The choice of business structure and the choice of business jurisdiction are the two most crucial factors to take into account when starting a firm. Today, a company’s location can impact its productivity, viability, and efficiency.
Many businessmen believe that the US is the best country for starting and running a business since the US has historically been associated with entrepreneurship.
The benefits of starting a business in the US are still present today, although they are not as great as they previously were.
Entrepreneurs have better chances in nations like Singapore that have created business-friendly legislation.
The benefits of starting a business in the United States are no longer as great as they previously were.
| Singapore | USA | |
| Corporate Tax | 0% (on Foreign Profits) | 21% |
| Withholding Tax | 0% (on Dividends) | 30% |
| Time to Incorporate a Business | 3 days | 10 days |
We examine the distinctions between conducting business in Singapore and the United States in this comparison report.
Financial Overview
The United States has the largest consumer market in the world with a population of 325 million. Over a quarter of worldwide household consumption is in reality accounted for by household expenditure in the United States. Additionally, the United States’ free trade agreements with a number of other nations give businesses improved access to hundreds of millions of extra consumers.
Investors are drawn to the country for a variety of reasons, including its size, quality of life, and business-friendly atmosphere.
The industrial and services sectors, which together account for a fifth and two-thirds of Singapore’s production, provide the bulk of the country’s economic support. Singapore has a competitive edge due to its natural connectedness to the region’s expanding markets, favourable labour-employer relations, favourable tax structure, and strong rule of law. As a result, over the past forty years, the Singapore economy has grown steadily and quickly.
Environment for Business
In terms of business ease, the United States is placed no. 6 in 2018 (World Bank Doing Business Report). Singapore, on the other hand, came in second place globally for its business-friendly climate, which enables enterprises to operate effectively and transparently. Here are some major comparisons at a glance:
In the United States, each state has its own set of laws and judiciaries. However, these state decisions are subordinate to federal law. The jury is viewed as an additional layer of defense against the abuse of authority in the US. As a result, although a judge decides on legal issues and informs the jury of legal violations, the jury renders a factual decision. However, a judge occasionally has the authority to overturn a jury’s decision.
English Common Law serves as the foundation for Singapore’s legal system. Trial by jury was discontinued in 1969 because it was thought inappropriate to entrust seven laymen with potentially life-or-death decisions. The only Asian state in the top 10 is Singapore, which is currently ranked 13th in the world for its respect for the law (World Justice Project Rule of Law Index 2016). While the United States is placed 19th.
Workforce
Women make up a sizeable portion of the labor force in both countries—56% in the United States and 60% in Singapore. At 41.9 and 43, respectively, the median ages of the labor force in the U.S. and Singapore are comparable.
In contrast to Singaporeans, who make up 54.6% of the adult population, 1 in 3 adults in the United States have a degree or higher.
Business Language
Both jurisdictions only do business in English. However, Spanish is the second most popular language in the U.S., where it is spoken by the fifth biggest population in the world. English and Hawaiian are recognized as official languages in Hawaii, while English and 20 other indigenous languages are recognized as such in Alaska.
The majority of Singaporeans also obtain formal education in their second languages, such as Malay, Mandarin, and Tamil, even though English is the primary language utilized in legislation, regulations, and business in Singapore.
Business Formation & Incorporation
The business corporation (company limited by shares) and the limited liability company (LLC) are the two primary types of commercial entities in the United States. State law is used to create business companies rather than federal law.
In other words, if a company wishes to operate in another state, it must register to do so. As was already noted, each state creates its own laws, therefore specifications may vary from one state to the next. Each state also maintains its own registration of corporate names.
The most adaptable and expandable sort of business entity in Singapore is a private limited company. Compared to a sole proprietorship or a limited liability partnership, it is also the most favoured type of business entity. For incorporation, you need a shareholder and a director.
A corporation can be incorporated in Singapore in a day, although it takes 6 days to do so in the United States.
Requirements for Filing
At the conclusion of each Financial Year, Singaporean businesses must report their revenue amount and Estimated Chargeable Income (ECI) to the Inland Revenue Authority of Singapore (IRAS). Additionally, corporations are required to hold an Annual General Meeting AGM once a year.
Publicly traded corporations in the US are required to submit an annual Schedule 10-K to the US Securities and Exchange Commission that includes audited financial statements.
Although it is not compulsory by law for private enterprises to provide audited financial statements, industry standards and legal requirements may call for small businesses to do so.
Regulations for Immigration
The B-1 visa, which is valid for 90 days, is available to visitors who are going to the US on business (without performing any job or receiving payment). A H-1B visa may be obtained if the applicant intends to work for a company they will be launching in the United States.
However, the position should be one for which a bachelor’s degree or above is often required. The E-2 treaty investor visa is available to visitors who want to do considerable business or establish an entity in the United States.
Foreign professionals, managers, and executives who earn a minimum monthly salary of S$3,600 in Singapore may be granted an Employment Pass. Additionally, foreign business owners who intend to launch and run a new enterprise in Singapore can apply for the EntrePass.
Income Tax
While taxes for federal social insurance programs (such as Social Security, Medicaid, and Medicare) are taxed separately in the United States, federal income tax is progressive and can reach up to 39.6% of taxable income.
In Singapore, the progressive personal income tax rate is 22%.
Corporate Tax
If taxable income surpasses US$335,000, the federal corporate tax rate increases to 35% from 15 to 34%.
Companies in Singapore, in comparison, benefit from a top corporate tax rate of 17% on their taxable income.
Tax Exemptions & Incentives
Newly registered businesses in Singapore are entitled to a complete three-year tax exemption on their first S$100,000 in chargeable income.
A federal R&D tax credit encourages investments in innovation in the United States. States may also have different tax advantages. For instance, firms that desire to remain and expand in California can take advantage of the California Competes tax credit, which is an income tax benefit. A Start-Up NY initiative in New York gives start-up companies the chance to pay no taxes for ten years.
Withholding Tax
The standard 30% withholding requirement applies to payments made by Americans to non-Americans.
However, the withholding tax in Singapore ranges from 10% to 17%.
Foreign-Sourced Income
In contrast to Singapore, where profits made and kept outside of the country are not taxable, resident corporations in the United States are taxed on their worldwide income.
| TAX | SINGAPORE | USA |
| Corporate Tax | 17% (For the first three years, new businesses who qualify receive a full exemption on their first $100,000 in revenue) | 15% – 35% |
| Branch Tax | 17% (Partial exemption on first $300,000) | 30% |
| Capital Gains Tax | – | 20% |
| Income Tax | 0% – 22% | 15% – 35% |
| Withholding Tax DividendsInterestsRoyalties | 0% 15% 10% | 30% 30% 30% |
| Double Taxation Relief | Yes | Yes |
| Foreign-Sourced Income Tax | If received or deemed received in Singapore, it can be taxable | Yes |
| GST/VAT | 7% | 0% – 7.5% |
Country Rankings at a Glance
| YEAR | CATEGORY | SINGAPORE’S RANK | USA’S RANK | SOURCE |
| 2018 | Ease of Doing Business | 2 | 6 | World Bank, Ease of Doing Business Report |
| 2017 – 2018 | World’s Most Competitive Economy | 3 | 2 | World Economic Forum, Global Competitiveness Report |
| 2017 | World’s Best Country for Business | 9 | 12 | Forbes Best Countries for Business List |
| 2016 | Country Most Open to Trade | 1 | 22 | World Economic Forum, Global Enabling Trade Report |
| 2018 | World’s Freest Economy | 2 | 18 | Heritage Foundation’s Index of Economic Freedom |
| 2018 | City with Best Quality of Living | 25 | 30 (San Francisco) | Mercer’s Quality of Living Survey |
| 2017 | Country with Least Corruption Perception | 6 | 16 | Transparency International’s Corruption Perceptions Index |
| 2018 | World’s Most Competitive Economy | 3 | 1 | IMD, World Competitiveness Yearbook |
| 2018 | Ease of Paying Taxes | 7 | 36 | PWC, World Bank’s Paying Taxes Survey |
| 2018 | World’s Most Innovative Economy | 5 | 6 | INSEAD Global Innovation Index |
| 2017 | World’s Most Economically Globalized Country | 1 | 54 | KOF Index of Globalization |
| 2017 | Global Talent Competitiveness | 2 | 4 | INSEAD Global Talent Competitiveness Index |
As a Final Thought
Even though they serve a sizable market, American businesses must contend with a convoluted tax code, onerous employment laws, and inefficient bureaucracy. Singapore’s superior accessibility to vital regional economic partners more than makes up for its relatively smaller market size. Comparing Singapore’s successful incorporation atmosphere to that of the U.S., better tax regulations, more alternatives for incorporating businesses, and a business-friendly environment continue to be major draws.
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