According to the World Bank’s 2014 report on ‘Ease of Doing Business’, Singapore maintains the top rank followed by Hong Kong and New Zealand. This is in stark contrast to India, which stands at 134th in the list. In light of this, incorporating a company in Singapore makes solid business sense, says Asiabiz Services, a leading Singapore corporate services consultancy.
FUTURE OF ENTREPRENEURSHIP CHALLENGING IN INDIA
After 66 years of independence, India presents a challenging business environment that is encouraging Indian businesses to set up shop elsewhere. India’s growth rate has plummeted from a high of about 10.5% in 2010 to 4.8% in 2013. Consumer inflation is high, hovering around 8%, while the currency is on a depreciation mode. Fears of a high current account deficit linger and the stock market volatility remains an ongoing concern. Infrastructure worries pose serious economic constraint.
In addition to the macroeconomic problems, the bureaucratic red tape makes it more difficult for the businesses to grow and realize sustainable profits. According to the latest Doing Business report, a construction company in India has to deal with 35 procedures to get a construction permit, while the average figure is less than half the procedures for South Asian economies. Altogether, an Indian entrepreneur takes about a month to incorporate a company. The average for South Asia is only 16.2 days.
HIGH TAX BURDEN
In addition to these factors, businesses face a high tax burden in India. According to the Doing Business report, the total tax rate in India can be as high as 62.8% and there are as many as 33 payments under the head of profit, labor and other taxes.
ATTRACTIVE BUSINESS ENVIRONMENT IN SINGAPORE
Located in the heart of South East Asia, Singapore offers a business-friendly environment that is conducive for growth and innovation. It was named the least bureaucratic place to do business in Asia by IMD World Competitiveness Yearbook in 2011. Powered with excellent infrastructure, attractive corporate tax rates, business-centric regulations, pragmatic immigration policies and solid IP protection, Singapore makes a sound business option for Indian entrepreneurs. In stark contrast to India, it takes only 3 procedures or 1 day to incorporate a company in Singapore. Getting construction permits require 11 procedures, less than a third required in India.
The Singapore workforce comprises educated and highly qualified professionals having extensive knowledge and business expertise. In addition to a professional business climate, Singapore offers a much better quality of life with top class and subsidized healthcare, excellent education facilities and a blend of cultures.
MARGINAL CORPORATE TAX RATE CAPPED AT 17%
Singapore’s marginal corporate tax rate is one of the lowest in the world. In addition to the absence of capital gains taxes, Singapore’s corporate tax rate for locally-registered companies ranges from 0 – 17%. This is because the effective corporate tax rate becomes significantly lower when the incentives offered under the startup tax exemption (SUTE) or Productivity and Innovation Credit (PIC) schemes are taken into account.
“As mentioned by Jim Rogers, if you were smart in 1907 you moved to New York City, and if you are smart in 2007 you move to Asia. Singapore has emerged from a backwater to the world’s fourth largest wealth management hub under 50 years. It aspires to be the best in everything, in order to attract the best of businesses and organizations. Indian businesses are well-positioned to make their mark in Singapore due to the CECA. However, businesses must contribute meaningfully and fill in the gaps in the sunrise industries in Singapore,” said Mr. James Nuben, Head of Taxation at Asiabiz Services.