Corporate structuring is a crucial factor for businesses involved in international trading or investing. For these businesses to structure their operations and control effectively, choosing the correct jurisdiction is crucial.

When choosing the jurisdiction in which to incorporate, some of the elements that should be taken into consideration include the business climate, economic competitiveness, tax structure, and political stability of the jurisdiction.

When choosing between different potential jurisdictions, people almost always consult worldwide surveys and country studies written by reputable organizations like the IMF, World Bank, and EIU.

Such polls, however, only offer basic advice, which can offer some first insight into comparable factors. When making such a crucial decision, the decision-makers must also pay particular attention to the interconnectedness of their businesses, their stage of growth, target markets, essential concerns, stakeholders, and competition.

	Singapore	British Virgin Island
Corporate Tax	0% (on Foreign Profits)	0%
Withholding Tax	0% (on Dividends)	0%
Time to Incorporate a Business	3 days	2 – 3 days

The following is a comparison of some of the crucial aspects of Singapore and The British Virgin Islands (BVI) as a potential jurisdiction for their businesses:

Environment for Business

Singapore is a city-state situated between the Indian Ocean and the South China Sea on the southernmost point of the Malay Peninsula in Southeast Asia. The mainland, which has a land size of 278 square miles and 63 islets, is a significant nautical and financial hub in a developing region of Asia.

The city-state is advantageously situated along a trading route from east to west. Along with Hong Kong, South Korea, and Taiwan, the nation, which has a population of 5.7 million, is known as one of the four Asian tigers and boasts a strong economy.

In contrast to the BVI, Singapore has a diversified economy that performs well in areas like financial services, information and communication technology services, and manufacturing, which includes industries like electronics, chemicals, oil rigs, medicines, and oil refining. The nation is considered as one of the world’s top centres for logistics and foreign exchange.

BVI, a self-governing British Overseas Territory with a land size of 57 square miles, is made up of roughly 60 islands dispersed over the northern Caribbean Sea.

The Central Statistics Office (CSO) estimates that 28,514 people live in the BVI. The only real industries in the area, which account for 60% and 40% of national income respectively, are financial services and tourism.

BVI is one of the most well-known offshore financial centres in the world despite its small size and population. However, the majority of businesses established in the BVI serve as passive asset holding businesses, with only a small number engaging in international trade or transactional activity.

Despite being a major offshore financial hub, Singapore consistently receives excellent ratings in the top international business and competitiveness polls, in which BVI rarely appears.

Singapore has, in reality, kept a top rank in the World Bank’s “Doing Business Report for more than a decade as one of the world’s easiest countries to do business (and is now second only to New Zealand).

Singapore was placed third globally (BVI was 36th) in the 2016 Global Financial Centres Index (GFCI) compiled by Z/Yen Group, designating Singapore as a “global leader” and BVI as a “transnational specialist.” According to this, Singapore’s ranking highlights its good standing in areas like human capital, business climate, infrastructure, and economic and enterprise ecosystem.

Taxes

With a territorial and single-tier taxation structure, Singapore also boasts a business-friendly tax system. Due to the numerous double taxation agreements (DTAs) that Singapore has signed with other nations, taxpayers from other nations will find the withholding tax rates to be highly appealing.

Singapore maintains a very “clean” reputation, is included on the OECD’s white list, and cooperates with other countries in the exchange of tax information while enhancing its transparency.

With the exception of import charges, payroll tax, and stamp duty on real estate transactions, there are essentially no taxes in the BVI.

All other taxes, including those on income, capital gains, sales, profits, inheritances, and corporations, are nil or non-existent in the British Virgin Islands (BVI). The majority of the government’s income comes from license and registration fees for businesses.

The BVI cannot sign or ratify international treaties on its own because it is a British Overseas Territory. Instead, the UK is in charge of the BVI’s international relations and can make arrangements for the BVI to ratify any convention.

As there is no withholding tax in the territory, Tax Information Exchange Agreements (TIEA’s) predominate over Data Transfer Agreements (DTA’s) in the BVI. Despite being on the OECD’s white list, Singapore made the EU’s Anti Money Laundering (AML) white-list of “equivalent jurisdictions” (released in 2012 after the EU’s third AML directive), while BVI did not.

This is because of Singapore’s near-zero tax policy, which contributes to the perception that BVI is a tax haven.

	Singapore	BVI
Headline Corporate Tax Rate	17%	Nil
Personal Tax Rate	0% to 22%	Nil
Sales Tax	7%	Nil
Capital Gains Tax	Nil	Nil
Duty on Trade	All exports are duty exempt   All imports are duty free except for controlled items	All exports are duty exempt   Import duty of up to 20% on items including household items, clothing and reading materials
Withholding Tax	10% to 15%   Recipients from DTA treaty partners enjoy concessionary rates	Not Applicable

Company Formation

The process for establishing a Singapore business and a BVI company is essentially the same. The renewal requirement that BVI corporations must meet, however, is the main distinction.

The BVI requires enterprises to pay an annual charge (minimum US$350) for the renewal of their business license, as opposed to Singapore, where businesses pay a one-time registration fee during incorporation.

Labour Force

Due to its limited domestic population, the BVI relies heavily on foreign labour to meet its labour needs. 67% of the labour force is made up of foreigners, according to a 2012 estimate. Singapore is likewise reliant on foreign labour, but its own nationals make up about 68% of the workforce (Singapore citizens and permanent residents).

In order to cover any labour deficits, Singapore continues to be open to qualified and competent foreign workers. One of the main considerations for multinational businesses choosing Singapore over other Asian countries to locate their businesses is the workforce’s competitiveness.

Singapore is ranked second in the world for labour/employee relations according to the World Economic Forum’s “2016 Global Competitiveness Report.”

	Singapore	BVI
Minimum Wages	No	US$6/hour
Social Security Contribution	Employer contribution rate: 16% of base pay for employees.   Employer contribution maximum per month: S$960	Employer Contribution Rate: 4.5 percent of Insurable Earnings, with a 2016 limit of US$40,300.
Payroll Tax	No	Employer Contribution Rate: 2% or 6% of employee compensation or considered compensation   Contribution Rate for Self-Employed Individuals: 10% or 14%

IP Protection

Numerous international studies continually rank Singapore’s IP regime as among the strongest in the world. According to the World Economic Forum’s “Global Competitiveness Report 2017/2018,” Singapore has the best IP protection in the world and is first in Asia.

Similar to the U.S Singapore was placed first in Asia for its IP environment in the “International IP Index 2016” published by the Global Intellectual Property Center.

With their Trademark Act, which went into effect on 1 September 2015, the BVI updated their dated intellectual property (IP) system and made significant reforms. We will have to wait and observe how the stakeholders react to the new system because the revamp was long needed.

A jurisdiction’s IP regime status reflects the environment that supports innovation, i.e., the availability of high-quality resources including people, capital, and infrastructure to support and incubate innovation activities.

The effectiveness of the IP regime and the availability of human, technical, and financial capital for innovative activities have been found to be directly correlated. Many businesses prefer Singapore over other countries because of its developed and reliable IP regime when deciding where to locate their R&D centres.

Politics and Bureaucracy

Both Singapore and the BVI have democratic and stable governments. There aren’t any internal conflicts or territorial threats in either jurisdiction.

According to a 2010 poll by the Political and Economic Risk Consultancy (PERC), Singapore’s bureaucracy is one of the most effective in the world. Comparable and similarly business-friendly is the BVI bureaucracy.

Environment for Living

Singapore and the British Virgin Islands, which are both island nations, provide a dynamic way of life amidst beautiful scenery.

Regarding housing, personal safety, environmental quality, political and economic stability, and overall quality of life, both jurisdictions are equivalent.

However, Singapore’s public amenities, entertainment, culture, and nightlife must be far more varied than those of the British Virgin Islands due to its much greater population and infrastructure.

In addition, Singapore, a mature, independent, and developed nation with a sizable population, provides a first-rate educational system, a comprehensive hospital system, as well as transportation infrastructure and other amenities.

Singapore provides a wide range of educational alternatives, with public, private, and foreign institutions spread out over the nation. Similar to other industries, healthcare is well-developed with top-notch facilities, doctors, and nurses.

A flight via Puerto Rico or another Caribbean island with flights to the USA and/or Europe is necessary to get to the British Virgin Islands.

In contrast, Singapore is placed 25th in the Quality of Living 2018 report created by Mercer and commands great connectivity as an international airline transit hub.

Singapore is a great place to live, work, and play in addition to being a great area to locate a firm that transacts or invests internationally.