Should Australian Business Owners Set Up In Singapore? When Singapore Actually Makes Sense

• WATCH THE SINGAPORE EPISODE FIRST
• This article is based on the Singapore episode of The Wealth Safe Country Series – “When Does Singapore Actually Make Sense?”
• If you prefer video, watch the episode above for the full discussion with Virna White.
• The article below expands on the strategic questions Australian business owners, founders and investors should consider before deciding whether Singapore has a role in their international strategy.

Why Singapore Attracts Australian Business Owners

Singapore is one of the strongest international business jurisdictions in Asia.

It is commercially sophisticated and globally respected. It has strong banking, a robust legal system and access to international markets. It combines commercial credibility with an attractive corporate environment and sophisticated banking, capital and professional infrastructure.

For the right business owner, Singapore can be exceptionally strong, particularly for founders operating internationally.

But that does not mean that you, as an Australian business owner, should establish a company there. And it certainly does not mean that moving to Singapore is the strategy.

Because one of the first questions business owners ask when they are considering moving offshore or becoming internationally based is, “Is Singapore a good jurisdiction?”

I think there is a better question: “Does Singapore make sense for what I’m actually trying to build?”

None of those advantages, on their own, tell you whether Singapore is right for you. The country is only one part of the decision.

When Does Singapore Actually Make Sense For An Australian Business Owner?

So who can Singapore make sense for?

It can be particularly relevant for established Australian founders and business owners with genuine international commercial activity. That includes:

• businesses with global customers;
• businesses expanding through Asia, or running regional operations across Asia;
• technology, digital and e-commerce businesses;
• international service businesses;
• businesses developing valuable intellectual property; and
• founders building something they expect to scale internationally, or preparing for significant international growth.

The common thread is the business, not the jurisdiction.

There needs to be a genuine strategic and commercial reason for Singapore to form part of the architecture.

What Role Should Singapore Perform Within Your International Architecture?

One of our clients, Victor, demonstrates the role question really well.

Victor had built a fast-growing technology and e-commerce business generating more than a million dollars in global sales, predominantly across the US and Europe. His ambition was much bigger. He wanted to expand into Asia, scale the business significantly and ultimately position it for a future exit.

So our starting question was not, “How do we set up a Singapore company?” It was, “What should Victor’s future international position actually look like, and what role, if any, should Singapore perform within it?”

That is a completely different conversation.

It is the Wealth Safe approach: we look at the client’s complete position and commercial objectives, design the broader international architecture and determine what role, if any, each jurisdiction should perform within it, bringing in specialist expertise where required.

Incorporating a company is relatively straightforward. Determining where the business should operate, where value is being created, what remains in Australia and how the pieces fit together is the strategic work.

If Singapore genuinely has a role, then we determine what that role should be. What functions belong there? What remains in Australia? Where is management and decision-making occurring? How does ownership work? And in what sequence does everything happen?

Why Your Australian Starting Position Still Matters

For an Australian business owner, there is another layer.

You cannot design the international side without understanding the Australian starting position. That means understanding:

• your residency;
• your existing companies and trusts;
• where the business is managed;
• where people perform the work;
• where intellectual property sits;
• where value is being created; and
• what needs to happen before, during and after the transition.

Because establishing a Singapore company does not, by itself, change your Australian tax position. It changes where a company sits. The entity is only one piece of the architecture.

Why Living In Singapore And Using Singapore For Business Are Different Decisions

Victor’s situation demonstrates another important principle.

Singapore made sense commercially. But that did not mean Singapore needed to solve every part of Victor’s life.

Victor, his wife and their children ultimately chose Malaysia for their lifestyle. Singapore performed the commercial role; Malaysia performed the lifestyle role.

The jurisdiction where someone lives does not necessarily need to be the same jurisdiction performing the commercial role. Separating those two decisions can allow each to be made on its own terms.

Sometimes different jurisdictions perform different roles within the same international architecture.

Why The Architecture Leads The Process

And this is where business owners can underestimate what comes next.

Once a well-designed architecture has been explained clearly, it can start to look surprisingly simple.

Australia does this. Singapore does that. The business owner relocates. Banking is established. Agreements are put in place.

But clarity should not be confused with simplicity. Understanding the architecture is different from bringing it to life.

The next question is how it is actually brought to life, and that is where sequencing and dependencies become important:

• When does ownership change?
• Where are the real management decisions being made?
• What happens to the Australian operation?
• When does banking need to be established?
• Which specialists need to be involved, and when?
• How does another jurisdiction, where the business owner or family may actually live, interact with everything else?

None of those decisions exists in isolation. A decision can make perfect sense from a Singapore perspective and still create a problem somewhere else if it is not considered within the broader international position.

Your Australian accountant may have expertise in Australia. The Singapore specialist may have expertise in Singapore. The immigration adviser understands residency. But none of those individual disciplines determines the complete international architecture.

The architecture establishes what the complete strategic position should look like, and the role each jurisdiction and component is intended to perform within it. That is very different from collecting advice from different professionals and trying to assemble it afterwards.

Individual advice can be completely correct within its own jurisdiction and still fail to produce the international outcome you are actually trying to create.

Why Commercial Reality Should Determine The Architecture

As Chief Strategist, my role is to design and oversee that complete architecture, bringing in specialist expertise where it is required and ensuring the individual pieces continue to serve the overall strategic position.

This is why I do not believe in choosing an offshore structure first and trying to make the business fit inside it.

Commercial reality should determine the architecture, not selecting a jurisdiction or entity first.

That is very different from, “Singapore has an attractive tax environment, so let’s put a company there.” That is selecting an entity before understanding the architecture.

A tax environment, on its own, is not a commercial reason.

Singapore Is Not The Strategy — It May Be One Part Of It

Singapore will not automatically make sense simply because someone wants lower tax. And it certainly is not a shortcut around Australian tax residency or Australian tax rules.

So, do I like Singapore? Yes.

For the right person, the right business and the right architecture, Singapore can be an exceptionally strong jurisdiction. But that is very different from saying, “Everyone should set up in Singapore.” Not everyone should.

Because Singapore is not the strategy. It is a jurisdiction that may form part of the strategy.

So do not begin by asking, “Which country has the lowest tax?” or even, “Which country is best?“

Start with what you are actually trying to create: your residency, your business, your family, your wealth, your commercial objectives and your longer-term future. Then determine which jurisdictions properly fit that architecture.

Understanding the country is one thing. Understanding the architecture is another. And bringing that architecture to life is another discipline altogether.

That is the distinction, and that is how Singapore should be considered properly.

Don’t start with Singapore and build the strategy around it. Start with what the business owner is actually trying to create, then determine whether Singapore belongs within that architecture.

Frequently Asked Questions

Disclaimer: This information is general in nature and provided for educational purposes only. It does not constitute legal, tax, or financial advice. You should obtain independent professional advice before acting on any information in this article.