Key Considerations for Foreigners Setting Up a Local Company and Opening a Bank Account in Singapore

For foreign entrepreneurs, the city state of Singapore remains an attractive business destination due to its strategic location, robust legal framework, and favourable tax regime. However, setting up a local company and opening a bank account as a foreign entrepreneur involves navigating a series of requirements to demonstrate genuine business intent and compliance with local regulations. Some opt to employ outsourcing services to local firms specialising in tasks, such as business incorporation, HR, accounting, and taxation. 

If you’re a foreigner looking to set up shop in Singapore, here’s what you need to know:

1. Establish a Clear Business Background and Align It with Your Expertise

When setting up a company in Singapore, it is crucial to establish a clear business background that aligns with your current expertise. This involves presenting a comprehensive business plan that reflects your understanding of the market and demonstrates how your skills and experience will contribute to the success of your venture in Singapore.

To make your case compelling, highlight your professional background, experience in the industry, and any previous achievements that showcase your capability to run a business in Singapore. This will help establish credibility with local authorities when applying for a bank account.

2. Provide a Detailed Curriculum Vitae (CV) of Key Personnel

The CVs of the key personnel involved in your company, particularly the directors and senior management, should be well-documented to prove their relevance to your business. Banks and regulatory authorities in Singapore often require this information to assess the competence and reliability of those managing the company.

Highlight key achievements, relevant experience, qualifications, and expertise that demonstrate why these individuals are well-suited to drive the company’s objectives in Singapore. This will help to build a strong case for your company’s legitimacy and operational capability.

3. Demonstrate the Need for a Local Bank Account Through Existing Business Contracts

One of the key requirements for opening a bank account in Singapore is the ability to show existing business contracts, particularly those involving local partners or clients. This serves as evidence of your company’s active engagement in legitimate business activities within Singapore.

By providing contracts or agreements with local suppliers, clients, or service providers, you underscore the need for an operating bank account to facilitate transactions and streamline business operations. This documentation reassures banks that your presence in Singapore is motivated by genuine business needs and not merely for financial or tax advantages.

4. Apply for Employment Passes (EP) for Key Directors and Personnel

To further demonstrate your commitment to establishing a local presence, consider applying for Employment Passes (EP) for key directors and senior management personnel. The EP is a work visa allowing foreign professionals to work in Singapore. By securing EPs for your personnel, you are showing a long-term commitment to building and growing your business within Singapore’s borders. You may opt to hire a local outsourcing services company in Singapore to process EPs for your employees. U Ventures specialises in EP applications and other vital HR and immigration services.

Acquiring EPs for key people strengthens your application for a bank account by demonstrating that your company has a physical and operational presence in Singapore and builds credibility with local stakeholders and regulatory bodies.

5. Understand the Costs Involved in Multi-Layered Corporate Structures

If your corporate structure involves multiple layers of ownership, be aware that there may be additional costs associated with the “un-layering” of your business structure to meet Singapore’s regulatory requirements. Banks may require a clear understanding of the ultimate beneficial owners of a company, especially if the structure is complex.

The typical cost for un-layering is approximately SGD 1,000 per layer. It is advisable to consult with a corporate secretarial firm or legal advisor to ensure your structure is transparent and compliant with local regulations, which will facilitate the bank account opening process.

6. Be Aware of Sensitivities and Restrictions for Certain Jurisdictions

Foreign entrepreneurs from certain regions, such as areas under scrutiny for money laundering activities, may face additional challenges when opening a bank account in Singapore. Banks must comply with stringent anti-money laundering regulations and are particularly cautious with applicants from high-risk jurisdictions.

Moreover, individuals or entities from sanctioned countries may not be considered for bank account opening. It is crucial to be aware of these sensitivities and be prepared to provide comprehensive documentation and evidence of legitimate business activities to mitigate any concerns from the banks.

7. Demonstrate Your Legitimacy and Transparency with a Company Website

A well-structured website demonstrates your professionalism and can significantly enhance your credibility with banks and local authorities. It provides an official platform to showcase your business activities, products, services, and contact information, demonstrating your genuine intent to operate in Singapore. Furthermore, a website can serve as an effective marketing tool to attract local customers and partners.

Banks and regulatory authorities often assess the online presence of businesses to verify their legitimacy and operational capabilities. A comprehensive website can help in establishing trust and transparency, which is essential for the approval of your business registration and bank account application.

8. Demonstrate Genuine Business Reasons for Establishing in Singapore

Lastly, it is imperative to articulate clear, genuine business reasons for setting up a company and opening a bank account in Singapore. This could include Singapore’s strategic geographic location, its role as a gateway to the Asia-Pacific region, the stable political environment, or access to a highly skilled workforce.

Ensure that your reasons are well-founded and align with your overall business strategy. Banks will look favourably on applications with a clear, legitimate business purpose supporting Singapore’s economic landscape.

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