid on such goods or services. The Comptroller of GST is not obliged to accept a request for voluntary registration and will only consider such registration if:
    • the applicant makes taxable supplies in the course of their business
    • the taxable supplies contribute substantially to the livelihood of the applicant
    • the denial of registration would cause the applicant to incur substantial input tax which he is unable to recover by virtue of his non-registration.
Once registered under the voluntary registration category, the person must remain registered for at least two years.

GST is charged at a prevailing standard rate of 7 per cent. However, there are certain specified goods and services which are termed zero-rated supplies and are subject to GST at 0 per cent. Generally, exported goods and international services rank as zero-rated supplies.

Examples of zero-rated international services include:
    • services connected with international transportation
    • hiring of transport for use outside Singapore
    • services connected with offshore property
    • services connected with offshore goods
    • services (including prescribed financial services) connected with goods for export
    • cultural, artistic and sporting services performed outside Singapore
    • services supplied to persons and businesses abroad
    • services related to ships and aircraft, other than recreation or pleasure craft
    • prescribed international telecommunication services.
Although such goods and services are zero-rated, the suppliers of zero-rated goods are entitled to obtain credits or refunds in the form of input tax for GST paid on purchases of goods and services used in the making of these zero-rated supplies. This is unlike the case of an exempt supply, where no credit is available for the input tax charged to an exempt supplier.

The rules prescribing when a supply would be zero-rated are very limited and a misreading or misinterpretation of these rules is not a defense to any claim or charge for breach of the law. It is strongly advised that professional advice be sought in this regard.

A registered taxable person is required to furnish a tax return to the Comptroller not later than one month after the end of each three-month accounting period. An application may be made to the Comptroller for a shorter accounting period of one month, or a longer period of six months provided certain conditions are met. In each case, the tax return for the period must be furnished within one month after the end of the period to which it relates.

A person furnishing his or her GST return must pay the Comptroller the GST due (that is, the difference between the output tax and input tax for the relevant period) for the accounting period to which the return relates. The payment must be made no later than the last day on which he or she is required to forward the GST return to the Comptroller – unless payment is made by way of Giro (automatic bank withdrawal) in which case the payment will be deducted from his or her bank account on the 15th day of the month after the due date for submission of the GST form.

Tax on individuals
Income tax
 
The imposition of Singapore tax on the income of an individual depends on the source of the income and the tax-resident status of the individual. Generally, an individual who is a Singapore resident is subject to Singapore income tax on their income derived from a source in Singapore. Foreign-sourced income that is received in Singapore is not subject to Singapore income tax, so long as it is not received via a partnership in Singapore. A non-resident individual, on the other hand, need only pay Singapore income tax on their Singapore-sourced income and is exempt from Singapore income tax on income arising abroad even when such income is received in Singapore.
 
As a general rule, a person is considered resident in Singapore if they are physically present in Singapore or exercise employment in Singapore (other than as a director of a company) for 183 days or more during the year preceding the year of assessment.

Singapore income tax on individuals is imposed on a marginal basis. For the year of assessment 2007 onwards, the maximum marginal tax rate is 20 per cent.

Central Provident Fund (CPF) contributions Unlike most countries, there are no compulsory contributions to any pension scheme or social security insurance scheme in Singapore. Singapore instead has the CPF Scheme, which is a form of long-term savings scheme. Compulsory contributions to the CPF account of an employee are required for an employee who is a Singapore citizen or permanent resident.

For such an employee, the employer must deduct and pay to the CPF Board a specified percentage of the employee’s salary (employee’s contribution) for deposit into the employee’s CPF account. The employer must also itself contribute to the employee’s CPF account, which contribution is also a specified percentage of the employee’s salary. Currently, the employee’s rate of contribution is 20 percent and the employer’s rate of contribution is 14.5 percent (15 percent from 1 September 2010) for Singapore citizens and permanent residents (from their third year of obtaining permanent residency status).

Other forms of tax

Stamp duty
 
Under the Stamp Duties Act (Cap 312), stamp duty is levied on instruments and agreements which relate to stocks and shares and immovable property situated in Singapore. Stamp duty is payable at ad valorem rates or at fixed rates, depending on the document concerned. Where the document is executed in Singapore, stamp duty is payable within 14 days after the document has been executed. Where the document is executed outside Singapore and received in Singapore, stamp duty is payable within 30 days after the document has been received in Singapore.
 
In the case of corporate reorganization involving transfer of shares or the business of a company or transfer of beneficial interests in assets between associated companies, exemption of stamp duty may apply if certain conditions are met.

Property tax
 
Property tax is levied on immovable properties in Singapore based on the annual value of the property at the progressive rates of 0 per cent, 4 per cent and 6 per cent for owner-occupied residential properties and 10 per cent (with effect from 1 July 2001) for other properties. Certain buildings may, however, qualify for exemptions or concessions. The annual value is the estimated annual market rent that the property can reasonably be expected to fetch if it were let from year to year.

Customs duty
 
Customs duty is levied on tobacco, liquor, motor vehicles and petroleum-related products.
Workplace relations

General
 
Singapore offers a highly educated and skilled workforce and competitive wage rates.

 
Singaporeans have always been and continue to be committed to making their industries internationally competitive. As Singapore progresses to a knowledge-based economy, the nature of work, workplaces and workplace practices are being aligned to the new demands of the economy.

 
The government authority tasked with employment matters is the MOM within which the Labor Relations Department (LRD) promotes and maintains industrial peace and stability in Singapore by balancing the interests of employers and employees and providing a legal framework to achieve this balance. The LRD also formulates policies on industrial relations and reviews labor and employment laws regularly to ensure their continued relevance to both employers and employees. The four main types of services provided by the LRD are as follows:
    • advisory services on terms and conditions of employment
    • investigation into claims and complaints regarding employment terms
    • conciliation of employment/trade disputes
    • adjudication of employment disputes.
Employment conditions
 
Employment conditions are usually provided for in contracts of service entered into between employers and employees and/or in the collective agreement entered into between employers and the trade unions representing these employees. For employees who fall within the ambit of the Employment Act (Cap 91), the provisions of the Employment Act must be observed to the extent that it sets out certain basic employment conditions that apply on a mandatory basis.

 
Depending on the particular industry/employer, there may be trade unions that negotiate workplace agreements between employers and employees.

 
Aside from the Employment Act, other statutes that may apply to an employment relationship include the Retirement Age Act (Cap 274A), the Workplace Safety and Health Act (Cap 354A), the Work Injury Compensation Act (Cap 354), the Central Providen Fund Act (Cap 36), the Children Development Co-Savings Act (Cap 38A), the Employment of Foreign Manpower Act (Cap 91A), the Industrial Relations Act (Cap 136), the Trade Unions Act (Cap 333), the Trade Disputes Act (Cap 331), and the Skills Development Levy Act (Cap 306). Other more specific legislation may also apply, for example, depending on the industry sector of the employer.

 
Substantive amendments were recently made to the Employment Act, with the changes coming into effect on 1 January 2009. These amendments sought to keep pace with changes in the workforce profile and to update employment standards and benefits, especially for vulnerable workers.

 
Employment Act
 
It is important to note that the Employment Act does not extend to all employees. An “employee” under the Employment Act is defined as “a person who has entered into or works under a contract of service with an employer and includes a workman and any officer or employee of the government included in a category, class or description of such officers or employees declared by the President to be employees for the purposes of this Act or any provision of it; but does not include any seaman, domestic worker or, subject to subsection (2), any person employed in a managerial or executive position or any person belonging to any other class of persons whom the Minister may, from time to time by notification in the Gazette, declare not to be employees for the purposes of this Act.” Persons employed in managerial or executive positions but who earn a basic monthly salary of S$2,500 and below enjoys statutory protection against nonpayment of salary and may access the MOM Labor Court for salary claims.

 
It is also worth noting that the Employment Act prescribes certain minimum conditions for workmen who are in receipt of a salary not exceeding S$4,500 a month and employees who are in receipt of a salary not exceeding S$2,000 a month (this ceiling applies as of 1 January 2009).

 
For employees falling within the Employment Act, the employer may stipulate conditions of employment which are more favorable than those set out in the Employment Act. Conversely, a contract of employment or service which provides for conditions which are less favorable than those prescribed in the Employment Act are illegal and are null and void to the extent that they are less favorable.

 
Employees not covered by the Employment Act are usually governed by their employment contracts with the employer and any other reasonable and lawful rules, regulations and policies as may from time to time be implemented by the employer (whether in the form of an employment handbook or otherwise).

 
Wages and bonuses
 
The salary to be paid to an employee is subject to negotiation between an employer and an employee (or the trade union). Singapore has no minimum wage law. Wages are determined by market forces.

 
Although not legally required, many companies in Singapore reward their employees with bonuses that range (generally) from one to three months’ salary depending on the employer’s and employee’s performance.

 
Apart from variable bonuses which hinge on the company’s and the individual’s performance, some companies also provide an annual wage supplement (AWS). Commonly known as the 13th month salary payment, the AWS represents a single annual payment (up to a maximum of three months’ salary) to employees which supplements the total amount of annual wages earned by the employee. The payment of AWS is not mandated by law and is payable only if required under the terms of the employment contract or a collective agreement.

 
Leave entitlements

 
Sick leave
 
All employees falling within the ambit of the Employment Act are entitled to a maximum of 14 days’ paid sick leave a year if no hospitalization is necessary and an additional 46 days paid sick leave a year if hospitalization is required. Other than that, an employee’s entitlement to sick leave will vary from contract to contract although it is common practice to provide employees with at least 14 days of sick leave per year.

 
Annual leave
 
Part IV of the Employment Act (which only applies to employees who are in receipt of a salary not exceeding S$2,000 a month and workmen who are in receipt of a salary not exceeding S$4,500 per month) provides that an employee who has at least three months of continuous service with an employer will be entitled to a minimum of seven days paid annual leave in the first year of service and an additional day’s leave for each year worked thereafter up to a maximum of 14 days. For employees who are not covered by the Employment Act, their entitlement to annual leave will depend on their contract of employment. Most employees are commonly given 14 to 21 days’ paid annual leave (depending on length of service).

 
Bereavement or compassionate leave
 
It is common for employers to provide two or three days’ leave without loss of pay for employees who suffer the death of a close relative.

 
Maternity leave
 
The Employment Act and the Children Development Co-Savings Act (CDCSA) provide maternity protection and benefits for female employees. The protection and benefits provided differ between the two statutes.

 
The CDCSA applies to all female employees working in Singapore (including those employees who fall within the ambit of the Employment Act) provided they fulfil certain qualifying criteria, as follows:
    • the employee’s child is a citizen of Singapore at the time of birth
    • the employee was lawfully married to the child’s natural father at the time of conception or before the child’s birth
    • the employee has been employed by the employer for at least 90 days before the birth of the child.
Prior to 31 October 2008, employees who qualified for maternity leave under the CDCSA were entitled to paid maternity leave of 12 weeks. This has been enhanced to 16 weeks with effect from 31 October 2008 regardless of the birth order of the child.

 
For the first two births, the first eight weeks of maternity leave will be employer-paid. The last eight weeks will be funded by the government (capped at S$20,000 per birth, including CPF contributions). For the third and subsequent births, the full 16 weeks will be funded by the government (capped at S$40,000 per birth, including CPF contributions).

 
Female employees who do not satisfy either of the first two criteria set out above but who fall within the ambit of the Employment Act and satisfy the third criterion (ie, they have been employed by their employer for at least 90 days before the birth of the child) will be entitled to 12 weeks of maternity leave under the Employment Act. Where the employee has fewer than two children of her own at the time of delivery, she is entitled to be paid her usual salary for the first eight weeks of maternity leave. In the case of multiple births (eg, twins, triplets, etc) during the first pregnancy, the employer is still required to pay the next eight weeks of maternity leave for the next birth.

 
It should be noted that a female employee who qualifies for maternity leave under the CDCSA will not be entitled to claim the same benefits under the Employment Act.

 
Childcare Leave
 
The CDCSA and the Employment Act both provide for childcare leave entitlement. Under the CDCSA, an employee is entitled to a total of six days of paid childcare leave per year (regardless of the number of children) if:
    • the employee’s child is a Singapore citizen
    • the employee is legally married to the other parent, or was married to the other parent at the time of, or at any time after, conception (where the child is not an adopted child); or where the child is an adopted child, the employee was married, widowed, or divorced when the employee adopted the child
    • the employee has any child (including any legally adopted or step-child) who is below seven years of age at the time the application for childcare leave is made or any child who celebrated or will be celebrating his or her seventh birthday during the calendar year (i.e., January 1 to December 31) in which the application for childcare leave is made
    • the employee has worked for the employer for at least three months.
Where the employee has been employed for at least three months but for less than 12 months, the six days’ paid childcare leave may be pro-rated by the employer, subject to a minimum of two days. The employee will be entitled to be paid at his/her gross rate of pay for every day of childcare leave that is taken, however where an employee has already taken three days of paid childcare leave, the amount of payment the employee is entitled to receive from his/her employer for each subsequent day of childcare leave that is taken is capped at S$500.

 
If the employee does not meet either of the first two criteria set out above but is covered under the Employment Act and fulfils the third and fourth criterion set out above, he/she will be entitled to a total of two days of paid childcare leave per year (regardless of the number of children) under the Employment Act. Where the employee qualifies for paid childcare leave under the Employment Act, the employee will be entitled to be paid at his/her gross rate of pay for every day of such childcare leave that is taken.

 
It should be noted that for so long as an employee is entitled to paid childcare leave under the CDCSA, he/she will not be entitled to paid childcare leave under the Employment Act.

 
Military Leave
 
Under section 23 of the Enlistment Act (Cap 93), an employer must grant leave of absence to any employee required to report for national service, mobilized service under section 73 of the Police Force Act (Cap 235), or voluntary service in the division of the Singapore Armed Forces known as the People’s Defense Force under the Singapore Armed Forces Act (Cap 295) or in the Special Constabulary under the Police Force Act (Cap 235).

 
Public holidays
 
There are generally 11 public holidays each year in Singapore (with minor fluctuations when holidays fall at weekends) and an employee who falls within the ambit of the Employment Act is entitled to a paid holiday for each of them.

 
National Wages Council
 
The National Wages Council (NWC) is usually convened when there is a need to review wage guidelines. Following its review, the NWC makes recommendations that apply to all employees (management, executives and rank-and-file employees), unionized and non-unionized companies and in both the public and private sectors. However, implementation of these recommendations is not mandatory and employers in the private sector have the discretion to elect whether or not to adopt them.

 
Termination of employment
 
Employees who have been terminated “unlawfully” may seek appropriate redress under the Employment Act or common law.

 
Under the Employment Act, an employee who considers that he or she has been dismissed without just cause or excuse may, within one month of dismissal, make representations in writing to MOM to be reinstated in his or her former employment. Upon satisfaction on the part of the Minister that the employee has been dismissed without just cause or excuse, the Minister may direct the employer to reinstate the employee in the former employment (although this is rare) and to pay the employee an amount that is equivalent to the wages that the employee would have earned had he or she not been dismissed. The Minister may alternatively direct the employer to pay the employee such amount of wages as compensation as may be determined by the Minister but not to reinstate his or her employment. Disputes which cannot be resolved amicably through the above means will be referred to the Labor Court for adjudication.

 
Alternatively, if the manner of dismissal contravenes the terms of the employment contract, the employee can make a claim for breach of contract against the employer. For an employee falling outside the ambit of the Employment Act, the employee can also seek redress in the form of damages for breach of contract.

 
There are no statutory requirements for the employer or employee to furnish reasons for termination of an employment contract.

 
Termination of employment at retirement The Retirement Age Act states that it is unlawful for an employer to dismiss any employee who is aged below 62 years because of his or her age. This Act, however, applies only to employees who are Singapore citizens or Permanent Residents.

 
Certain categories of employees are exempted from the ambit of the Act including, but not limited to, persons employed to work on a specific project for a fixed term.

 
By 2012, the Singapore Government intends to enact re-employment legislation to enable more people to continue working beyond the current statutory retirement age of 62, up to 65 in the first instance and subsequently, up to 67. In April 2008, the Tripartite Implementation Workgroup, a body set up to focus on implementation issues and to help companies adopt re-employment legislation, released an advisory known as the Tripartite Advisory on the Re-employment of Older Workers which identified good practices in areas such as pre-retirement planning and re-employment consultation, job arrangements upon re-employment and re-employment contract durations. Following this, in March 2010, the Tripartite Implementation Workgroup released guidelines (the Tripartite Guidelines on the Re-Employment of Older Employees) to better prepare employees for the proposed re-employment legislation. These guidelines are to serve as the basis for drafting the proposed re-employment legislation and identify good re-employment practices that employers should consider adopting in the following areas:
    • planning and preparing employees for re-employment
    • the re-employment contract
    • recognizing the contributions of re-employed employees
    • providing assistance to eligible employees whom employers are unable to re-employ.
Trade unions
 
Unions represent the industrial interests of certain categories of employees who are entitled to become its members. Typical trade union activity is to negotiate collective agreements with employers on behalf of its members.

 
The MOM maintains a Registry of Trade Unions, the primary function of which is to regulate the following:
    • formation and dissolution of trade unions
    • safe custody and lawful utilization of union funds
    • impartial and proper election of union officers.
All trade unions have to be registered under the Registry of Trade Unions otherwise they are illegal. The Registry also provides advisory services to trade union officers and members on matters relating to the laws and regulations on trade unions.

 
Occupational health and safety
 
Increasing emphasis is being placed on the importance of occupational health and safety in Singapore which is reflected in legislation such as:
    • The Workplace Safety and Health Act, which sets out a framework for the promotion of safe practices in all factories and workplaces of various risk levels and industries and
    • The Work Injury Compensation Act (which replaced the Workmen’s Compensation Act with effect from 1 April 2008) which covers all employees except self-employed persons, independent contractors, domestic workers, members of the Singapore Armed Forces and officers of the Singapore Police Force, the Singapore Civil Defense Force, the Central Narcotics Bureau and the Singapore Prison Service.

The Work Injury Compensation Act requires employers to maintain insurance for employees who are involved in manual work or non-manual work (where the employee’s total earnings do not exceed S$1,600 per month). It is not mandatory for employers to buy insurance for employees who are involved in non-manual work and have monthly earnings of above S$1,600. Nonetheless, employers will be required to pay compensation in the event of a valid claim, even if they do not buy insurance for this group of employees.

The MOM also requires employers to purchase and maintain insurance for medical expenses of foreign workers. This requirement applies to all foreign workers on work permits (including foreign domestic workers) or S passes. For medical insurance policies taken up or renewed on/or after 1 January 2010, the insurance coverage must be at least S$15,000 per year for each worker’s inpatient care and day surgery during his/her stay in Singapore.

Dispute resolution

Courts
 
The courts in Singapore hear a full range of civil and criminal matters, and are empowered to make orders in respect of damages, specific performance and injunctions. The courts are divided into the Subordinate Courts and the Supreme Court, and cases are filed before these courts according to the monetary amounts involved.

The Subordinate Courts comprise of the District and Magistrate Courts, both of which oversee civil and criminal matters, as well as specialized family, juvenile, coroner’s courts and the Small Claims Tribunal, which handles civil claims for amounts below S$10,000. The Supreme Court is made up of the High Court and the Court of Appeal and hears both civil and criminal matters. The Court of Appeal hears appeals against decisions of the High Court in both civil and criminal matters and has been Singapore’s final court of appeal since 8 April 1994, when appeals to the Judicial Committee of the Privy Council were abolished.

Singapore’s court system is transparent and efficient. In recent years, far-reaching changes have been made within the Supreme Court and the Subordinate Courts to rationalize and standardize court rules into a single uniform set of rules to ensure uniformity of practice and consistency. The courts have also been increasingly vigilant in ensuring that orders of court are complied with and parties do not prolong the process of litigation unnecessarily. These measures have been relatively far-reaching and have resulted in a drastic reduction in case backlog.

Arbitration
Singapore as a nation is committed to promoting international arbitration as a means of resolving commercial disputes within the region. Recently, changes to the Legal Profession Act (Cap 161) were introduced to allow foreign lawyers to represent parties in arbitration in Singapore. This is in addition to the Qualifying Foreign Law Firm scheme, which grants foreign law firms a license to practice Singapore law in designated practice areas through Singapore-qualified lawyers employed by the firms.
 
Singapore has world-class facilities for arbitration and a full range of qualified arbitrators registered with the Singapore International Arbitration Centre, which has fairly comprehensive arbitration rules which can be adopted by parties involved in a dispute. Singapore is now home to the world’s first integrated dispute resolution center for international arbitration cases, namely the Maxwell Chambers.

Arbitration generally affords more privacy to the parties in dispute as compared to litigation. The other key feature of international arbitration is that there are better prospects of enforcing an international arbitration award in other countries within the region than enforcing a foreign court judgement. This is often perceived as a useful risk-management tool for parties doing business in Asia.

As a result of recent amendments to the International Arbitration Act (Cap 143A), the Singapore High Court is now empowered to provide interim relief in aid of arbitrations seated in countries other than Singapore. Before this amendment, the High Court had interpreted the power to provide interim relief conferred by the International Arbitration Act as excluding foreign arbitrations. Parties considering making an application to the Singapore High Court for interim relief will have now greater flexibility to do so.
General
Over the last four decades, Singapore has achieved enviable economic progress. Today, the city-state is a reputable financial center, a key regional trading center, one of the world’s busiest ports and a top location for investment.

Singapore offers a pro-business environment, advanced infrastructure, world-class connectivity, highly trained people and a young working and consumer population.

Leading surveys have consistently ranked Singapore as one of the most competitive nations and best places for business in the world. In a 2010 World Bank-IFC report, Singapore was ranked as the world’s easiest place to do business and is the second most open economy in the world (according to the 2009 Index of Economic Freedom). Singapore has also consistently been ranked as one of the five least corrupt countries in the world and the least corrupt nation in Asia by Transparency International.
 
Singapore has entered into landmark free trade agreements (FTAs) with ASEAN, the United States, Australia, the European Free Trade Association (Switzerland, Liechtenstein, Norway and Iceland), New Zealand, India, China, South Korea, Japan, Peru, Costa Rica, the Trans-Pacific SEP (Brunei, New Zealand and Chile), the Hashemite Kingdom of Jordan, Panama and the Cooperation Council for the Arab States of the Gulf (Kuwait, Oman, Qatar, Saudi Arabia, Bahrain and the United Arab Emirates). It is currently negotiating FTAs with Canada, Mexico, Pakistan and Ukraine.

Startups
Venture capital industry
 
A significant amount of venture capital funding has been attracted into Singapore and is managed by a host of fund management companies and firms.
 
Government-linked schemes and incentives
 
 To further foster entrepreneurship and innovation in Singapore, the EDB has a range of schemes and incentives designed to help new ventures over initial funding hurdles, obtain government co-funding, enjoy tax breaks for investors and support for entrepreneurs seeking investors. These include:
    • the Business Angel Scheme
    • the i.MATCH Programme
    • the Startup Enterprise Development Scheme.
Research and development
 
The Singapore government committed S$13.55 billion (approximately US$10 billion) on R&D activities in the period 2006–10 (a more than 200 per cent increase from the previous five-year period). The government has also established several research institutions, with competence in areas such as biotechnology, microelectronics, manufacturing technologies, materials and chemical sciences.
The Singapore government attaches great importance to the protection of intellectual property rights (IPR), a high standard of IPR protection being necessary to protect and encourage the growth of high-value-added, high-content industries. To protect these vital industries, the government has put in place a comprehensive regime as listed below for IPR protection.

Legal and policy – compliance with the TRIPS Agreement
 
Singapore has achieved full compliance with the World Trade Organization’s (WTO) Agreement on Trade Related Aspects of International Property Rights (TRIPS). TRIPS is, to date, the most comprehensive multilateral agreement on trade and intellectual property. It sets out a high standard of compliance for the protection, enforcement and dispute settlement of trade-related IPR matters for WTO members to adhere to.
 
In implementing the legal initiatives necessary to be TRIPS-compliant, Singapore has strengthened its IP legal framework and made it more attractive for foreign investors to invest in Singapore’s developing knowledge-based economy.
 
Singapore’s membership of IPR Conventions
 
Singapore has been a member of the World Intellectual Property Organization since December 1990. Singapore has also acceded to several international IP treaties including the Berne Convention, the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purpose of Patent Procedure and the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol). In addition, Singapore is a party to the Paris Convention for the Protection of Industrial Property and the Patent Cooperation Treaty (PCT).
 
Enforcement
 
Sustained enforcement actions are constantly undertaken by various authorities, including the Singapore Police Force, Films and Publications Department and Customs and Excise Department (now the ICA). Backing the enforcement actions is the continued imposition of stiff penalties for copyright and trade mark offences by the Singapore courts. Persons guilty of trade mark and copyright offences may be given jail terms of up to five years and/or fines of up to S$100,000.
 
Substantial statutory damages may be awarded by courts for trademark and copyright infringements in civil actions. Under the Trade Marks Act (Cap 332), for example, infringements involving counterfeit trademarks may attract statutory damages in excess of S$1 million.

International recognition
 
The Political & Economic Risk Consultancy, the International Institute for Management Development and the World Economic Forum (WEF) have consistently ranked Singapore top in Asia for IP protection.

Cooperative approach with industry
 
While Singapore’s efforts to protect IPR have been successful, the government is constantly reviewing its protection programmes to ensure that not only are existing measures relevant, effective and adequate but that they also adapt to technological advances or changing circumstances through consultations with industry.
 
IPR-related legislation
 
Singapore has completed its review and amendment to its IPR-related legislation to comply with the obligations under the TRIPS Agreement.

Copyright
 
The Copyright Act (Cap 63) governs copyright and related rights in Singapore. The duration of copyright protection varies according to the type of work concerned:
Literary, dramatic, musical, artistic works
    • If the work is only published after the death of the author, it lasts for 70 years from the end of the year in which the work was first published – 70 years from the end of the year the author died.
    • Published editions of literary, dramatic, musical or artistic works (layout) – 25 years from the end of the year the edition was first published.
    • Sound recordings and films – 70 years from the end of the year the sound recording or film was first published
    • Broadcasts and cable programs – 50 years from the end of the year the broadcast was first made or cable programme was first included in a cable programme service
    • Performances – 70 years from the end of the year of the performance
    • Copyright material sent over the Internet or stored in webservers is treated in the same manner as copyright material in other media. The civil remedies for copyright infringement include injunctions, damages and account of profits. In addition, there is criminal liability attached to distribution of infringing materials, as well as willful infringement of copyright.
Trade marks
 
The registration and protection of trade marks in Singapore is governed by the Trade Marks Act, which was revised in 2007. Singapore is a contracting country under the Madrid Protocol and may be designated as a target jurisdiction under an international trade mark application. The registration of a trade mark is for an indefinite period so long as the renewal fees are paid every tenth year. Singapore adopts the International Classification of Goods and Services under the Nice Agreement. Some of the salient features of the Trade Marks Act include:
    • a more streamlined test of registrability which is that of capacity to distinguish
    • simplifying and expediting the examination process
    • the protection of “shape” and “color” marks
    • the protection of “well-known marks”.
In general, protection of trade marks under the Trade Marks Act is conditional on the registration of the trade mark with the Intellectual Property Office of Singapore (IPOS). There is one exception – marks which qualify as “well-known marks” are protected under the Trade Marks Act despite not being registered in Singapore.

In 2009, the Singapore Court of Appeal, Singapore’s highest court, released its first decision concerning “well-known marks” in the case of Novelty Pte Ltd v Amanresorts Ltd & Anor (Civil Appeal No. 56 of 2007/Z) [2009] SGCA 13. In this landmark case, the Singapore Court of Appeal discussed the definition of a “well-known mark” under Singapore’s laws and the application of section 55 of the Trade Marks Act, which grants protection to “well-known marks” which have not been registered in Singapore.

Patents
 
The law governing patent protection in Singapore is the Patents Act (Cap 221). Patent protection lasts 20 years from the date of filing the application. Singapore is a party to the PCT and may be designated as a country under an international patent application. Software and business methods patents are recognized in Singapore.
 
Plant varieties
 
Under the Plant Varieties Protection Act 2004 (Cap 232A), which conforms with the 1991 revision to the International Convention for the Protection of New Varieties of Plants, breeders may file for new plant variety protection. The term of protection is 25 years from the date of grant.
 
Designs
 
The Registered Designs Act (Cap 266) came into force on 13 November 2000. The Registered Designs Act repealed the United Kingdom Designs (Protection) Act (Cap 339), which previously conferred protection in Singapore on designs registered in the UK. The Registry of Designs was established with applications for registration of designs being lodged in Singapore instead of the UK.

Geographical indications
 
Singapore has the Geographical Indications Act (Cap 117B), to protect geographical indications. The Geographical Indications Act seeks to prevent the use of misleading geographical indications, the registration of misleading geographical indications as trademarks and the use of geographical indications that would constitute an act of unfair competition. Protection afforded to geographical indications is automatic. Where geographical indications qualify as a trade mark, certification mark or collective mark, it is also possible to register geographical indications under Singapore’s trade mark legislation.
 
Layout designs of integrated circuits
 
The original layout design of integrated circuits is protected under the Layout Designs of Integrated Circuits Act (Cap 159A). Protection is automatic and the duration of protection is either ten years after the first commercial exploitation (if the exploitation takes place within five years after the year it is created) or 15 years after the year it is created.

Franchising in Singapore
In 2009, there were over 500 franchising systems and 3,000 franchisees in Singapore. However, Singapore does not have a specific franchise law, regulation or code of practice. Distribution and franchise agreements are governed by general contract and common law principles applying to commercial contracts in Singapore. There is no requirement to register a franchise or distribution agreement, or any related disclosure document, in Singapore. The Franchising and Licensing Association of Singapore (FLA) was established to nurture and develop Singapore’s franchising industry. Membership of the FLA is discretionary and all members must comply with the FLA’s code of ethics.

Competition laws
 
According to the Global Competitiveness Report 2009–2010 by the WEF, Singapore is ranked the third most competitive economy in the world. In 2004, Singapore enacted the Competition Act (Cap 50B). Modelled largely on the UK Competition Act 1998, Singapore’s Competition Act is administered and enforced by the Competition Commission of Singapore and prohibits three main types of anticompetitive behavior, namely:
    • anti-competitive agreements, decisions and practices
    • abuses of market power
    • mergers and acquisitions that have the effect of substantially lessening competition. A voluntary merger notification system applies under the Competition Act.
Consumer Protection (Trade Descriptions and Safety Requirements) Act
The Consumer Protection (Trade Descriptions and Safety Requirements) Act (Cap 53) (CPTDSRA) was enacted to protect consumers against false trade descriptions such as deceptive statements concerning the composition or nature of goods. The CPTDSRA makes it an offence for any trader to apply a false trade description to any goods or to supply goods to which false trade descriptions are applied. Trade marks which contain or comprise false trade descriptions are also prohibited, unless they fall within the exemption criteria stipulated under the CPTDSRA. Offences under the CPTDSRA are punishable with a fine of up to S$10,000 and/or imprisonment of up to two years.
 
Consumer Protection (Fair Trading) Act Singapore has enacted the Consumer Protection (Fair Trading) Act (Cap 52A) (CPFTA). The CPFTA came into force on 1 March 2004 (and was amended on 15 April 2009) and protects consumers against unfair practices by suppliers in Singapore in relation to consumer transactions. Unfair practices are defined in the CPFTA and include circumstances where suppliers make false claims or misleading or deceptive representations. Certain transactions are excluded from the CPFTA, such as employment contracts and the acquisition of an interest in real estate. The CPFTA prescribes civil remedies against businesses or traders who engage in unfair trade practices (as defined by the CPFTA). The CPFTA further prescribes a maximum amount that can be claimed by way of damages for its breach (S$30,000) as well as a limitation period within which all claims must be filed.
Visas
 
The Singapore government controls all immigration matters through the Immigration and Checkpoints Authority (ICA). The ICA monitors and controls the passing of people and goods over Singapore’s borders and is responsible for various immigration and registration functions including the issue of immigration passes and permits to foreign nationals as well as the issue of travel documents and identity cards to Singapore citizens.
 
Under Singapore’s immigration policy, a visa is required by foreign nationals from countries such as the Commonwealth of Independent States, the Middle East states, China and some north African countries. Apart from India and Bangladesh, residents of the Commonwealth, Europe, the United States, Canada and South America generally do not require visas to enter Singapore.

Visitors are generally granted either a 14-day or 30-day social visit pass on arrival, provided they hold passports with a validity of at least six months, sufficient funds to cover their stay in Singapore, confirmed onward/return tickets and entry documentation for any onward destination. A social visit pass permits short stays, enabling attendance at job interviews, short business negotiations, discussions or meetings. For longer stays, see below.

Any person wishing to be employed or to work under a contract of service or employment (or any similar agreement) for a prolonged period in Singapore must obtain an employment pass.

Business visitor
 
A person visiting Singapore for business negotiations or discussions and who needs to stay longer than the 14 or 30 days permitted under a social visit pass may apply for an extension of their pass. The company with whom the business visitor is dealing is required to sponsor the application for the extension, provide details of the applicant’s business visit and guarantee the business visitor’s maintenance and repatriation. If an application is successful, the social visit pass may be extended for up to a further 30 days. All applications are processed by the Visitors’ Services Centre at the ICA, usually within two days.

The Singapore government strongly supports new investors/entrepreneurs in establishing business activities in the country. Through the Singapore Economic Development Board (EDB), the Global Investor Programme (GIP) for foreign investors has been developed under which foreigners are allowed to enter and stay in Singapore through the following means:
    • multiple journey visa (MJV)
    • long-term visit pass for entrepreneurs (lTVP)
    • EntrePass.
An MJV (which is issued for periods of one, two or five years) is normally granted to a foreign individual who frequently travels into Singapore for the purpose of exploring business opportunities or to attend to business and investment matters. An MJV allows the foreign individual to stay in Singapore for up to 30 days per visit and can be renewed. A letter of introduction is required from a Singapore-registered company in support of a MJV application.
 
An lTVP enables a foreign individual to stay in Singapore for six months for the purposes of conducting feasibility studies, exploring business opportunities or completing negotiations and may be renewed for up to one year. In order to obtain an lTVP, a letter of support in the prescribed form must have been issued in support of the application by the EDB.
 
An EntrePass, with an initial validity period of up to two years, is targeted at foreign entrepreneurs who:
 
    • are ready to start a new business/company in Singapore and who will be actively involved in the operation of the business/company
    • own a business which must have been registered with the Accounting and Corporate Regulatory Authority (ACRA) for a maximum of six months at the time of submission of the EntrePass application.
      All new EntrePass applicants must register their companies as private limited companies with at least S$50,000 paid-up share capital and hold at least a 30 per cent shareholding in the company. The Ministry of Manpower (MOM) and the Standards, Productivity and Innovation Board are responsible for processing applications for EntrePasses.
 
Employment pass
 
Employment pass holders are allowed to live and work in Singapore for periods of up to three years at a time. The employer is required to sponsor the application for the pass made by the applicant and applications are usually processed within two weeks by the MOM. The following types of employment passes are available to foreigners seeking professional, managerial or executive and specialist jobs:
    • P1 pass: for foreigners earning a fixed monthly salary of more than S$7,000
    • P2 pass: for foreigners earning a fixed monthly salary of more than S$3,500 and up to S$7,000 and who possess recognized qualifications
    • Q1 pass: for foreigners earning a fixed monthly salary of more than S$2,500 and who possess recognized qualifications.
The S pass is available for mid-level skilled foreigners earning a minimum fixed monthly salary of S$1,800 who possess recognized qualifications.
 
Apart from obtaining an employment pass, foreigners can also apply for dependant passes and/or LTVPs for their immediate family members.

The personalized employment pass (PEP) is available for employment pass holders who have worked in Singapore for some time or overseas foreign professionals whose last drawn fixed monthly salary overseas was at least S$7,000. The PEP allows the holder to remain in Singapore for up to six months between jobs to evaluate new employment opportunities and its validity is not conditional upon the PEP holder keeping his job with the same employer, unlike an employment pass.
 
Permanent residence
 
There are a number of schemes under which permanent residency can be granted, depending on an applicant’s skills and qualifications. These include the Professional, Technical Personnel and Skilled Workers Scheme, the Landed Permanent Residence Scheme, Approval-in-Principle for Permanent Residence Scheme (for Hong Kong applicants), the Foreign Artistic Talent Scheme, and the Global Investor Programme.
 
Permanent residence applications can be lodged either in Singapore with the ICA or, if the applicant is currently residing overseas, an application can be submitted to the Singapore mission in the resident country. Processing usually takes three months.

 

General
Foreign investors have a wide range of business structures to choose from when doing business in Singapore.
 
The most common business entities used by non-residents in Singapore are:
    • representative offices
    • branches of parent companies
    • Singapore subsidiaries
    • partnerships
    • joint ventures
    • trusts.
Representative office
 
When a foreign corporation wishes to explore the Singaporean market to analyses the suitability of the market for its goods and/or services, it may elect to open a representative office. A representative office is permitted and licensed to carry out limited activities including market research, auxiliary or support services (such as the dissemination of market information) and promotional and liaison work for the foreign corporation it represents. It can also engage in customer service to the extent of answering queries on behalf of the foreign corporation.
 
A representative office cannot conduct any business activities of a profit-yielding nature, carry out any trading activities or enter into any contracts in Singapore (other than for the purpose of carrying out any permitted activities), nor is it allowed to open any letters of credit directly or indirectly on behalf of its head office. As a representative office is not revenue producing, it is a cost center to the foreign corporation.

The government authority responsible for registering representative offices for most industries (including manufacturing, business services and commerce) is International Enterprise Singapore (the IES).

Representative offices of banking, finance and insurance businesses have to be registered with the Monetary Authority of Singapore (MAS).
 
A representative office must be staffed by a representative from the foreign corporation’s head office and it can engage Singaporean support staff. Liabilities of a representative office are borne by the foreign corporation.

A representative office would not normally be regarded as a taxable entity in Singapore as it does not generate income. However, unless protected under a tax treaty, in some circumstances, the Inland Revenue Authority of Singapore (IRAS) may take the view that there is some profit element which should be subject to tax (for example, where the representative office regularly secures orders for acceptance by the overseas head office of the foreign corporation). In such circumstances, the IRAS may impose taxes based on a notional profit of 5 per cent of the operating overheads and expenses incurred by the representative office in Singapore. In this case, tax would be levied at the normal corporate rate on the notional profit amount. This is because the IRAS may regard the activities rendered by the representative office to the head office of the foreign corporation as sufficient to amount to a taxable presence in Singapore.

Branch office
 
If a foreign company wishes to conduct business in Singapore but does not wish to establish a separate legal entity, it may register a branch. A branch is a registered legal entity although unlike a subsidiary, a branch is treated as an extension of the foreign company. The name of the foreign company’s Singapore branch must be the same as that of the head office.

A branch must have a registered office address in Singapore and two local agents for acceptance of service of process and notices. Note that the liabilities of the branch are the liabilities of the foreign company which established it.

A branch will not be subject to limitations on the scope of its activities. However, just as with any other business or company operating in Singapore, certain types of business activities will require governmental approvals and licenses. The registered foreign company will then be able to carry on business in Singapore through its branch.

From a taxation point of view, a branch is considered a non-resident entity (because control and management are exercised outside Singapore) and, therefore, is not eligible for tax exemptions and incentives available to local companies in Singapore. The IRAS will impose income tax on the income of the branch accrued in or derived from Singapore. The current applicable corporate tax rate (for the 2010 year of assessment onwards) is 17 per cent on all chargeable income accrued in or derived from Singapore.

Singapore subsidiary
 
Singapore allows 100 per cent foreign ownership in companies. Therefore, a foreign company may incorporate a limited liability company in Singapore and own 100 per cent of its shareholding. One advantage of a subsidiary arrangement is that it “ring fences” the liability of the parent company from operations carried on by the Singapore subsidiary.

A company must be incorporated with a minimum of one member and have at least one director who is ordinarily resident in Singapore. A Singapore citizen, permanent resident or an employment pass holder will typically satisfy this requirement. Subject to compliance with these residency requirements, the sole shareholder and director can be the same person. Every Singapore-incorporated company must maintain a registered office in Singapore and have at least one company secretary who is ordinarily resident in Singapore.

A subsidiary may be either a private or a public company. Professional assistance should be sought to ensure that the most suitable corporate structure is chosen. The majority of companies in Singapore are private companies. Private companies are limited to a maximum of 50 non-employee shareholders. Although it is possible to incorporate a company with unlimited liability, there may be few commercial or other benefits in doing so. In a limited liability company, the liability of the members to contribute to the debts of the company is limited to the amount they each agreed to contribute as capital. Private companies are also subject to fund-raising restrictions and must not offer their shares to the public or engage in any activity that would require the lodgment of a disclosure document (for example, a prospectus). A private limited company’s name in Singapore normally ends with “Private Limited” or “Pte Ltd”.

Public companies are usually listed on a stock exchange and have well-established medium-to-large businesses with a large number of shareholders. Public companies are subject to more stringent rules and regulations as they have the ability to raise funds from the public. A public company’s name in Singapore ends with “Limited” or “Ltd”.

A corporate tax rate of 17 per cent for the 2010 year of assessment applies to Singapore incorporated and registered companies.

Partnership
 
General partnerships are comparatively inexpensive to establish and can be formed quickly. The agreement creating the partnership does not need to be registered. However, if the partnership trades under a business name, that name must be registered.

Each partner is personally liable (on a joint and several basis) with the other partners for the debts and obligations of the partnership incurred while the relevant person is a partner. Each partner can be held responsible for the actions of another partner. Subject to an exception for certain types of professional partnerships, partnerships may not generally have more than 20 members.
 
A partnership must lodge an income tax return (Form P) as if it were an ordinary taxpayer but is not itself assessed for income tax on its taxable income. Instead, the individual partners are assessed on their share of the taxable income of the partnership together with any other personal income they may have. The partners may claim a deduction for any losses that the partnership incurs.

Limited liability partnerships
 
A limited liability partnership (LLP) is a hybrid between a company and a general partnership and was introduced in 2005 through the enactment of the Limited Liability Partnership Act (Cap 163A).

An LLP partner can be an individual or a business entity and retains the desired flexibility of a partnership to the extent that it has less onerous reporting requirements than companies. Further, an LLP partner’s liability is limited (that is, a partner is not liable for liabilities of the other partner(s)).

An LLP must have at least two partners at all times and one manager who is ordinarily resident in Singapore. The manager may be held personally liable for the failure of the LLP to submit an annual declaration of solvency statement.

For income tax purposes, an LLP is tax-transparent (that is, each LLP partner will bear the liability of paying taxes according to its own tax circumstances, which would include its share of profits from the LLP). For treaty purposes, the Singapore tax authorities may not issue a tax residency certificate for the LLP as it is a tax-transparent entity, but may consider issuing the certificate to the LLP’s partners who are individuals or companies resident in Singapore for tax purposes.
 
Limited partnerships
 
Limited partnerships were introduced in 2009 through the enactment of the Limited Partnership Act (Cap 163B) (LP Act) and have become a popular vehicle for private equity and investment funds in Singapore. A limited partnership must consist of one or more general partners and one or more limited partners. There is no prescribed upper limit on the total number of partners. A limited partnership is essentially a general partnership with passive investors participating as limited partners.

A limited partner’s liability is capped at his agreed investment in the limited partnership provided that the limited partner does not participate in management of the limited partnership. If the limited partner does participate in management of the limited partnership, he risks losing his limited liability status for the period of such participation in management. The LP Act helpfully sets out a non-exhaustive list of “safe harbor” activities which do not constitute participating in management of a limited partnership.
 
General partners typically manage the limited partnership and have unlimited personal liability for all debts and obligations of the limited partnership incurred while they are general partners. In consequence, it is common for the general partner to be set up as a special purpose limited liability company.
 
Like a general partnership, a limited partnership has no separate legal personality and, therefore, cannot own assets in its own name.
 
A limited partnership is tax-transparent; all partners are taxed on their share of the limited partnership’s income and gains according to their personal income tax rates.
 
Unincorporated joint ventures and co-ventures
 
This type of business arrangement should be distinguished from a partnership. A joint venture is an association of persons created when two or more parties agree to work towards a common goal. This arrangement is often structured so that it is not a partnership, as the parties to the joint venture do not share the profit of the venture and do not wish to be legally liable for each other’s acts and liabilities. However, notwithstanding the intentions of the parties, Singapore law may, under certain circumstances, regard that business arrangement as a partnership, and legal advice should be sought if the arrangement is not intended to be regarded as such.
 
Careful legal planning is required to achieve the most favorable tax treatment and to avoid any undesired classification as a partnership.
 
Joint venture company
 
This takes the form of a company incorporated to carry on the joint venture on behalf of its shareholders. The company is a separate legal entity distinct from its shareholders and is used where a number of parties wish to carry on business together. The component parties’ liability is limited to their share of capital investment in the joint venture company.
 
Trusts
 
While not commonly used in Singapore, a trust can be utilized as a business vehicle or as an investment vehicle whereby a trustee conducts the trust’s business on behalf of its “members” (legally known as “beneficiaries” of the trust). The trustee may be a company (usually proprietary) created for this purpose. The income generated will belong to the beneficiaries of the trust and the rights and duties of the trustees are set out in the trust deed.
 
A trust is not an independent legal entity. The trustee can assume obligations on behalf of the trust and is allowed to use trust assets to satisfy trust debts as provided for in the trust deed.
 
Business trusts
 
For trusts which are registered under the Business Trusts Act (Cap 21A), the tax treatment applicable to normal trusts does not apply. A registered business trust will instead be subject to tax like a company under the one-tier system and income will continue to be taxable at the trustee level. The unit holders will, however, not be taxed on their share of the statutory income of the trust to which they are entitled and no credit will be allowed to the unit holders for the tax paid by the trustee.
 
Shelf companies
 
Shelf companies are “ready-made” companies available for immediate use. Shelf companies, therefore, offer a solution to an urgent requirement for a company as it usually takes an average of a week to incorporate a company in Singapore. Shelf companies have all the powers of a company under the Companies Act (Cap 50) to carry out any nature of business.

Singapore Exchange
 
Investors may wish to consider raising local equity by listing on the Singapore Exchange (SgX). This avenue is also available to companies incorporated outside Singapore. The SgX serves a wide array of international and domestic investors and end users, including many of the world’s largest financial institutions.

Potential investors should ask their legal advisers for a thorough outline of the current listing rules.

 

General
Foreign investors have a wide range of business structures to choose from when doing business in Singapore.
 
The most common business entities used by non-residents in Singapore are:
    • representative offices
    • branches of parent companies
    • Singapore subsidiaries
    • partnerships
    • joint ventures
    • trusts.
Representative office
 
When a foreign corporation wishes to explore the Singaporean market to analyses the suitability of the market for its goods and/or services, it may elect to open a representative office. A representative office is permitted and licensed to carry out limited activities including market research, auxiliary or support services (such as the dissemination of market information) and promotional and liaison work for the foreign corporation it represents. It can also engage in customer service to the extent of answering queries on behalf of the foreign corporation.
 
A representative office cannot conduct any business activities of a profit-yielding nature, carry out any trading activities or enter into any contracts in Singapore (other than for the purpose of carrying out any permitted activities), nor is it allowed to open any letters of credit directly or indirectly on behalf of its head office. As a representative office is not revenue producing, it is a cost center to the foreign corporation.

The government authority responsible for registering representative offices for most industries (including manufacturing, business services and commerce) is International Enterprise Singapore (the IES).
 
Representative offices of banking, finance and insurance businesses have to be registered with the Monetary Authority of Singapore (MAS).

A representative office must be staffed by a representative from the foreign corporation’s head office and it can engage Singaporean support staff. Liabilities of a representative office are borne by the foreign corporation.

A representative office would not normally be regarded as a taxable entity in Singapore as it does not generate income. However, unless protected under a tax treaty, in some circumstances, the Inland Revenue Authority of Singapore (IRAS) may take the view that there is some profit element which should be subject to tax (for example, where the representative office regularly secures orders for acceptance by the overseas head office of the foreign corporation). In such circumstances, the IRAS may impose taxes based on a notional profit of 5 per cent of the operating overheads and expenses incurred by the representative office in Singapore. In this case, tax would be levied at the normal corporate rate on the notional profit amount. This is because the IRAS may regard the activities rendered by the representative office to the head office of the foreign corporation as sufficient to amount to a taxable presence in Singapore.

Branch office
 
If a foreign company wishes to conduct business in Singapore but does not wish to establish a separate legal entity, it may register a branch. A branch is a registered legal entity although unlike a subsidiary, a branch is treated as an extension of the foreign company. The name of the foreign company’s Singapore branch must be the same as that of the head office.

A branch must have a registered office address in Singapore and two local agents for acceptance of service of process and notices. Note that the liabilities of the branch are the liabilities of the foreign company which established it.

A branch will not be subject to limitations on the scope of its activities. However, just as with any other business or company operating in Singapore, certain types of business activities will require governmental approvals and licenses. The registered foreign company will then be able to carry on business in Singapore through its branch.

From a taxation point of view, a branch is considered a non-resident entity (because control and management are exercised outside Singapore) and, therefore, is not eligible for tax exemptions and incentives available to local companies in Singapore. The IRAS will impose income tax on the income of the branch accrued in or derived from Singapore. The current applicable corporate tax rate (for the 2010 year of assessment onwards) is 17 per cent on all chargeable income accrued in or derived from Singapore.
 
Singapore subsidiary
 
Singapore allows 100 per cent foreign ownership in companies. Therefore, a foreign company may incorporate a limited liability company in Singapore and own 100 per cent of its shareholding. One advantage of a subsidiary arrangement is that it “ring fences” the liability of the parent company from operations carried on by the Singapore subsidiary.

A company must be incorporated with a minimum of one member and have at least one director who is ordinarily resident in Singapore. A Singapore citizen, permanent resident or an employment pass holder will typically satisfy this requirement. Subject to compliance with these residency requirements, the sole shareholder and director can be the same person. Every Singapore-incorporated company must maintain a registered office in Singapore and have at least one company secretary who is ordinarily resident in Singapore.
 
A subsidiary may be either a private or a public company. Professional assistance should be sought to ensure that the most suitable corporate structure is chosen. The majority of companies in Singapore are private companies. Private companies are limited to a maximum of 50 non-employee shareholders. Although it is possible to incorporate a company with unlimited liability, there may be few commercial or other benefits in doing so. In a limited liability company, the liability of the members to contribute to the debts of the company is limited to the amount they each agreed to contribute as capital. Private companies are also subject to fund-raising restrictions and must not offer their shares to the public or engage in any activity that would require the lodgment of a disclosure document (for example, a prospectus). A private limited company’s name in Singapore normally ends with “Private Limited” or “Pte Ltd”.
 
Public companies are usually listed on a stock exchange and have well-established medium-to-large businesses with a large number of shareholders. Public companies are subject to more stringent rules and regulations as they have the ability to raise funds from the public. A public company’s name in Singapore ends with “Limited” or “Ltd”.
 
A corporate tax rate of 17 per cent for the 2010 year of assessment applies to Singapore incorporated and registered companies.
 
Partnership
 
General partnerships are comparatively inexpensive to establish and can be formed quickly. The agreement creating the partnership does not need to be registered. However, if the partnership trades under a business name, that name must be registered.
 
Each partner is personally liable (on a joint and several basis) with the other partners for the debts and obligations of the partnership incurred while the relevant person is a partner. Each partner can be held responsible for the actions of another partner. Subject to an exception for certain types of professional partnerships, partnerships may not generally have more than 20 members.
 
A partnership must lodge an income tax return (Form P) as if it were an ordinary taxpayer but is not itself assessed for income tax on its taxable income. Instead, the individual partners are assessed on their share of the taxable income of the partnership together with any other personal income they may have. The partners may claim a deduction for any losses that the partnership incurs.
 
Limited liability partnerships
 
A limited liability partnership (LLP) is a hybrid between a company and a general partnership and was introduced in 2005 through the enactment of the Limited Liability Partnership Act (Cap 163A).
 
An LLP partner can be an individual or a business entity and retains the desired flexibility of a partnership to the extent that it has less onerous reporting requirements than companies. Further, an LLP partner’s liability is limited (that is, a partner is not liable for liabilities of the other partner(s)).
 
An LLP must have at least two partners at all times and one manager who is ordinarily resident in Singapore. The manager may be held personally liable for the failure of the LLP to submit an annual declaration of solvency statement.
 
For income tax purposes, an LLP is tax-transparent (that is, each LLP partner will bear the liability of paying taxes according to its own tax circumstances, which would include its share of profits from the LLP). For treaty purposes, the Singapore tax authorities may not issue a tax residency certificate for the LLP as it is a tax-transparent entity, but may consider issuing the certificate to the LLP’s partners who are individuals or companies resident in Singapore for tax purposes.
 
Limited partnerships
 
Limited partnerships were introduced in 2009 through the enactment of the Limited Partnership Act (Cap 163B) (LP Act) and have become a popular vehicle for private equity and investment funds in Singapore. A limited partnership must consist of one or more general partners and one or more limited partners. There is no prescribed upper limit on the total number of partners. A limited partnership is essentially a general partnership with passive investors participating as limited partners.
 
A limited partner’s liability is capped at his agreed investment in the limited partnership provided that the limited partner does not participate in management of the limited partnership. If the limited partner does participate in management of the limited partnership, he risks losing his limited liability status for the period of such participation in management. The LP Act helpfully sets out a non-exhaustive list of “safe harbor” activities which do not constitute participating in management of a limited partnership.
 
General partners typically manage the limited partnership and have unlimited personal liability for all debts and obligations of the limited partnership incurred while they are general partners. In consequence, it is common for the general partner to be set up as a special purpose limited liability company.
 
Like a general partnership, a limited partnership has no separate legal personality and, therefore, cannot own assets in its own name.
 
A limited partnership is tax-transparent; all partners are taxed on their share of the limited partnership’s income and gains according to their personal income tax rates.
 
Unincorporated joint ventures and co-ventures
 
This type of business arrangement should be distinguished from a partnership. A joint venture is an association of persons created when two or more parties agree to work towards a common goal. This arrangement is often structured so that it is not a partnership, as the parties to the joint venture do not share the profit of the venture and do not wish to be legally liable for each other’s acts and liabilities. However, notwithstanding the intentions of the parties, Singapore law may, under certain circumstances, regard that business arrangement as a partnership, and legal advice should be sought if the arrangement is not intended to be regarded as such.
 
Careful legal planning is required to achieve the most favorable tax treatment and to avoid any undesired classification as a partnership.
 
Joint venture company
 
This takes the form of a company incorporated to carry on the joint venture on behalf of its shareholders. The company is a separate legal entity distinct from its shareholders and is used where a number of parties wish to carry on business together. The component parties’ liability is limited to their share of capital investment in the joint venture company.
 
Trusts
 
While not commonly used in Singapore, a trust can be utilized as a business vehicle or as an investment vehicle whereby a trustee conducts the trust’s business on behalf of its “members” (legally known as “beneficiaries” of the trust). The trustee may be a company (usually proprietary) created for this purpose. The income generated will belong to the beneficiaries of the trust and the rights and duties of the trustees are set out in the trust deed.
 
A trust is not an independent legal entity. The trustee can assume obligations on behalf of the trust and is allowed to use trust assets to satisfy trust debts as provided for in the trust deed.
 
Business trusts
 
For trusts which are registered under the Business Trusts Act (Cap 21A), the tax treatment applicable to normal trusts does not apply. A registered business trust will instead be subject to tax like a company under the one-tier system and income will continue to be taxable at the trustee level. The unit holders will, however, not be taxed on their share of the statutory income of the trust to which they are entitled and no credit will be allowed to the unit holders for the tax paid by the trustee.
 
Shelf companies
 
Shelf companies are “ready-made” companies available for immediate use. Shelf companies, therefore, offer a solution to an urgent requirement for a company as it usually takes an average of a week to incorporate a company in Singapore. Shelf companies have all the powers of a company under the Companies Act (Cap 50) to carry out any nature of business.
 
Singapore Exchange
 
Investors may wish to consider raising local equity by listing on the Singapore Exchange (SgX). This avenue is also available to companies incorporated outside Singapore. The SgX serves a wide array of international and domestic investors and end users, including many of the world’s largest financial institutions.
 
Potential investors should ask their legal advisers for a thorough outline of the current listing rules.

 

Foreign capital plays a key role in the development of Singapore’s industries and resources. In the Global Enabling Trade Report 2009 by the WEF, Singapore was ranked the most open economy in the world of international trade and investment. With very few barriers to foreign investments and a large number of investment incentives available, foreign investors, both in partnership with local companies or on their own account, are strongly encouraged to pursue opportunities in Singapore.

Those foreign investment restrictions that do exist in Singapore are primarily in the broadcasting and domestic news media sectors, legal and other professional services, multi-level marketing, property ownership and retail banking industries.
 
Government initiatives and incentives
 
General
 
In order to promote economic and industrial development in Singapore, the government has introduced various tax concessions, incentives and development schemes. However, certain conditions may need to be satisfied for these incentives to be available.
 
Incentives
 
The available tax incentives are found mainly in the following legislation:
    • Economic Expansion Incentives (Relief from Income Tax) Act (Cap 86)
    • Income Tax Act (Cap 134).

Broadly speaking, there are two types of tax incentives – incentives to attract specific investments and incentives to promote overseas investment. Most of the tax incentives are administred by the EDB, the MAS or the IES. These incentives extend to a wide range of business sectors.

Some of the financial and tax incentives available are as follows – this is not an exhaustive list; the incentives available may vary from time to time.

 

Corporate tax
 
Singapore’s tax laws tax income of a corporation that is actually or deemed to be derived from a source within Singapore or is actually or deemed to be received in Singapore from outside Singapore. There is no precise definition of “source” in the Income Tax Act (Cap 134) and consequently, each income-generating commercial activity has to be carefully examined to determine its source. Income is deemed to be received in Singapore from outside Singapore if the income:
    • is remitted or transmitted to, or brought into, Singapore
    • is applied in or towards the satisfaction of any debt incurred in respect of a trade or business carried on in Singapore
    • is applied towards the purchase of any movable property which is brought into Singapore.
    • In Singapore, income is assessed to tax on a preceding year basis. Essentially, this means that income earned by a company in a financial year will be taxed in the following tax year, referred to as the year of assessment. For example, income for the financial year ended in 2008 will be assessed in the year of assessment 2009. The Singapore fiscal year is the calendar year. Singapore incorporated companies and Singapore branches of foreign companies are both taxed at the same corporate tax rate, which is currently 17 percent.
Sale of shares
 
Singapore laws do not impose tax on capital gains, but do impose tax on income gains.
 
Accordingly, gains arising from a sale of shares are only subject to tax where the gains are of an income nature and are derived from Singapore or are received in Singapore.

The gains are usually deemed to be of an income nature where the seller engages in or is deemed to be engaging in a business of dealing in or trading of shares and securities. The gains are usually considered to be of a capital nature where the seller is a long-term investor. Whether the sale of shares amounts to income gains or capital gains is dependent on the facts of each case. In determining whether the gains constitute taxable income gains, the factors that the tax authority takes into consideration include:
    • the length of the holding period of the shares in question
    • the frequency of share sale transactions carried out by the seller
    • the reasons for which the shares were acquired
    • the circumstances under which the disposal of the shares was made
    • the nature of business or trade carried on by the seller.
Dividends
 
Dividends distributed by a company resident in Singapore are deemed to be sourced from Singapore. A company is considered as a resident in Singapore if the control and management of its business is exercised in Singapore.

With effect from 1 January 2008, all Singapore companies moved to a one-tier corporate tax system. Pursuant to the one-tier system, the tax paid by a company on its normal chargeable income would constitute a final tax. Also, dividends paid out of “after-tax profit” will be exempt from tax in the hands of shareholders (exempt one-tier dividends). All dividends paid on or after 1 January 2008 are exempt from one-tier dividends.

Under the one-tier system, companies need not maintain a record of corporate tax paid for the purposes of paying dividends. Further, when the company pays an exempt one-tier dividend, it is not required to deduct tax from the dividend paid.

The one-tier system does not alter the tax treatment of foreign dividends remitted to Singapore. Such foreign dividends remain taxable in the hands of the shareholders unless exempted from tax. Expenses incurred by the shareholders to earn the foreign dividends are attributed to and allowed as set-off against such dividends only. The applicable foreign tax credit continues to be granted.

Currently, for Singapore tax-resident corporations, foreign dividends remitted to or received in Singapore will be tax exempt provided the following conditions are met:
    • in the year the foreign dividend is received in Singapore, the headline tax rate of the foreign jurisdiction from which the dividend is received is at least 15 per cent
    • the foreign dividend has been subjected to tax in the foreign jurisdiction from which they were received. This condition may be regarded as fulfilled if no taxes are paid in the foreign jurisdiction due to a tax holiday, or where specific remission is granted for a “look through” treatment – where an operating subsidiary at the end of a holding chain satisfies this requirement.
Withholding tax
 
Withholding tax is a tax-collection mechanism enacted primarily to ensure and facilitate the collection of taxes due on specified categories of income sourced or deemed to be sourced in Singapore where such payments are made by a person in Singapore to a non-resident.
 
Generally, withholding tax applies to the following categories of income or payment:
    • interest, commission, fees in connection with any loan or indebtedness
    • royalties and other payments for the use of, or right to use, movable property
    • know-how payments for the use of scientific, technical, industrial or commercial knowledge/ information
    • technical assistance or service fees
    • management fees
    • rent or other payments for use of movable property
    • directors’ remuneration
    • professional service fees
    • proceeds from sale of real property by a real property trader.
The rate of withholding tax applicable to a payment made to a non-resident is either the prevailing corporate tax rate (17 percent for 2009 year of assessment), or the reduced rate of 15 percent or 10 percent, depending on the nature of the payment. These rates may be reduced under Singapore’s tax treaties with other countries in respect of payments made to residents of such treaty countries. There are also exemptions from withholding tax for specified payments under certain conditions.

Goods and services tax
 
Goods and services tax (GST) is a tax imposed on the supply of goods or services made in Singapore. GST is payable on any taxable supply made by a taxable person in the course or furtherance of any business carried on by him or her and on the importation of goods into Singapore.

A “taxable supply” is a supply of goods or services made in Singapore other than an exempt supply. A “supply” refers to any form of supply made for a consideration. An “exempt supply” generally relates to financial services, leases and sales of residential properties.

GST is only required to be charged on the supply of goods and services made in Singapore. There are different rules for determining the place of supply of goods and the place of supply of services.

Generally, goods are treated as being supplied at the place from where they are “removed”. If a supply of goods involves “their removal” to Singapore (that is, they are imported), these goods are treated as supplied outside Singapore. If the supply of goods does not involve their removal from or to Singapore, the supply is made in Singapore if the goods are “in” Singapore at the time of the supply. If the goods are not in Singapore at the time of the supply, the supply is not made in Singapore.

In the case of services, a supply of services is deemed made in Singapore if the supplier “belongs” in Singapore. A supplier of services will be treated as belonging in Singapore if they:
    • have a business establishment or some other fixed establishment in Singapore and no such establishment elsewhere
    • have no such establishment in any country but their usual place of residence is in Singapore
    • have such establishments in Singapore and elsewhere and their establishment in Singapore is the one that is most directly concerned with the supply.
A “taxable person” is a person who is, or is required to be, registered under the Goods and Services Tax Act (Cap 117A). At present, a person is required to be registered as a taxable person if their annual turnover of taxable supplies exceeds or is expected to exceed S$1 million.
 
Only a GST-registered person can charge and collect GST on all taxable supplies they make (output tax). The person is also entitled to recover any GST (input tax) that they had paid in the purchase of goods and services, provided that the goods and services purchased are directly attributable to the making of the taxable supplies in respect of which the registered person has charged and collected GST (that is, output tax). The amount of GST payable by the GST-registered supplier to the IrAS is the difference between the output tax and the input tax. Where the input tax exceeds the output tax, the IrAS will refund the difference to the registered person.

If a person’s taxable supply is below the S$1 million threshold, they are not required to be registered as a taxable person. However, if the person transacts frequently with suppliers and customers who are GST-registered, they may consider voluntary registration in order to claim credits or refunds for input tax paid on such goods or services. The Comptroller of GST is not obliged to accept a request for voluntary registration and will only consider such registration if:
    • the applicant makes taxable supplies in the course of their business
    • the taxable supplies contribute substantially to the livelihood of the applicant
    • the denial of registration would cause the applicant to incur substantial input tax which he is unable to recover by virtue of his non-registration.
Once registered under the voluntary registration category, the person must remain registered for at least two years.

GST is charged at a prevailing standard rate of 7 per cent. However, there are certain specified goods and services which are termed zero-rated supplies and are subject to GST at 0 per cent. Generally, exported goods and international services rank as zero-rated supplies.

Examples of zero-rated international services include:
    • services connected with international transportation
    • hiring of transport for use outside Singapore
    • services connected with offshore property
    • services connected with offshore goods
    • services (including prescribed financial services) connected with goods for export
    • cultural, artistic and sporting services performed outside Singapore
    • services supplied to persons and businesses abroad
    • services related to ships and aircraft, other than recreation or pleasure craft
    • prescribed international telecommunication services.
Although such goods and services are zero-rated, the suppliers of zero-rated goods are entitled to obtain credits or refunds in the form of input tax for GST paid on purchases of goods and services used in the making of these zero-rated supplies. This is unlike the case of an exempt supply, where no credit is available for the input tax charged to an exempt supplier.

The rules prescribing when a supply would be zero-rated are very limited and a misreading or misinterpretation of these rules is not a defense to any claim or charge for breach of the law. It is strongly advised that professional advice be sought in this regard.

A registered taxable person is required to furnish a tax return to the Comptroller not later than one month after the end of each three-month accounting period. An application may be made to the Comptroller for a shorter accounting period of one month, or a longer period of six months provided certain conditions are met. In each case, the tax return for the period must be furnished within one month after the end of the period to which it relates.

A person furnishing his or her GST return must pay the Comptroller the GST due (that is, the difference between the output tax and input tax for the relevant period) for the accounting period to which the return relates. The payment must be made no later than the last day on which he or she is required to forward the GST return to the Comptroller – unless payment is made by way of Giro (automatic bank withdrawal) in which case the payment will be deducted from his or her bank account on the 15th day of the month after the due date for submission of the GST form.

Tax on individuals
Income tax
 
The imposition of Singapore tax on the income of an individual depends on the source of the income and the tax-resident status of the individual. Generally, an individual who is a Singapore resident is subject to Singapore income tax on their income derived from a source in Singapore. Foreign-sourced income that is received in Singapore is not subject to Singapore income tax, so long as it is not received via a partnership in Singapore. A non-resident individual, on the other hand, need only pay Singapore income tax on their Singapore-sourced income and is exempt from Singapore income tax on income arising abroad even when such income is received in Singapore.
 
As a general rule, a person is considered resident in Singapore if they are physically present in Singapore or exercise employment in Singapore (other than as a director of a company) for 183 days or more during the year preceding the year of assessment.

Singapore income tax on individuals is imposed on a marginal basis. For the year of assessment 2007 onwards, the maximum marginal tax rate is 20 per cent.

Central Provident Fund (CPF) contributions Unlike most countries, there are no compulsory contributions to any pension scheme or social security insurance scheme in Singapore. Singapore instead has the CPF Scheme, which is a form of long-term savings scheme. Compulsory contributions to the CPF account of an employee are required for an employee who is a Singapore citizen or permanent resident.

For such an employee, the employer must deduct and pay to the CPF Board a specified percentage of the employee’s salary (employee’s contribution) for deposit into the employee’s CPF account. The employer must also itself contribute to the employee’s CPF account, which contribution is also a specified percentage of the employee’s salary. Currently, the employee’s rate of contribution is 20 percent and the employer’s rate of contribution is 14.5 percent (15 percent from 1 September 2010) for Singapore citizens and permanent residents (from their third year of obtaining permanent residency status).

Other forms of tax

Stamp duty
 
Under the Stamp Duties Act (Cap 312), stamp duty is levied on instruments and agreements which relate to stocks and shares and immovable property situated in Singapore. Stamp duty is payable at ad valorem rates or at fixed rates, depending on the document concerned. Where the document is executed in Singapore, stamp duty is payable within 14 days after the document has been executed. Where the document is executed outside Singapore and received in Singapore, stamp duty is payable within 30 days after the document has been received in Singapore.
 
In the case of corporate reorganization involving transfer of shares or the business of a company or transfer of beneficial interests in assets between associated companies, exemption of stamp duty may apply if certain conditions are met.

Property tax
 
Property tax is levied on immovable properties in Singapore based on the annual value of the property at the progressive rates of 0 per cent, 4 per cent and 6 per cent for owner-occupied residential properties and 10 per cent (with effect from 1 July 2001) for other properties. Certain buildings may, however, qualify for exemptions or concessions. The annual value is the estimated annual market rent that the property can reasonably be expected to fetch if it were let from year to year.

Customs duty
 
Customs duty is levied on tobacco, liquor, motor vehicles and petroleum-related products.
Workplace relations

General
 
Singapore offers a highly educated and skilled workforce and competitive wage rates.

 
Singaporeans have always been and continue to be committed to making their industries internationally competitive. As Singapore progresses to a knowledge-based economy, the nature of work, workplaces and workplace practices are being aligned to the new demands of the economy.

 
The government authority tasked with employment matters is the MOM within which the Labor Relations Department (LRD) promotes and maintains industrial peace and stability in Singapore by balancing the interests of employers and employees and providing a legal framework to achieve this balance. The LRD also formulates policies on industrial relations and reviews labor and employment laws regularly to ensure their continued relevance to both employers and employees. The four main types of services provided by the LRD are as follows:
    • advisory services on terms and conditions of employment
    • investigation into claims and complaints regarding employment terms
    • conciliation of employment/trade disputes
    • adjudication of employment disputes.
Employment conditions
 
Employment conditions are usually provided for in contracts of service entered into between employers and employees and/or in the collective agreement entered into between employers and the trade unions representing these employees. For employees who fall within the ambit of the Employment Act (Cap 91), the provisions of the Employment Act must be observed to the extent that it sets out certain basic employment conditions that apply on a mandatory basis.

 
Depending on the particular industry/employer, there may be trade unions that negotiate workplace agreements between employers and employees.

 
Aside from the Employment Act, other statutes that may apply to an employment relationship include the Retirement Age Act (Cap 274A), the Workplace Safety and Health Act (Cap 354A), the Work Injury Compensation Act (Cap 354), the Central Providen Fund Act (Cap 36), the Children Development Co-Savings Act (Cap 38A), the Employment of Foreign Manpower Act (Cap 91A), the Industrial Relations Act (Cap 136), the Trade Unions Act (Cap 333), the Trade Disputes Act (Cap 331), and the Skills Development Levy Act (Cap 306). Other more specific legislation may also apply, for example, depending on the industry sector of the employer.

 
Substantive amendments were recently made to the Employment Act, with the changes coming into effect on 1 January 2009. These amendments sought to keep pace with changes in the workforce profile and to update employment standards and benefits, especially for vulnerable workers.

 
Employment Act
 
It is important to note that the Employment Act does not extend to all employees. An “employee” under the Employment Act is defined as “a person who has entered into or works under a contract of service with an employer and includes a workman and any officer or employee of the government included in a category, class or description of such officers or employees declared by the President to be employees for the purposes of this Act or any provision of it; but does not include any seaman, domestic worker or, subject to subsection (2), any person employed in a managerial or executive position or any person belonging to any other class of persons whom the Minister may, from time to time by notification in the Gazette, declare not to be employees for the purposes of this Act.” Persons employed in managerial or executive positions but who earn a basic monthly salary of S$2,500 and below enjoys statutory protection against nonpayment of salary and may access the MOM Labor Court for salary claims.

 
It is also worth noting that the Employment Act prescribes certain minimum conditions for workmen who are in receipt of a salary not exceeding S$4,500 a month and employees who are in receipt of a salary not exceeding S$2,000 a month (this ceiling applies as of 1 January 2009).

 
For employees falling within the Employment Act, the employer may stipulate conditions of employment which are more favorable than those set out in the Employment Act. Conversely, a contract of employment or service which provides for conditions which are less favorable than those prescribed in the Employment Act are illegal and are null and void to the extent that they are less favorable.

 
Employees not covered by the Employment Act are usually governed by their employment contracts with the employer and any other reasonable and lawful rules, regulations and policies as may from time to time be implemented by the employer (whether in the form of an employment handbook or otherwise).

 
Wages and bonuses
 
The salary to be paid to an employee is subject to negotiation between an employer and an employee (or the trade union). Singapore has no minimum wage law. Wages are determined by market forces.

 
Although not legally required, many companies in Singapore reward their employees with bonuses that range (generally) from one to three months’ salary depending on the employer’s and employee’s performance.

 
Apart from variable bonuses which hinge on the company’s and the individual’s performance, some companies also provide an annual wage supplement (AWS). Commonly known as the 13th month salary payment, the AWS represents a single annual payment (up to a maximum of three months’ salary) to employees which supplements the total amount of annual wages earned by the employee. The payment of AWS is not mandated by law and is payable only if required under the terms of the employment contract or a collective agreement.

 
Leave entitlements

 
Sick leave
 
All employees falling within the ambit of the Employment Act are entitled to a maximum of 14 days’ paid sick leave a year if no hospitalization is necessary and an additional 46 days paid sick leave a year if hospitalization is required. Other than that, an employee’s entitlement to sick leave will vary from contract to contract although it is common practice to provide employees with at least 14 days of sick leave per year.

 
Annual leave
 
Part IV of the Employment Act (which only applies to employees who are in receipt of a salary not exceeding S$2,000 a month and workmen who are in receipt of a salary not exceeding S$4,500 per month) provides that an employee who has at least three months of continuous service with an employer will be entitled to a minimum of seven days paid annual leave in the first year of service and an additional day’s leave for each year worked thereafter up to a maximum of 14 days. For employees who are not covered by the Employment Act, their entitlement to annual leave will depend on their contract of employment. Most employees are commonly given 14 to 21 days’ paid annual leave (depending on length of service).

 
Bereavement or compassionate leave
 
It is common for employers to provide two or three days’ leave without loss of pay for employees who suffer the death of a close relative.

 
Maternity leave
 
The Employment Act and the Children Development Co-Savings Act (CDCSA) provide maternity protection and benefits for female employees. The protection and benefits provided differ between the two statutes.

 
The CDCSA applies to all female employees working in Singapore (including those employees who fall within the ambit of the Employment Act) provided they fulfil certain qualifying criteria, as follows:
    • the employee’s child is a citizen of Singapore at the time of birth
    • the employee was lawfully married to the child’s natural father at the time of conception or before the child’s birth
    • the employee has been employed by the employer for at least 90 days before the birth of the child.
Prior to 31 October 2008, employees who qualified for maternity leave under the CDCSA were entitled to paid maternity leave of 12 weeks. This has been enhanced to 16 weeks with effect from 31 October 2008 regardless of the birth order of the child.

 
For the first two births, the first eight weeks of maternity leave will be employer-paid. The last eight weeks will be funded by the government (capped at S$20,000 per birth, including CPF contributions). For the third and subsequent births, the full 16 weeks will be funded by the government (capped at S$40,000 per birth, including CPF contributions).

 
Female employees who do not satisfy either of the first two criteria set out above but who fall within the ambit of the Employment Act and satisfy the third criterion (ie, they have been employed by their employer for at least 90 days before the birth of the child) will be entitled to 12 weeks of maternity leave under the Employment Act. Where the employee has fewer than two children of her own at the time of delivery, she is entitled to be paid her usual salary for the first eight weeks of maternity leave. In the case of multiple births (eg, twins, triplets, etc) during the first pregnancy, the employer is still required to pay the next eight weeks of maternity leave for the next birth.

 
It should be noted that a female employee who qualifies for maternity leave under the CDCSA will not be entitled to claim the same benefits under the Employment Act.

 
Childcare Leave
 
The CDCSA and the Employment Act both provide for childcare leave entitlement. Under the CDCSA, an employee is entitled to a total of six days of paid childcare leave per year (regardless of the number of children) if:
    • the employee’s child is a Singapore citizen
    • the employee is legally married to the other parent, or was married to the other parent at the time of, or at any time after, conception (where the child is not an adopted child); or where the child is an adopted child, the employee was married, widowed, or divorced when the employee adopted the child
    • the employee has any child (including any legally adopted or step-child) who is below seven years of age at the time the application for childcare leave is made or any child who celebrated or will be celebrating his or her seventh birthday during the calendar year (i.e., January 1 to December 31) in which the application for childcare leave is made
    • the employee has worked for the employer for at least three months.
Where the employee has been employed for at least three months but for less than 12 months, the six days’ paid childcare leave may be pro-rated by the employer, subject to a minimum of two days. The employee will be entitled to be paid at his/her gross rate of pay for every day of childcare leave that is taken, however where an employee has already taken three days of paid childcare leave, the amount of payment the employee is entitled to receive from his/her employer for each subsequent day of childcare leave that is taken is capped at S$500.

 
If the employee does not meet either of the first two criteria set out above but is covered under the Employment Act and fulfils the third and fourth criterion set out above, he/she will be entitled to a total of two days of paid childcare leave per year (regardless of the number of children) under the Employment Act. Where the employee qualifies for paid childcare leave under the Employment Act, the employee will be entitled to be paid at his/her gross rate of pay for every day of such childcare leave that is taken.

 
It should be noted that for so long as an employee is entitled to paid childcare leave under the CDCSA, he/she will not be entitled to paid childcare leave under the Employment Act.

 
Military Leave
 
Under section 23 of the Enlistment Act (Cap 93), an employer must grant leave of absence to any employee required to report for national service, mobilized service under section 73 of the Police Force Act (Cap 235), or voluntary service in the division of the Singapore Armed Forces known as the People’s Defense Force under the Singapore Armed Forces Act (Cap 295) or in the Special Constabulary under the Police Force Act (Cap 235).

 
Public holidays
 
There are generally 11 public holidays each year in Singapore (with minor fluctuations when holidays fall at weekends) and an employee who falls within the ambit of the Employment Act is entitled to a paid holiday for each of them.

 
National Wages Council
 
The National Wages Council (NWC) is usually convened when there is a need to review wage guidelines. Following its review, the NWC makes recommendations that apply to all employees (management, executives and rank-and-file employees), unionized and non-unionized companies and in both the public and private sectors. However, implementation of these recommendations is not mandatory and employers in the private sector have the discretion to elect whether or not to adopt them.

 
Termination of employment
 
Employees who have been terminated “unlawfully” may seek appropriate redress under the Employment Act or common law.

 
Under the Employment Act, an employee who considers that he or she has been dismissed without just cause or excuse may, within one month of dismissal, make representations in writing to MOM to be reinstated in his or her former employment. Upon satisfaction on the part of the Minister that the employee has been dismissed without just cause or excuse, the Minister may direct the employer to reinstate the employee in the former employment (although this is rare) and to pay the employee an amount that is equivalent to the wages that the employee would have earned had he or she not been dismissed. The Minister may alternatively direct the employer to pay the employee such amount of wages as compensation as may be determined by the Minister but not to reinstate his or her employment. Disputes which cannot be resolved amicably through the above means will be referred to the Labor Court for adjudication.

 
Alternatively, if the manner of dismissal contravenes the terms of the employment contract, the employee can make a claim for breach of contract against the employer. For an employee falling outside the ambit of the Employment Act, the employee can also seek redress in the form of damages for breach of contract.

 
There are no statutory requirements for the employer or employee to furnish reasons for termination of an employment contract.

 
Termination of employment at retirement The Retirement Age Act states that it is unlawful for an employer to dismiss any employee who is aged below 62 years because of his or her age. This Act, however, applies only to employees who are Singapore citizens or Permanent Residents.

 
Certain categories of employees are exempted from the ambit of the Act including, but not limited to, persons employed to work on a specific project for a fixed term.

 
By 2012, the Singapore Government intends to enact re-employment legislation to enable more people to continue working beyond the current statutory retirement age of 62, up to 65 in the first instance and subsequently, up to 67. In April 2008, the Tripartite Implementation Workgroup, a body set up to focus on implementation issues and to help companies adopt re-employment legislation, released an advisory known as the Tripartite Advisory on the Re-employment of Older Workers which identified good practices in areas such as pre-retirement planning and re-employment consultation, job arrangements upon re-employment and re-employment contract durations. Following this, in March 2010, the Tripartite Implementation Workgroup released guidelines (the Tripartite Guidelines on the Re-Employment of Older Employees) to better prepare employees for the proposed re-employment legislation. These guidelines are to serve as the basis for drafting the proposed re-employment legislation and identify good re-employment practices that employers should consider adopting in the following areas:
    • planning and preparing employees for re-employment
    • the re-employment contract
    • recognizing the contributions of re-employed employees
    • providing assistance to eligible employees whom employers are unable to re-employ.
Trade unions
 
Unions represent the industrial interests of certain categories of employees who are entitled to become its members. Typical trade union activity is to negotiate collective agreements with employers on behalf of its members.

 
The MOM maintains a Registry of Trade Unions, the primary function of which is to regulate the following:
    • formation and dissolution of trade unions
    • safe custody and lawful utilization of union funds
    • impartial and proper election of union officers.
All trade unions have to be registered under the Registry of Trade Unions otherwise they are illegal. The Registry also provides advisory services to trade union officers and members on matters relating to the laws and regulations on trade unions.

 
Occupational health and safety
 
Increasing emphasis is being placed on the importance of occupational health and safety in Singapore which is reflected in legislation such as:
    • The Workplace Safety and Health Act, which sets out a framework for the promotion of safe practices in all factories and workplaces of various risk levels and industries and
    • The Work Injury Compensation Act (which replaced the Workmen’s Compensation Act with effect from 1 April 2008) which covers all employees except self-employed persons, independent contractors, domestic workers, members of the Singapore Armed Forces and officers of the Singapore Police Force, the Singapore Civil Defense Force, the Central Narcotics Bureau and the Singapore Prison Service.

The Work Injury Compensation Act requires employers to maintain insurance for employees who are involved in manual work or non-manual work (where the employee’s total earnings do not exceed S$1,600 per month). It is not mandatory for employers to buy insurance for employees who are involved in non-manual work and have monthly earnings of above S$1,600. Nonetheless, employers will be required to pay compensation in the event of a valid claim, even if they do not buy insurance for this group of employees.

The MOM also requires employers to purchase and maintain insurance for medical expenses of foreign workers. This requirement applies to all foreign workers on work permits (including foreign domestic workers) or S passes. For medical insurance policies taken up or renewed on/or after 1 January 2010, the insurance coverage must be at least S$15,000 per year for each worker’s inpatient care and day surgery during his/her stay in Singapore.

Dispute resolution

Courts
 
The courts in Singapore hear a full range of civil and criminal matters, and are empowered to make orders in respect of damages, specific performance and injunctions. The courts are divided into the Subordinate Courts and the Supreme Court, and cases are filed before these courts according to the monetary amounts involved.

The Subordinate Courts comprise of the District and Magistrate Courts, both of which oversee civil and criminal matters, as well as specialized family, juvenile, coroner’s courts and the Small Claims Tribunal, which handles civil claims for amounts below S$10,000. The Supreme Court is made up of the High Court and the Court of Appeal and hears both civil and criminal matters. The Court of Appeal hears appeals against decisions of the High Court in both civil and criminal matters and has been Singapore’s final court of appeal since 8 April 1994, when appeals to the Judicial Committee of the Privy Council were abolished.

Singapore’s court system is transparent and efficient. In recent years, far-reaching changes have been made within the Supreme Court and the Subordinate Courts to rationalize and standardize court rules into a single uniform set of rules to ensure uniformity of practice and consistency. The courts have also been increasingly vigilant in ensuring that orders of court are complied with and parties do not prolong the process of litigation unnecessarily. These measures have been relatively far-reaching and have resulted in a drastic reduction in case backlog.

Arbitration
Singapore as a nation is committed to promoting international arbitration as a means of resolving commercial disputes within the region. Recently, changes to the Legal Profession Act (Cap 161) were introduced to allow foreign lawyers to represent parties in arbitration in Singapore. This is in addition to the Qualifying Foreign Law Firm scheme, which grants foreign law firms a license to practice Singapore law in designated practice areas through Singapore-qualified lawyers employed by the firms.
 
Singapore has world-class facilities for arbitration and a full range of qualified arbitrators registered with the Singapore International Arbitration Centre, which has fairly comprehensive arbitration rules which can be adopted by parties involved in a dispute. Singapore is now home to the world’s first integrated dispute resolution center for international arbitration cases, namely the Maxwell Chambers.

Arbitration generally affords more privacy to the parties in dispute as compared to litigation. The other key feature of international arbitration is that there are better prospects of enforcing an international arbitration award in other countries within the region than enforcing a foreign court judgement. This is often perceived as a useful risk-management tool for parties doing business in Asia.

As a result of recent amendments to the International Arbitration Act (Cap 143A), the Singapore High Court is now empowered to provide interim relief in aid of arbitrations seated in countries other than Singapore. Before this amendment, the High Court had interpreted the power to provide interim relief conferred by the International Arbitration Act as excluding foreign arbitrations. Parties considering making an application to the Singapore High Court for interim relief will have now greater flexibility to do so.
General
Over the last four decades, Singapore has achieved enviable economic progress. Today, the city-state is a reputable financial center, a key regional trading center, one of the world’s busiest ports and a top location for investment.

Singapore offers a pro-business environment, advanced infrastructure, world-class connectivity, highly trained people and a young working and consumer population.

Leading surveys have consistently ranked Singapore as one of the most competitive nations and best places for business in the world. In a 2010 World Bank-IFC report, Singapore was ranked as the world’s easiest place to do business and is the second most open economy in the world (according to the 2009 Index of Economic Freedom). Singapore has also consistently been ranked as one of the five least corrupt countries in the world and the least corrupt nation in Asia by Transparency International.
 
Singapore has entered into landmark free trade agreements (FTAs) with ASEAN, the United States, Australia, the European Free Trade Association (Switzerland, Liechtenstein, Norway and Iceland), New Zealand, India, China, South Korea, Japan, Peru, Costa Rica, the Trans-Pacific SEP (Brunei, New Zealand and Chile), the Hashemite Kingdom of Jordan, Panama and the Cooperation Council for the Arab States of the Gulf (Kuwait, Oman, Qatar, Saudi Arabia, Bahrain and the United Arab Emirates). It is currently negotiating FTAs with Canada, Mexico, Pakistan and Ukraine.

Startups
Venture capital industry
 
A significant amount of venture capital funding has been attracted into Singapore and is managed by a host of fund management companies and firms.
 
Government-linked schemes and incentives
 
 To further foster entrepreneurship and innovation in Singapore, the EDB has a range of schemes and incentives designed to help new ventures over initial funding hurdles, obtain government co-funding, enjoy tax breaks for investors and support for entrepreneurs seeking investors. These include:
    • the Business Angel Scheme
    • the i.MATCH Programme
    • the Startup Enterprise Development Scheme.
Research and development
 
The Singapore government committed S$13.55 billion (approximately US$10 billion) on R&D activities in the period 2006–10 (a more than 200 per cent increase from the previous five-year period). The government has also established several research institutions, with competence in areas such as biotechnology, microelectronics, manufacturing technologies, materials and chemical sciences.
The Singapore government attaches great importance to the protection of intellectual property rights (IPR), a high standard of IPR protection being necessary to protect and encourage the growth of high-value-added, high-content industries. To protect these vital industries, the government has put in place a comprehensive regime as listed below for IPR protection.

Legal and policy – compliance with the TRIPS Agreement
 
Singapore has achieved full compliance with the World Trade Organization’s (WTO) Agreement on Trade Related Aspects of International Property Rights (TRIPS). TRIPS is, to date, the most comprehensive multilateral agreement on trade and intellectual property. It sets out a high standard of compliance for the protection, enforcement and dispute settlement of trade-related IPR matters for WTO members to adhere to.
 
In implementing the legal initiatives necessary to be TRIPS-compliant, Singapore has strengthened its IP legal framework and made it more attractive for foreign investors to invest in Singapore’s developing knowledge-based economy.
 
Singapore’s membership of IPR Conventions
 
Singapore has been a member of the World Intellectual Property Organization since December 1990. Singapore has also acceded to several international IP treaties including the Berne Convention, the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purpose of Patent Procedure and the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol). In addition, Singapore is a party to the Paris Convention for the Protection of Industrial Property and the Patent Cooperation Treaty (PCT).
 
Enforcement
 
Sustained enforcement actions are constantly undertaken by various authorities, including the Singapore Police Force, Films and Publications Department and Customs and Excise Department (now the ICA). Backing the enforcement actions is the continued imposition of stiff penalties for copyright and trade mark offences by the Singapore courts. Persons guilty of trade mark and copyright offences may be given jail terms of up to five years and/or fines of up to S$100,000.
 
Substantial statutory damages may be awarded by courts for trademark and copyright infringements in civil actions. Under the Trade Marks Act (Cap 332), for example, infringements involving counterfeit trademarks may attract statutory damages in excess of S$1 million.

International recognition
 
The Political & Economic Risk Consultancy, the International Institute for Management Development and the World Economic Forum (WEF) have consistently ranked Singapore top in Asia for IP protection.

Cooperative approach with industry
 
While Singapore’s efforts to protect IPR have been successful, the government is constantly reviewing its protection programmes to ensure that not only are existing measures relevant, effective and adequate but that they also adapt to technological advances or changing circumstances through consultations with industry.
 
IPR-related legislation
 
Singapore has completed its review and amendment to its IPR-related legislation to comply with the obligations under the TRIPS Agreement.

Copyright
 
The Copyright Act (Cap 63) governs copyright and related rights in Singapore. The duration of copyright protection varies according to the type of work concerned:
Literary, dramatic, musical, artistic works
    • If the work is only published after the death of the author, it lasts for 70 years from the end of the year in which the work was first published – 70 years from the end of the year the author died.
    • Published editions of literary, dramatic, musical or artistic works (layout) – 25 years from the end of the year the edition was first published.
    • Sound recordings and films – 70 years from the end of the year the sound recording or film was first published
    • Broadcasts and cable programs – 50 years from the end of the year the broadcast was first made or cable programme was first included in a cable programme service
    • Performances – 70 years from the end of the year of the performance
    • Copyright material sent over the Internet or stored in webservers is treated in the same manner as copyright material in other media. The civil remedies for copyright infringement include injunctions, damages and account of profits. In addition, there is criminal liability attached to distribution of infringing materials, as well as willful infringement of copyright.
Trade marks
 
The registration and protection of trade marks in Singapore is governed by the Trade Marks Act, which was revised in 2007. Singapore is a contracting country under the Madrid Protocol and may be designated as a target jurisdiction under an international trade mark application. The registration of a trade mark is for an indefinite period so long as the renewal fees are paid every tenth year. Singapore adopts the International Classification of Goods and Services under the Nice Agreement. Some of the salient features of the Trade Marks Act include:
    • a more streamlined test of registrability which is that of capacity to distinguish
    • simplifying and expediting the examination process
    • the protection of “shape” and “color” marks
    • the protection of “well-known marks”.
In general, protection of trade marks under the Trade Marks Act is conditional on the registration of the trade mark with the Intellectual Property Office of Singapore (IPOS). There is one exception – marks which qualify as “well-known marks” are protected under the Trade Marks Act despite not being registered in Singapore.

In 2009, the Singapore Court of Appeal, Singapore’s highest court, released its first decision concerning “well-known marks” in the case of Novelty Pte Ltd v Amanresorts Ltd & Anor (Civil Appeal No. 56 of 2007/Z) [2009] SGCA 13. In this landmark case, the Singapore Court of Appeal discussed the definition of a “well-known mark” under Singapore’s laws and the application of section 55 of the Trade Marks Act, which grants protection to “well-known marks” which have not been registered in Singapore.

Patents
 
The law governing patent protection in Singapore is the Patents Act (Cap 221). Patent protection lasts 20 years from the date of filing the application. Singapore is a party to the PCT and may be designated as a country under an international patent application. Software and business methods patents are recognized in Singapore.
 
Plant varieties
 
Under the Plant Varieties Protection Act 2004 (Cap 232A), which conforms with the 1991 revision to the International Convention for the Protection of New Varieties of Plants, breeders may file for new plant variety protection. The term of protection is 25 years from the date of grant.
 
Designs
 
The Registered Designs Act (Cap 266) came into force on 13 November 2000. The Registered Designs Act repealed the United Kingdom Designs (Protection) Act (Cap 339), which previously conferred protection in Singapore on designs registered in the UK. The Registry of Designs was established with applications for registration of designs being lodged in Singapore instead of the UK.

Geographical indications
 
Singapore has the Geographical Indications Act (Cap 117B), to protect geographical indications. The Geographical Indications Act seeks to prevent the use of misleading geographical indications, the registration of misleading geographical indications as trademarks and the use of geographical indications that would constitute an act of unfair competition. Protection afforded to geographical indications is automatic. Where geographical indications qualify as a trade mark, certification mark or collective mark, it is also possible to register geographical indications under Singapore’s trade mark legislation.
 
Layout designs of integrated circuits
 
The original layout design of integrated circuits is protected under the Layout Designs of Integrated Circuits Act (Cap 159A). Protection is automatic and the duration of protection is either ten years after the first commercial exploitation (if the exploitation takes place within five years after the year it is created) or 15 years after the year it is created.

Franchising in Singapore
In 2009, there were over 500 franchising systems and 3,000 franchisees in Singapore. However, Singapore does not have a specific franchise law, regulation or code of practice. Distribution and franchise agreements are governed by general contract and common law principles applying to commercial contracts in Singapore. There is no requirement to register a franchise or distribution agreement, or any related disclosure document, in Singapore. The Franchising and Licensing Association of Singapore (FLA) was established to nurture and develop Singapore’s franchising industry. Membership of the FLA is discretionary and all members must comply with the FLA’s code of ethics.

Competition laws
 
According to the Global Competitiveness Report 2009–2010 by the WEF, Singapore is ranked the third most competitive economy in the world. In 2004, Singapore enacted the Competition Act (Cap 50B). Modelled largely on the UK Competition Act 1998, Singapore’s Competition Act is administered and enforced by the Competition Commission of Singapore and prohibits three main types of anticompetitive behavior, namely:
    • anti-competitive agreements, decisions and practices
    • abuses of market power
    • mergers and acquisitions that have the effect of substantially lessening competition. A voluntary merger notification system applies under the Competition Act.
Consumer Protection (Trade Descriptions and Safety Requirements) Act
The Consumer Protection (Trade Descriptions and Safety Requirements) Act (Cap 53) (CPTDSRA) was enacted to protect consumers against false trade descriptions such as deceptive statements concerning the composition or nature of goods. The CPTDSRA makes it an offence for any trader to apply a false trade description to any goods or to supply goods to which false trade descriptions are applied. Trade marks which contain or comprise false trade descriptions are also prohibited, unless they fall within the exemption criteria stipulated under the CPTDSRA. Offences under the CPTDSRA are punishable with a fine of up to S$10,000 and/or imprisonment of up to two years.
 
Consumer Protection (Fair Trading) Act Singapore has enacted the Consumer Protection (Fair Trading) Act (Cap 52A) (CPFTA). The CPFTA came into force on 1 March 2004 (and was amended on 15 April 2009) and protects consumers against unfair practices by suppliers in Singapore in relation to consumer transactions. Unfair practices are defined in the CPFTA and include circumstances where suppliers make false claims or misleading or deceptive representations. Certain transactions are excluded from the CPFTA, such as employment contracts and the acquisition of an interest in real estate. The CPFTA prescribes civil remedies against businesses or traders who engage in unfair trade practices (as defined by the CPFTA). The CPFTA further prescribes a maximum amount that can be claimed by way of damages for its breach (S$30,000) as well as a limitation period within which all claims must be filed.

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