This topic has been discussed quite a few times in different threads, but some of the information I found through search is incorrect. So, I want to gather all the correct information regarding this topic here.
My friend owns a SaaS company, and he asked me to help him find a place to incorporate. His customers are from around the world, and he needs access to reliable banking and a Stripe account. The corporate structure must be tax-free.
He doesn’t want to incorporate in the US, UK, or EU, so I suggested that Hong Kong or Singapore might be good options. However, I decided to dig deeper to determine which jurisdiction would be better for his case. Most of his competitors use a Singaporean company, and I found that in Singapore, private companies are not required to undergo an audit unless their annual revenue exceeds SGD 10 million. This is a significant advantage because, in Hong Kong, all companies must be audited. While I’m not saying audits are a bad thing, I would prefer to avoid them if possible.
For Hong Kong, the situation is quite straightforward - you simply apply for offshore status, and you're good to go. (You have to meet the requirements to get this status.)
For Singapore, however, things are a bit more complicated. Singapore operates on a territorial tax system, where taxes are levied solely on income generated within the country. An offshore company in Singapore is exempt from corporate tax if it is managed from abroad, does not have a local corporate bank account, and operates solely overseas.
This means that having a Singaporean bank account makes your company subject to tax in Singapore. I’m not sure if the solution is as simple as opening a bank account in, say, Hong Kong for a SG company.
I feel that Hong Kong has more fintech solutions and clearer taxation.
However, getting a real business bank account in either Hong Kong or Singapore is tough if you don’t have any connections to Asian countries or business there.
In Singapore, having a local bank account doesn’t make sense because it makes your company subject to a 17% CIT, so you’ll always have to rely on fintech solutions that are based outside of the SG.
So, what company would you choose in that case, and why, how would you legally bypass the tax if you would choose SG?
My friend owns a SaaS company, and he asked me to help him find a place to incorporate. His customers are from around the world, and he needs access to reliable banking and a Stripe account. The corporate structure must be tax-free.
He doesn’t want to incorporate in the US, UK, or EU, so I suggested that Hong Kong or Singapore might be good options. However, I decided to dig deeper to determine which jurisdiction would be better for his case. Most of his competitors use a Singaporean company, and I found that in Singapore, private companies are not required to undergo an audit unless their annual revenue exceeds SGD 10 million. This is a significant advantage because, in Hong Kong, all companies must be audited. While I’m not saying audits are a bad thing, I would prefer to avoid them if possible.
For Hong Kong, the situation is quite straightforward - you simply apply for offshore status, and you're good to go. (You have to meet the requirements to get this status.)
For Singapore, however, things are a bit more complicated. Singapore operates on a territorial tax system, where taxes are levied solely on income generated within the country. An offshore company in Singapore is exempt from corporate tax if it is managed from abroad, does not have a local corporate bank account, and operates solely overseas.
This means that having a Singaporean bank account makes your company subject to tax in Singapore. I’m not sure if the solution is as simple as opening a bank account in, say, Hong Kong for a SG company.
I feel that Hong Kong has more fintech solutions and clearer taxation.
However, getting a real business bank account in either Hong Kong or Singapore is tough if you don’t have any connections to Asian countries or business there.
In Singapore, having a local bank account doesn’t make sense because it makes your company subject to a 17% CIT, so you’ll always have to rely on fintech solutions that are based outside of the SG.
So, what company would you choose in that case, and why, how would you legally bypass the tax if you would choose SG?
