For several years, this tiny Asian island nation topped the rankings as the world’s top location for investments and the busiest port in the Asia Pacific region. Strategic location, pro-business environment, forward economic policies, and competitive workforce made Singapore the world’s gateway to Asia.
Consistently rated by expatriates as the best place in the world to live and work, Singapore has a perfect mix of skills development, career advancement, and good quality of life. It is easy for couples to advance their career or start a business in this city-state.
This article gives you an overview on how to operate a business in Singapore under a Dependant’s Pass.
How can a DP Holder Run a Business in Singapore?
Married spouses and children under 21-years old of qualified Employment Pass and S Pass holders can come to Singapore on a Dependant’s Pass. Take note that S Pass and Employment Pass holders must earn a minimum of $6,000/month to qualify to bring their dependents to Singapore.
If you are a Dependant’s Pass (DP) holder who wants to run a business in Singapore, you must obtain a Letter of Consent (LOC). You can own a Private Limited Company (Pte Ltd) in Singapore. A Pte Ltd is easier to raise capital because it has limited liability.
A Pte Ltd is taxed at the entity level, and you can benefit from tax incentives and exemptions. It is also easy to transfer ownership interest or add owners. However, PTE Ltd Companies have high maintenance and compliance costs. You must register your business with ACRA and apply for a Letter of Consent (LOC) from MOM to run your business.
If you wish to get employed in Singapore rather than operating your own business, you will be required to apply for the Employment Pass, Work Permit, and S Pass rather than a Letter of Consent.
Now, let’s discuss the procedure on how you can run your business in Singapore.
Determine Your Business Structure
Before registering your business with (ACRA) Accounting and Corporate Regulatory Authority, determine the business structure you are eligible to operate as a DP visa holder.
A sole proprietorship is a type of business owned and controlled by one individual.
- You have the complete voice in the business and get all the profits you generate.
- It is the easiest, less costly to set up, and has fewer compliance requirements.
- Your tax would be at a personal income rate.
- You will have unlimited liability.
- Your assets may be at risk because you will be liable if the business incurs debts and takes legal action.
A Partnership type of business is owned by at least two, but less than 20 partners. It is similar to a sole proprietorship:
- You will have fewer compliance requirements.
- Each partner is a single legal entity.
- The partners have unlimited liability not only for their actions, and debts but of the other partners in the business.
- Each partner will be taxed based on personal income rates.
A company, on the other hand, is a separate legal entity from its owners known as shareholders. A partnership with more than 20 partners must incorporate a company under the Companies Act.
In contrast to the sole proprietorship business and partnerships, the company shareholders have restrictive liability because a company is a separate legal entity from its owners. Therefore, shareholders will not be personally accountable for any obligations incurred by the firm or any lawful motion taken against it.
However, companies have more compliance requirements.
- You must file annual returns and hold annual general meetings.
- Failure to comply may result in disciplinary action from ACRA.
- You must be the director with 30% shareholding to be eligible for a LOC (Letter of Consent).
- You will manage the affairs of the business.
- You make decisions in the best interest of the institution.
What Is a Letter of Consent & How Do I Get One?
A Letter of Consent (LOC) is a requirement for anyone who wants to run a business in Singapore on a Dependant’s Pass. You can get this from Singapore’s Ministry of Manpower. The application grant will take three weeks to process and would serve as your permission to operate your business.
Who is Eligible?
To be eligible to apply for an LOC, you need to be one of the following types of business owner:
- The sole proprietor of an ACRA-registered business.
- A partner of an ACRA-registered business.
- A company director with at least 30% shareholding in an ACRA-registered business.
Registering Your Business
You must register your business once you have chosen a structure and business name. You log into ACRA’s website using your SingPass and identification number. If you do not have a SingPass you can hire a corporate service firm to complete the registration on your behalf.
At the time of incorporation, you need to appoint a local director. He must be either a Singapore citizen or permanent resident who is living in Singapore with at least 30% of company shares. Please note that a DP holder cannot be listed as a shareholder or director at the time of incorporation. If you want to be a director of your company, you would need to apply for an Employment Pass. You can only apply for this visa after your company is first set up and your corporate bank account has been opened.
Your business also needs to hire at least one Singaporean or Permanent Resident who earns at least S$1,400 and receives Central Provident Fund (CPF).
Keep in mind that you need to obtain a Letter of Consent (LOC) prior to operating your business to ensure that you comply with MOM requirements.
Setting up your own business in Singapore can be challenging, but also exciting. Apart from working and even setting up a business here, Singapore is one of the most appealing countries to live in the world. The good quality of life and stable economy of this state attracts many foreigners to settle in one of the world’s most beautiful cities.
For assistance in applying your Letter of Consent (LOC), you may engage with our immigration services and our dedicated consultant will guide you in every step of the way.