When deciding where to establish a private limited company in Southeast Asia, Singapore and Malaysia are two popular and attractive options for entrepreneurs. While both countries provide business-friendly environments, there are key differences in terms of requirements, tax rates, and other regulations that businesses need to consider. This article provides a detailed comparison of the essential factors when starting a private limited company in Singapore and Malaysia.
1. Directorship Requirements
- Singapore: Singapore requires at least one local resident director for a private limited company. This director can be a Singaporean citizen, or a Singapore permanent resident.
- Malaysia: Similarly, a private limited company must have at least one local resident director. The director must be a Malaysian citizen or a permanent resident.
- Singapore and Malaysia: A private limited company must have at least one local resident director.
Key Point: Both countries require a local resident director. In Singapore, the requirement is more straightforward, requiring either a Citizen or a Permanent Resident. In Malaysia, a person qualifies as a resident director if they can demonstrate and substantiate that they permanently reside in Malaysia.
2. Shareholders
- Singapore: Singapore also permits foreign or corporate shareholders, with no restrictions on foreign ownership for private limited companies.
- Malaysia: A private limited company in Malaysia can have foreign or corporate shareholders. There is no restriction on foreign ownership unless specified by industry regulations or licensing requirements.
Key Point: Both Singapore and Malaysia allow foreign and corporate shareholders, making them attractive options for international investors.
3. Number of Shareholders
- Singapore: The maximum number of shareholders in a private limited company is 50.
- Malaysia: Similarly, a private limited company in Malaysia can have no more than 50 shareholders.
Key Point: Both countries have the same maximum limit for the number of shareholders in a private limited company.
4. Minimum Paid-up Capital
- Singapore: The minimum paid-up capital required to incorporate a private limited company is SGD 1. However, depending on the type of business and licenses required, the capital may need to be higher.
- Malaysia: The minimum paid-up capital is RM 1. Similar to Singapore, certain businesses may need to meet higher capital requirements depending on licensing needs.
Key Point: Both countries offer very low minimum paid-up capital requirements, making it easy for entrepreneurs to start a business with minimal initial investment.
5. Registrar of Companies
- Singapore: In Singapore, the Accounting and Corporate Regulatory Authority (ACRA) is the official body responsible for business registration, compliance, and regulatory matters.
- Malaysia: In Malaysia, company registration and compliance are overseen by the Companies Commission of Malaysia (SSM).
Key Point: Both countries have dedicated government agencies that handle company registration, ensuring smooth incorporation processes.
6. Business/Premise Licenses
- Singapore: Singapore does not require a separate business premise license. Businesses must comply with specific industry regulations but are not required to apply for a separate business premises license.
- Malaysia: In contrast, businesses in Malaysia generally require business premise licenses, which are issued by local municipal councils. This is applicable to most businesses operating with a physical premise.
Key Point: Singapore has a more streamlined process without the need for a separate license for physical premises, while Malaysia mandates business premise licenses.
7. Corporate Tax Rates
- Singapore: Singapore has a corporate tax rate of 17% for all companies, complemented by start-up tax exemptions, partial tax exemptions, and corporate tax rebates, which may vary based on government budget announcements. These factors make Singapore one of the most competitive tax regimes globally.
- Malaysia: The headline corporate tax rate in Malaysia is 24% depending on the company’s income.
Key Point: Singapore’s corporate tax rate of 17%, combined with various tax exemptions and rebates, is more competitive compared to Malaysia’s 24% tax rate.
8. Indirect Taxes
- Singapore: Singapore applies a 9% Goods and Services Tax (GST), which applies to most goods and services, with some exemptions such as for financial services and the sale of residential properties.
- Malaysia: Malaysia has a 10% Sales Tax and an 8% Services Tax. Certain services such as food and beverages, telecommunication services, and logistics may be exempted.
Key Point: Singapore uses a simplified Goods and Services Tax system, while Malaysia’s tax system includes both Sales Tax and Services Tax.
Key Differences at a Glance
Aspect | Singapore | Malaysia |
Directorship | Must have at least 1 local resident director | Must have at least 1 local resident Director |
Shareholders | Can be foreigner or corporate shareholders | Can be foreigner or corporate shareholders |
Number of Shareholders | ≤ 50 pax | ≤ 50 pax |
Minimum Paid-Up Capital | SGD 1 (Depends if any licenses needed) | RM 1 (Depends if any licenses needed) |
Registrar of Companies | Accounting and Corporate Regulatory Authority (ACRA) | Companies Commission of Malaysia (SSM) |
Business/Premise Licenses | No | Yes |
Corporate Tax Rate | 17% | 24% |
Indirect Tax | 9% GST | 10% sales tax, 8% services tax |
Conclusion
Both Singapore and Malaysia present strong options for entrepreneurs looking to start a private limited company in Southeast Asia. The key differences lie in the specific requirements for directorship, business premise licenses, and tax systems.
- Singapore, with its simplified tax structure and streamlined business registration
process, is known for its ease of doing business and attractive incentives
for new companies. - Malaysia may be more appealing for businesses that require specific tax incentives
or industry-related licenses.
Ultimately, the choice between Singapore and Malaysia depends on factors such as the type of business, target market, and specific regulatory requirements. Entrepreneurs should consider consulting with local experts to ensure they make an informed decision that best suits their business goals. To learn more, contact us now!