Doing Business in Singapore

Why Singapore, honestly

Singapore is Asia's default regional headquarters for a reason: a 17% headline corporate tax rate, English-language common law, no capital controls, same-day company registration, and the deepest pool of regional-HQ talent in Southeast Asia. The trade-off is cost — salaries and rent are the region's highest — and a work-pass regime that has tightened every year since 2020.

We are not a satellite office writing this from somewhere else. Aniday is headquartered here — our legal entity is Aniday Pte. Ltd., UEN 201914755Z — and the pattern we see weekly is consistent: foreign companies breeze through incorporation, then stall for months on the part nobody warned them about. It is not the paperwork. It is people: Employment Pass floors that rise with the candidate's age and rise again for applications from 1 January 2027, a COMPASS points test that scores your company as much as your candidate, and local-hire costs that run 17% above gross once CPF lands.

The most common Singapore mistake is reading the S$315 incorporation fee as a proxy for how easy everything else will be. Registering the company is the easiest thing you will do here. Getting your second foreign hire an Employment Pass through COMPASS is not.

Setting up a company

Incorporating a Singapore private limited company costs S$315 in official ACRA fees (S$15 name application + S$300 incorporation), takes 1–3 days in most cases, requires only S$1 of paid-up capital, and allows 100% foreign ownership. The one genuine constraint: at least one director must be ordinarily resident in Singapore.

The steps, in the order that actually matters:

1. Name reservation and incorporation via ACRA (BizFile+) — S$15 for the name, S$300 for incorporation, usually approved within 1–3 days unless the name needs referral to another agency.
2. Resident director — at least one director ordinarily resident in Singapore: a citizen, permanent resident, or eligible pass holder with a local residential address. Foreign founders typically appoint a nominee director (roughly S$1,500–3,000/year with a refundable deposit) until they relocate on their own pass.
3. Company secretary — must be appointed within 6 months of incorporation; in practice bundled with your corporate services provider from day one.
4. Paid-up capital — legal minimum S$1. Unlike Malaysia or Indonesia, immigration does not impose a separate capital threshold, though a S$1 company sponsoring an Employment Pass invites more questions than one capitalised to cover a year of payroll.
5. Corporate bank account — 1–4 weeks. Digital-first providers onboard remotely in days; the incumbent banks want more documents and sometimes a face-to-face meeting for foreign-owned companies (more in the banking section).
6. Registrations before your first hire — CPF submission account for local employees, and MOM work-pass privileges if you plan to sponsor foreigners. GST registration becomes mandatory once taxable turnover exceeds S$1 million.

Realistic end-to-end timeline — incorporation to a fully operating company with a bank account: 2–5 weeks. Add 3–8 weeks if your first employee needs an Employment Pass through COMPASS.

Company incorporation walkthrough →

Entity or EOR: how to choose

Use an Employer of Record to hire in Singapore within days with no entity, no resident director, and no CPF account of your own — from US$80/month, typically US$190–350 all-in per employee. Incorporate when you need local revenue contracts, licenses, or your own pass sponsorship. Many clients start on EOR and convert to their own entity later.

Because incorporation here is genuinely cheap, the EOR question in Singapore is less about capital (as in Malaysia or Indonesia) and more about time and obligation. An entity commits you to a resident director, a company secretary, annual filings, audit questions, and — the moment you hire — CPF deadlines with real teeth. An EOR carries all of that for you while you test the market: we employ your hire through our own Singapore entity, run CPF-compliant payroll, and sponsor the Employment Pass where the role clears COMPASS.

Set up your own Pte. Ltd. if you have a clear plan for 10–15+ employees within 12 months, you need to invoice Singapore customers and register for GST, you are raising from investors who want a Singapore topco, or your activity needs a license only an entity can hold (financial services, employment agency, F&B).

A pattern worth knowing: companies that start with an EOR typically convert to their own entity between months 6 and 18, once headcount and revenue justify the fixed compliance cost. Starting with an EOR does not block the entity path — your people keep working while you do the incorporation, banking, and MOM steps in parallel.

Read our full guide to Singapore Employer of Record →

EOR vs. Your Own Pte. Ltd.

The clean side-by-side most founders actually need. For the full mechanics of the EOR side, see our Singapore Employer of Record guide; for the entity side, the company incorporation walkthrough covers the path above.

Corporate tax and GST

Corporate Income Tax is a flat 17%, and generous exemptions push the effective rate well below that for small companies. New companies get a start-up exemption for their first 3 years of assessment; for YA2026 there is also a one-off 50% CIT rebate capped at S$40,000, including a S$2,000 cash grant. GST is 9%, with registration mandatory above S$1 million turnover.

How the exemptions actually stack:

• Start-up tax exemption (first 3 YAs) — 75% of the first S$100,000 of chargeable income exempt, plus 50% of the next S$100,000. A qualifying startup earning S$200,000 pays tax on just S$75,000 of it.
• Partial tax exemption (everyone else) — 75% of the first S$10,000 exempt, plus 50% of the next S$190,000.
• YA2026 CIT rebate — 50% of tax payable, capped at S$40,000 including a S$2,000 cash grant for active companies that employed at least one local in 2025. A Budget 2026 measure; do not build it into long-term models.

Other features that make CFOs like Singapore: a single-tier dividend system (no withholding tax on dividends paid out of taxed profits), no capital gains tax as a general rule, over 90 double-tax treaties, and territorial-leaning taxation of foreign income. The usual caveats apply to foreign-sourced income remitted to Singapore and to the global minimum tax for groups above €750M revenue — if that is you, you already have advisers.

GST is 9% (since 1 January 2024). Registration is compulsory once taxable turnover exceeds S$1 million in a 12-month window; voluntary registration below that can make sense if your customers are GST-registered businesses. If you sell to Singapore consumers from offshore, check the overseas-vendor registration rules before your first invoice, not after.

Hiring and the talent market

Singapore's talent pool is the region's most senior and most expensive: regional heads, finance, legal, and go-to-market leaders who run Asia from one time zone. The local market is tight — unemployment persistently around 2% — so hiring is a speed game, and every foreign hire now has to clear salary floors and COMPASS before they can start.

Compensation benchmarks (2026, gross monthly SGD)

Indicative market ranges; 1 USD ≈ S$1.34.

• Software engineer, 2 to 5 years: S$5,500 to S$9,000
• Senior engineer / tech lead: S$10,000 to S$16,000
• Finance manager: S$8,000 to S$13,000
• Sales manager B2B: S$7,000 to S$12,000 plus commission
• Regional / country manager: S$18,000 to S$30,000 plus variable
• Customer success / operations executive: S$3,500 to S$5,500

Three operational notes. First, benchmark against the EP floors before you write a JD for a foreign candidate: a S$6,000 offer that clears the 2026 qualifying salary for a 28-year-old will not clear it for a 45-year-old (S$10,700, rising to S$11,500 for new applications from 2027). Second, notice periods of 1–3 months are standard for professionals, so realistic start dates are 4–10 weeks from offer. Third, counter-offers are aggressive in this market — close fast and keep candidates warm. For confidential C-suite and regional-head searches, see our Executive Search in Singapore; for a map of the local recruiting scene, our roundup of the top headhunting companies in Singapore.

Labor law in practice

Singapore employment law is contract-first and comparatively employer-friendly: no severance mandated by statute for most professionals, short statutory notice, and no works councils. The floor is the Employment Act; the culture is set by MOM guidelines with real enforcement behind them — and a Workplace Fairness Act arrives in force by end-2027.

Contracts and probation

Written contracts (with Key Employment Terms issued within 14 days) are standard. Probation of 3–6 months is customary and, unlike Malaysia, carries no special unfair-dismissal regime for professionals — termination with contractual notice is generally lawful, though wrongful-dismissal claims exist for dismissals on discriminatory or retaliatory grounds.

Working hours and leave

Statutory limits (44-hour weeks, overtime rules) cover workmen and lower-salaried employees; professionals are governed by contract. The statutory leave floor is lean, and market practice sits well above it:

Termination and notice

Either side may terminate with contractual notice; if the contract is silent, statutory notice applies: 1 day under 26 weeks of service, 1 week from 26 weeks to 2 years, 2 weeks from 2 to 5 years, and 4 weeks at 5 years or more. In practice professional contracts specify 1–3 months. Retrenchment benefits are a matter of contract or negotiation (norms of 2 weeks–1 month per year of service exist by convention, not statute), and MOM expects retrenchment notifications for larger exercises. Cancel work passes promptly when foreign employees exit.

The Workplace Fairness Act is coming

Singapore's first workplace anti-discrimination statute was passed in January 2025 (with a second procedural act in November 2025) and takes effect by end-2027, prohibiting adverse employment decisions on protected characteristics such as age, nationality, sex, race, religion, disability, and family status. Firms with fewer than 25 employees are initially exempt, but grievance-handling processes will be expected broadly. If you are building a team now, write your HR policies as if it were already in force — retrofitting is more expensive than doing it once.

Payroll, CPF, and the real cost of an employee

For a Singapore citizen or PR earning up to the ceiling, the employer pays 17% CPF on top of gross salary (for employees aged 55 and below), plus the Skills Development Levy of 0.25%. Foreign employees get no CPF at all — their cost is salary plus any levy plus SDL. From 1 January 2026 the CPF Ordinary Wage ceiling is S$8,000/month.

CPF contribution rates from 1 January 2026 (citizens & PRs)

The mechanics that matter: contributions apply to Ordinary Wages up to S$8,000/month (the final step of the phased ceiling raise, effective 1 January 2026) within an annual salary ceiling of S$102,000 — so bonuses attract CPF too, up to that annual cap. Only the 55–65 bands rose in 2026; on 1 January 2027 they rise again (55–60 to 35.5%, 60–65 to 26%), with a CPF Transition Offset covering half of the 2027 employer increase. New permanent residents contribute at graduated rates in their first two years of PR status before reaching the full table — a detail payroll software gets wrong surprisingly often.

The small print that adds up

• Skills Development Levy (SDL) — 0.25% of monthly wages per employee, minimum S$2 and capped at S$11.25/month, payable for all employees including foreigners. Tiny, but auditors check it.
• Self-Help Group deductions — small community-fund contributions (CDAC, SINDA, ECF, MBMF) deducted from the employee's wages by default based on the employee's community; employees can opt out. Employee-side, not an employer cost — but your payroll must handle them.
• CPF deadlines have teeth — contributions are due by the last day of the month, with a 14-day grace period; late payment accrues interest at 1.5% per month and repeated lapses draw prosecution. This is the single most common compliance failure we clean up for companies that ran payroll "from HQ".
• AWS ("13th month") is customary, not statutory — pay it if you promised it, budget for it because candidates expect it, and draft bonus clauses as discretionary if you mean discretionary.
• Budget 2026 sweeteners for local hiring — Progressive Wage Credit co-funding raised to 30% (through 2028) and the Senior Employment Credit extended to end-2027 offset part of the cost of lower-wage and senior local hires.

Personal income tax

Residents pay progressive rates from 0% to 24% (the top rate applies above S$1 million of chargeable income); non-residents pay 15% on employment income or resident rates, whichever produces more tax. There is no monthly wage withholding for locals — employees file and pay IRAS directly — but employers must file annual IR8A returns and run tax clearance (IR21) before a foreign employee departs.

If you already have a Singapore entity but want the monthly run, CPF submissions, SDL, SHG deductions, IR8A and payslips off your plate, our payroll outsourcing in Singapore handles it end-to-end. If you have local headcount and need a co-employment structure rather than full EOR in Singapore, see PEO in Singapore.

Employment Pass, COMPASS, and the S Pass

The Employment Pass needs a qualifying salary of S$5,600/month in 2026 (S$6,200 in financial services) for the youngest applicants, rising with age to S$10,700 (S$11,800) at 45+ — and 40 points under COMPASS. Announced floors rise to S$6,000/S$6,600 for new applications from 1 January 2027. Plan every foreign hire against both tables.

EP qualifying salary: 2026 vs. 2027

2027 figures announced at MOM's Committee of Supply on 3 March 2026. The qualifying salary scales with age between the minimum and the 45+ figure.

COMPASS: the points test that scores your company too

Since September 2023 every new EP application (and since September 2024, renewals) must score 40 points under COMPASS. Two criteria score the candidate, two score you:

• C1 Salary — vs. local PMET salaries in your sector by age: 0, 10, or 20 points.
• C2 Qualifications — 0, 10, or 20 points; top-tier institutions score 20.
• C3 Nationality diversity — if the candidate's nationality is under 5% of your PMET workforce, 20 points. A concentrated team scores 0 and must make it up elsewhere.
• C4 Local employment — your share of local PMETs vs. sector peers.
• C5 Shortage Occupation List — +20 bonus points for listed occupations.
• C6 Strategic economic priorities — +10 for firms on qualifying government programmes.

Small firms with fewer than 25 PMET employees score a default 10 on C3 and C4 — which is exactly why early foreign hires usually pass and the fifth or sixth same-nationality hire suddenly does not. Candidates on a fixed monthly salary of S$22,500 or more are exempt from COMPASS entirely. We model COMPASS scores before clients make offers; it is far cheaper than discovering a 35-point application after the candidate has resigned their old job.

S Pass: mid-skilled, quota-bound

The quota math trips people up: your S Pass headroom is a percentage of your local workforce, and a local only counts if paid at least the Local Qualifying Salary — S$1,800/month from 1 July 2026. A services company with three full-LQS locals has room for zero S Passes until the fourth local is on payroll.

The premium lanes

The Personalised Employment Pass (PEP) requires a salary of S$22,500/month or more to apply and is not tied to one employer. The Overseas Networks & Expertise (ONE) Pass requires S$30,000/month or more (or equivalent achievements), runs five years, and gains a dedicated AI/tech track from January 2027. Founders relocating themselves usually weigh EP (sponsored by their own entity, COMPASS applies) against EntrePass or simply salarying themselves past the COMPASS-exemption line.

2026–2027 changes timeline

Employment Pass and visa guide →

Banking and moving money

Singapore is the easiest place in Asia to move money: no capital controls, no repatriation approvals, no withholding tax on dividends, and multi-currency accounts as the default. The only friction is onboarding — banks apply serious KYC to foreign-owned newcos, and timelines range from days (digital providers) to a month (incumbents).

The practical playbook: open with a digital-first provider (remote onboarding, days) to get operational, then add a traditional bank (DBS, OCBC, UOB) once you have substance to show — contracts, payroll history, a resident director who can attend a meeting. Expect enhanced due diligence if your shareholders sit behind layers of holding companies or in higher-risk jurisdictions; a clean one-page structure chart shortens every conversation. Companies that want their team working while banking and incorporation grind on often start with expansion without an entity and convert later.

Sector-specific watch-outs

• Financial services: MAS licensing for fund management, payments (PS Act), broking, and insurance; higher EP/S Pass qualifying salaries apply to the whole sector (S$6,200 EP in 2026, S$6,600 from 2027).
• Crypto and digital assets: regulated, not banned — but the Digital Token Service Provider regime and MAS's consumer-access rules make this a licensed activity. Do not onboard Singapore customers "quietly".
• Recruitment and HR services: an MOM Employment Agency licence is mandatory — this is our own licensed industry, and unlicensed "talent introductions" draw fines.
• F&B and retail: SFA licensing, tight Work Permit quotas and levies for service staff — the labour model, not the licence, is the hard part.
• Education: private schools register under the Private Education framework; CPE registration before you enrol a single student.
• Tech, HQ activities, and professional services: the open lane — no sector licence, 100% foreign ownership, and the main gate is COMPASS on your foreign headcount.

Common mistakes

1. Treating EP approval as a formality because "Singapore is business-friendly". COMPASS scores your workforce profile, not just the candidate — model the points before the offer letter, not after.
2. Budgeting local salaries without the +17% employer CPF and SDL — and forgetting that bonuses attract CPF up to the S$102,000 annual ceiling.
3. Planning 2027 foreign hires on 2026 numbers. New EP applications from 1 January 2027 need S$6,000–S$11,500 (more in financial services); renewals follow for passes expiring from 2028.
4. Missing CPF deadlines while payroll is "run from HQ". Contributions are due by the last day of the month with a 14-day grace period; after that it is 1.5% monthly interest and, for repeat offenders, prosecution.
5. Paying Singapore workers as invoice-issuing "contractors" to skip CPF. Misclassification is reclassified with backdated contributions and penalties — and it poisons the well with MOM for future pass applications.
6. Forgetting the quota arithmetic for S Passes and Work Permits: locals only count toward your quota base at the Local Qualifying Salary (S$1,800 from 1 July 2026).
7. Writing AWS or bonuses into contracts as fixed entitlements when you meant them to be discretionary. In a contract-first jurisdiction, the contract wins.
8. Skipping tax clearance (IR21) when a foreign employee resigns — the employer must withhold final payments until IRAS clears, and unwinding a missed clearance is painful.

Frequently asked questions