How to open offshore business accounts in Singapore

For small and medium-sized enterprises (SMEs) venturing into international markets, Singapore stands out as a key player, given its strategic position in the ASEAN community. The flourishing trade relations between Hong Kong and Singapore open up vast opportunities for collaboration, and many businesses opt to set up offshore accounts in Singapore. This article offers a comprehensive guide on the necessary documentation, process, advantages, and potential risks of opening a business account in Singapore. Furthermore, it will highlight how Airwallex, a leading global financial platform for modern businesses, can support SMEs in expediting account opening and accessing cost-effective remittance services.

Benefits of owning a Singapore offshore account

Opening an offshore account in Singapore offers several benefits for Hong Kong companies and SMEs when conducting transactions with Singaporean customers or suppliers:

1. Eliminating currency conversion: With a Singapore offshore account that allows direct receipt and payment in SGD, there is no need for frequent currency conversion. This streamlines transactions, saves on bank conversion fees, and avoids risks associated to foreign exchange fluctuations.

2. Tax Incentives: Singapore is known for its low tax rates and currency freedom. Similar to Hong Kong, it operates on a territorial tax system, meaning profits sourced outside of Singapore are not subject to Singaporean income tax. Offshore companies only need to pay a single corporate income tax and can potentially benefit from tax incentive policies.

3. International Trade and Investment: Singapore is an international financial centre and has consistently ranked third in the Global Financial Centres Index in March 2024 and September 2023. It possesses a well-developed financial system and an internationalised financial market. Opening an offshore account facilitates international trade, cross-border investments, and fund management, providing businesses with more commercial opportunities.

4. Asset Protection: Singapore boasts political stability and a robust legal system, ensuring that assets are governed and regulated by the local judiciary. By transferring assets to Singapore, businesses can benefit from a favourable legal environment that protects their assets.

How do I open a bank account in Singapore? 

Opening an account at Singapore banks is generally convenient and fast. Some banks even offer online applications so businesses can open accounts remotely in other regions without visiting the branches. However, certain banks may require branch visits with necessary documents.

The general process for opening a bank account at Singapore banks is as follows:

• Prepare the required documents: such as application form, passport or identification documents, proof of address, relevant documents signed by authorised personnel or directors, certificate of Company Incorporation and Business Registration, etc.

• Visit the bank's official website/branch: Follow the instructions on the official website to open a bank account, fill out the application form, and provide the necessary personal and company information.

• Prepare the initial deposit: Deposit the required amount at the time of account opening.

• Complete the account opening process: Once the verification is completed, the Singapore bank account is opened.

Account set up fees and other charges 

The Oversea-Chinese Banking Corporation (OCBC), United Overseas Bank (UOB) , and DBS Bank are the major traditional large banks in Singapore. Detailed below are the account setup fees and related charges for setting up a business account* for entities registered outside of Singapore.

*Information as of 1 May 2024 and is for reference only. Please visit the official websites of respective banks for details.

Account opening requirements and minimum deposit

Singapore banks cater to both locally and internationally registered businesses for account opening. Generally, the process involves completing application forms, submitting specified signed documents, paying the account opening or monthly charges, and fulfilling the minimum deposit criteria. 

For example, OCBC in Singapore allows overseas-registered companies to open commercial or multi-currency accounts remotely, supporting transfers in 60 currencies. The initial deposit requirement is SGD 30,000 for commercial accounts, and USD 30,000 for multi-currency accounts. Applicants are required to submit personal and company details (such as registered company name and business registration number) on the bank's website. Once approved, the account is opened.

Conversely, UOB requires a traditional approach. Businesses are required to schedule an in-branch appointment to open an account, during which they must present a range of documents. The initial deposit for a global currency account is set at HKD 7,800, maintaining a minimum average balance of HKD 60,000 to avoid a monthly charge of HKD 200 if the balance dips below.

DBS Bank asks for a minimum deposit of SGD 10,000 to open an account. For businesses operating for less than three years, DBS waives the minimum and initial deposit requirements, along with monthly service charges, only levying an annual account fee of SGD 120.

Documents for account opening

The required documents may vary among different banks, but generally, the following documents are commonly needed:

• Commemorative Record of Registration

• Proof of Directorship (within the past year)

• Memorandum And Articles of Association

• Passport copies of all Directors

• Proof of the company's Principal Place of Business

• Self-certification of Foreign Account Tax Compliance Act

• Proof of Address

Time required for opening an account

Different banks have varying procedures, processes, and requirements for opening accounts. Generally, it may take anywhere from as quick as 1 week to approximately 1 month for a bank to complete the entire approval and account opening process.

Can overseas virtual banks replace offshore accounts?

Most overseas virtual banks only accept applications from locally registered companies and require the applicant or the company's beneficial owner to be a local or tax resident. 

In comparison to traditional banks, the financial condition and stability of some overseas virtual banks may vary. In case of any questions, businesses can only inquire online through email or hotline support.

Corporate remittances with third party platforms 

For small and medium-sized enterprises (SMEs), managing cash flow is often a challenge. Gaining the trust of trading partners is crucial, and being able to make same-day transfers to suppliers can significantly contribute to maintaining a good working relationship. Airwallex, a leading global financial platform for modern businesses, offers low-cost international remittance services, with nearly 70% of transactions being credited on the same day. This allows SMEs to benefit from more affordable rates compared to traditional banks.

Airwallex Global Account

Airwallex Global Accounts allow users to effortlessly receive funds in over 180 countries and supports 180+ currencies. Additionally, Airwallex offers swift transfers in 60+ currencies to more than 150 countries. Payments can potentially arrive on the same day, with no limits on transactions, no fees for opening an account, and no monthly service charges. 

Furthermore, there is no requirement to register a company in Singapore. Businesses in Hong Kong can open a Business Account with Airwallex and immediately gain access to a Global Account, including a SGD account. With a unique account number, local branch code, and bank code, you can start receiving payments in SGD and make direct payments to Singaporean suppliers or contractors without incurring any currency conversion fees.

FAQs

1. How do I set up an offshore account in Singapore?

You can apply for an account at a Singapore bank either through their official website or by visiting a branch in person. Before opening the account, you need to prepare the initial deposit and the required documents such as the application form, identification documents, proof of address, certificate of Company Registration, etc. Afterwards, all you need to do is to wait for the bank to complete the approval process. You may also opt for the Airwallex Global Account to collect SGD directly.

2. How much should I prepare if I want to open a Singapore offshore account?

Different banks have varying requirements. For example, the minimum deposit requirement for opening an account at DBS Bank is SGD 10,000. Businesses operating less than three years have no minimum deposit or initial deposit requirements. 

3. What are the risks of opening a Singapore offshore account? 

Businesses are subject to currency fluctuations, local tax regulations, and potential changes in Singapore's banking regulations.