Firms prefer S’pore to register biz
View(s):Many new firms – especially start-ups – are opting to register their businesses in Singapore instead of Sri Lanka owing to the stringent laws prevailing here, industry sources say.
They said that while registering in Singapore gives companies regional as well as an Asian presence, firms latch onto the open policies in Singapore which makes it easier for businesses to operate. This is true for start-ups which need venture capital funding. “There are no restrictions on the amount of capital that one can bring from his home country to invest in a Singaporean company. It imposes no restriction on repatriation of profits. Unlike in Sri Lanka which imposes large barriers to the
free movement of foreign currencies, there is no restraint on movement of foreign currency in or out of that country,” a CEO of a start-up pointed out. This effortless transfer of funds across borders provides exceptional flexibility to a business, he added.
In 2018, certain firms in IT and garments shifted their head offices out of Colombo to Singapore owing to that year’s political crisis, regressive taxation, the general downbeat and business setting that Sri Lanka presented.
Singapore which is often called the ‘Delaware of Asia’ because of its business-friendly taxation policies is also celebrated for the ‘ease of doing business’. Singapore is the world’s easiest place to set up and manage a business, another CEO, intending to branch out there, said. According to World Bank’s ranking, Singapore is ranked as one of the top three countries in the Ease of Doing Business among total 189 countries.
There is no capital gain tax, which means, the dividends paid by Singaporean companies to their investors is tax-free. Singapore is continuously ranked as top country for its Contract Enforcement and intellectual Property Protection. Also, many start-ups say that Singapore is amongst the least bureaucratic countries in the world. The first CEO noted that opening a corporate bank account is also very simple and easy as against in local banks. Banks in Singapore offer exceptional Letter of Credit support to Singaporean companies connected to international trade, which isn’t so readily available in Colombo, he added.
“Singapore has pro-business taxation rates and presents many tax correlated incentives to prop up entrepreneurship. Singapore has one of the world’s simplest and most rational taxation systems in place. It imposes no tax on capital gains or on dividends,” a CEO of a large software firm told the Business Times. “We find it easier to do business in Singapore. We find it very difficult when consolidating our accounts for certain expenses etc and we have decided to leave Colombo.”
(DEC)