Why Do High Net Worth Individuals Choose Singapore for Global Expansion? Insights from a Prominent Software Company Director’s Overseas Journey
In recent years, with increasing cooperation between China and Singapore, numerous businesses and individuals from China have been venturing abroad. Their primary choice for international expansion often leads them to Singapore. According to the official “2022 Population Report” released by Singapore, a total of 21,537 individuals acquired Singaporean citizenship in the first half of 2022. Why is Singapore becoming the preferred destination for more and more people?
Singapore Ranks High in Per Capita GDP
1. Singapore Releases “2022 Population Report”
In the first half of 2023, the National Population and Talent Division of the Prime Minister’s Office in Singapore released the “2022 Population Report,” indicating that Singapore’s per capita GDP exceeded $80,000 in 2022.
Additionally, the economic data for the fourth quarter of 2022 was revealed, showing a 2.1% year-on-year growth in Singapore’s GDP for that quarter. The full-year GDP growth for 2022 reached 3.6%, with a total GDP of SGD 643.546 billion (approximately $46.7 billion USD) for the year. Based on Singapore’s average exchange rate against the US dollar in 2022, this amounts to about $467 billion USD.
Considering Singapore’s population of approximately 5.65 million as of the end of June 2022, the per capita GDP for 2022 is estimated to be around $82,700 USD. This per capita GDP would place Singapore among the top 9 countries globally.
Judging solely from the total GDP and per capita GDP, Singapore is indeed very prosperous and could be considered one of the wealthiest nations globally.
Due to this reason, Singapore has attracted a significant number of immigrants in recent years, including many wealthy individuals from China. According to the report, a total of 21,537 individuals acquired Singaporean citizenship in the first half of 2022. Additionally, 33,435 individuals became permanent residents, amounting to a total of 54,971 immigrants attracted to Singapore in just six months.
One of the primary reasons for the influx of wealthy individuals into Singapore in recent years, apart from the appealing local environment, is likely the various social security benefits offered by the country.
For instance, in the 2022 Global Pension Index ranking, Singapore’s Central Provident Fund (CPF) ranked as the top pension system in Asia. This marks the 14th consecutive year that Singapore’s CPF has held the top spot in Asia.
*The picture comes from pexels
2. Economic Growth in Southeast Asian Countries in 2022
According to another report, the economic growth of seven Southeast Asian countries, including Indonesia, Thailand, Singapore, Vietnam, Cambodia, Malaysia, and the Philippines, has been announced for the year 2022.
Among these countries, Singapore ranks third in terms of GDP measured in US dollars, with a value of $466.708 billion USD in 2022. This represents a growth of nearly $70 billion USD compared to 2021, with a nominal growth rate of 17.60%, the highest among these countries. In terms of Chinese yuan, Singapore’s GDP for 2022 is equivalent to approximately CNY 3.14 trillion.
Despite being affected by factors like exchange rate fluctuations and the impact of the pandemic, the economic growth in the Southeast Asian region remains positive overall. With improving exchange rates, it is believed that the Southeast Asian economies will experience rapid development in 2023.
*The picture comes from pexels
Advantages of Registering a Company in Singapore
With the maturity of business development in the domestic market, more and more companies are shifting their focus to overseas markets. Leading enterprises have been quick to establish a global operational mindset. When it comes to the first stop for many Chinese companies venturing abroad, Singapore often stands out. What advantages are they seeking?
1. Strong Economy and Foreign Direct Investment
Singapore possesses substantial foreign exchange reserves and lacks external public debt. Its current account remains in growth mode, and the country actively engages in overseas investments. In 2022, Singapore’s GDP grew by 3.6%. The per capita GDP, calculated at current market prices, reached $114,165 USD. The services sector contributed over 70% of nominal value, while goods-producing industries contributed around 25%.
*The picture comes from pexels
2. Affordable Taxes and Capital Gains
Singapore features one of the most affordable territorial tax systems, operating on a single-tier tax basis for companies. This means that once your company pays taxes, it can distribute dividends to shareholders without them being subject to additional taxation.
A. Singapore Corporate Income Tax
Singapore’s corporate tax is levied at a flat rate of 17%. However, local companies can benefit from tax exemptions, tax holidays, and rebates, effectively lowering their tax rates to around 8.5% to 9.5%. Qualified startups can enjoy tax exemptions for their first three consecutive years. For more financial and tax planning matters, you can consult your dedicated account manager at GoGlobalGem.
B. Singapore Personal Income Tax
Singapore’s personal income tax system follows a progressive structure for tax-resident individuals:
- 0% for annual income up to SGD 20,000
- Maximum of 22% for income surpassing SGD 320,000
- Employment income is taxed at a uniform rate of 15%
- Other personal income, encompassing rental income, pensions, and director’s fees, faces a 22% tax rate
C. Singapore Goods and Services Tax (GST)
As of 2023, Singapore’s GST rate is 8%, making it one of the countries with the lowest GST rates globally. It’s important to note that starting from the estimated tax year 2024, the income tax rate for non-resident individuals (excluding employment income and certain income subject to lower withholding tax rates) will increase from 22% to 24%.
Note: Information sourced from the official IRAS website of Singapore.
3. Avoidance of Double Taxation
Singapore has signed numerous Double Taxation Agreements (DTAs) with its trading partner countries. These DTAs ensure that Singaporean companies engaged in trade with treaty countries are not subject to double taxation. This significantly reduces the complexity of cross-border trade.0
4. High-Quality Workforce
Singapore boasts world-class educational institutions that annually contribute highly skilled students to its workforce. These individuals are known for their diligence, rule-following behavior, and high work efficiency.
5. Strategic Geographic Location
Singapore serves as a trade gateway between the East and West, positioned as the gateway to a consumer base of 3 billion people in Asia. Singapore’s air connections to emerging markets in Asia are reliable and require only short flights. Singapore’s port is connected to over 600 ports worldwide.
*The picture comes from pexels
Mr. L’s Overseas Expansion Story
In today’s landscape, the overseas expansion of software and technology companies has evolved into a more rational approach. Transitioning from software tools to SaaS products, these companies are dedicated to facilitating digital transformation for clients, achieving notable success in numerous regional markets.
R Company stands as a prominent software and information technology service provider in China. Leveraging its profound industry expertise, the company serves over 1,000 domestic and international clients across more than ten critical sectors. Mr. L, a C-level executive at R Company, graduated from a prestigious domestic university with a degree in engineering. Subsequently, he pursued further studies at the Massachusetts Institute of Technology (MIT) in the United States, earning a master’s degree in engineering.
Mr. L embarked on his entrepreneurial journey in 1999. To drive the company’s business expansion across Southeast Asia and globally, he established a company in Singapore in 2022, with plans to develop it into the international headquarters of the group. This strategic move will enhance the company’s influence in the Southeast Asian market and foster global business growth. By positioning Singapore as the hub, Mr. L can seize opportunities in the Southeast Asian region, strengthen ties with local partners, and leverage the favorable business environment and global advantages to drive the company’s success.
In 2019, the Singaporean government announced an investment of SGD 4.6 billion in new economic initiatives over the next three years. These initiatives aim to assist businesses in enhancing industry skills and continue establishing Singapore as a global and Asian hub for technology, innovation, and entrepreneurship, aligning with the Fourth Industrial Revolution.
Mr. L and the company’s executive team have a positive outlook on Singapore’s software and digital technology market. Hence, they decided to enter the Singaporean market and establish an overseas management team to further expand their market share abroad.
Guided by their comprehensive analysis of Mr. L and R Company’s situation, GoGlobalGem’s account manager provided them with a tailored GIP (Global Investor Program) solution. From drafting the proposal and preparing documentation to submitting it for official review and subsequent assistance with EP (Employment Pass) approval and issuance, the GoGlobalGem account manager accompanied and supported them throughout the process, delivering high-quality overseas planning services.
*The theft must be investigated
- May 25, 2023: Submission of EP application
- June 5, 2023: Approval of Mr. L’s EP
Singapore, a country with a robust legal system and a range of favorable tax policies, offers a stable and secure living environment. This makes it a top choice for many seeking overseas investment and relocation opportunities. If you have such needs, please contact Go Global Gem. We will evaluate your situation and formulate appropriate overseas solutions tailored to your requirements.
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