Ben Todd | Jun 2, 2017 | 1
How To Open an Offshore Bank Account In Singapore
People are keen on Singapore for their offshore bank accounts because they have low taxes, the area is stable, it has numerous investment opportunities, exchange fees/rates are often favorable, and you are often able to access and withdraw your money quicker than you are with other countries.
However, despite the fact that Singapore is growing in terms of its banking activity, it is becoming more and more difficult for non-residents to get accounts. This is even more so the case in the middle of 2017, where it’s no longer dead-easy to open up a bank account as a non-resident.
There are two bank account scenarios: you want to open an offshore bank account in Singapore or you will be living in Singapore as an expat and need to open a bank account.
For most of you coming to this article, the latter is probably what you are looking for. If you are in the former category, opening a bank account will be easy for you.
Bank Accounts for Tourists
If are not a resident of Singapore, and are not working over there temporarily or studying over there, then the banks will want to know why you are applying. “Why do you want an account if you do not live here?”
Plus, the reasons given in the introduction (above) are not good enough to present to the bank.
If you do not have hundreds of thousands (preferably millions), and/or your business doesn’t turn over millions, and you are not a resident, you should expect a lot of rejection. As a tourist, the general word is that you can’t open a bank account with a reputable bank. You can certainly try, but expect to be denied.
As a legit bank, may ask, why would a tourist in the country possible want to open a bank account? The bottom line is that Singapore has a lot of money and the locals earn more than most north Americans in salaries per year. The banks don’t need your few thousand dollars!
Now, just because you can’t open a bank account as a tourist does NOT mean you can’t open a bank account as a non-resident. But to do so, you’ll need to incorporate a company (more on this later).
Bank Accounts for Expats
There are two categories here: you live in Singapore or you WILL be living in Singapore.
You Are Currently LIVING in Singapore
If you are staying long term in Singapore as an expat (such as studying or working there), you can easily open a bank account, provided you are staying in Singapore legally and you have the appropriate supporting paperwork.
The bank will expect to see your passport, and your study pass or employment pass. The bank will also want proof of your address in Singapore, and may also ask for your tax information and an introduction from your current bank or one of their current customers.
If you are not living there, but are planning to move there and work or study for a set period, then you will have trouble setting up your account. A bank will expect a wide variety of things, from a recommendation from the company you are going to work for, to proof of your study plan, and even then, they may still hold or freeze your account until you arrive and take up residence in Singapore. It’s possible, but you are going to have to jump through hopes.
You Will Be Living In Singapore Soon
It can be very tough to get an account before you arrive, but the bank you currently have may affect your ability to get an account in Singapore. It’s certainly easier to get a bank account if you will be living in Singapore in the near future and you have concrete proof of this fact (letter of employment, a residence, a work permit, etc).
Having an existing account with the following banks may make it easier to open a bank account in Singapore.
- BNP Paribas
- Standard Chartered
If you bank with the above banks then you may be able to convince them to open an account in Singapore in your name. They all have branches in the country, and are sometimes more amenable to opening accounts for trusted customers. However, they may still expect initial deposits of up to one million dollars, and an average bank balance of over ten thousand dollars.
How to Open an Offshore Bank Account in Singapore (as a non-resident)
If you want to open an actual offshore account (i.e. you don’t reside in Singapore), it’s a lot more difficult to open this type of account.
A few years ago, Singapore was an offshore-banking friendly nation. However, as of 2016, it has become increasingly difficult for non-millionaires to get accounts in Singapore if they are not working, studying or living there.
If you do have a million in your bank account, then apply to the banks in Singapore, go through the usual due diligence and background checking and then open your account in person.
For American’s, there is a chance that Citibank may give you an account in Singapore if you are a US citizen, but do not hold your breath. The problem is that the US is now requiring other countries to give up all information about US citizen accounts; this is extra work and money for banks that comply; because of this, it’s often easier for banks to simply refuse to deal with American citizens.
As a non-resident, you basically have two types of accounts you can open: a personal account and a business account.
How to Open a (Personal) Offshore Account in Singapore
If you want a personal offshore bank account without being a resident, good luck — it probably won’t happen, not without a big deposit. It’s still possible, but it’s not going to be easy. A business account though is very possible, if you are willing to take the steps.
Factors That Determine Your Ability to Open an Offshore Bank
To open an offshore account in Singapore, there are three factors that will determine how easy it is to do so:
1) Your Citizenship
2) Your ability to meet KYC requirements and prove the money source
3) Your Deposit Amount
4) Whether you incorporate a local company or not
To open an offshore account, you are almost certainly going to be required to travel there in person and apply. It’s very difficult to open an online offshore account right now.
These may vary depending on the bank, but you can certainly expect to be able to furnish the following:
- A Passport
- Identity papers (e.g. social security number, a driver’s license, etc)
- Proof of address (your home lease papers, home ownership papers, or utility bills, or some other proof)
- Banks statements from your existing bank (anywhere from six months to a year)
What If I Travel To Singapore to Open an Offshore Account?
There is a little anecdotal information on the Internet that suggests people have traveled to Singapore and opened an account, but you should be very careful what you believe on the Internet. Plus, their post may have been from years ago when it “was” easier to open an account over there.
If you are willing to travel there, then these banks “may” consider you for an account, but you are going to have to convince them that you are going to put over $200,000 in on a regular basis and/or maintain a very high bank balance.
- Bank of Singapore
- Standard Chartered
They often have maintenance fees, but most are maintenance-free free if you maintain a certain bank balance. All of the banks in Singapore have online banking facilities, and almost all of them have wire transfer fees and multi-currency account options.
Opening an Offshore Account as an American Citizen
If you are an American, expect a serious uphill battle when trying to open an account. Recent tax evasion scandals such as the Panama Papers have had the US tightening banking regulations and requiring tax haven countries to comply with new regulations.
As such, Singapore has made it more difficult for Americans. Singaporean banks require proof of your address in the US, which includes bills from your utility companies and your bank. You will require a valid passport to open your account, and you will need a recommendation from your current bank. Some countries are blacklisted, where the residents of blacklisted countries are not allowed accounts in Singapore (the US is not one of them). The bank will want a good reason as to why you want your account. Not only will your reason have to be good, it should also avoid sounding like it may cause future problems (such as saying that declining currency values are hurting your business).
The banks in Singapore are reluctant to allow US citizens to open accounts unless they have a lot of money to invest in their accounts, and even if they do, the banks do not like dealing with the US government and the IRS. They have to declare all of the assets held by US customers in their banks, which is very expensive. The banks are typically money grubbing, to the point where you may be slapped with a fee if you deposit money by hand.
Tip: Go In Person
It’s possible to open a bank account in Singapore in person. In fact, this is probably the best way to be certain you can open a bank without problems. Don’t fall for an online scam that says you can open a legit offshore bank account with a reputable Singaporean bank with a couple mouse clicks and a fee.
You are going to have to hit the pavement yourself. Make sure you bring ALL major documents (ID, passport, copy of your bank account statements, proof of home residency, letter from your home bank) with you so you can furnish all required documents in person when you sit down to apply for a bank account.
There are some people that simply tour the banks in Singapore, going from one to the other until they get their account. There are some people that fear this type of behavior may negatively affect their credit rating, but people that invest in Singapore usually have fantastic credit ratings. Plus, many of the banks are not interested in your credit rating if you are not looking for any form of bank lending in the future.
In most places, you will need an appointment, but you can walk in, set one up, and then walk next door and try them. You will need access to your initial deposit money so that you may pay it in on the same day that you open your account. You may also find a local mobile phone number is useful too, and it is possible to buy a prepaid SIM card can help you with this.
How to Open a Business Offshore Account in Singapore (The Guaranteed Way)
As you can see, it’s a lot of trouble trying to open an offshore PERSONAL account in Singapore. Frankly, I wouldn’t bother trying to open an offshore account as a non-resident.
However, there is a guaranteed method that will work for everyone: incorporate in Singapore and open a business account for that corporation.
You can easily incorporate in Singapore, and once you have your papers, take those to a bank and open a business account.
There are various 3rd party companies that will handle setting up the paperwork and incorporating the company. So don’t need to do this yourself if you hire a company that specializes in this (do a google search, there are many such).
There are some things to be aware of, such as needing a local person to be your company nominee/director there (you can pay for this), having a physical address on record in Singapore (you can pay for this), filing yearly paperwork (you can pay for this).
Opening the Bank Account…
Once you have incorporated and have the appropriate paperwork, you can then open a bank account with any bank in Singapore. You might be able to nominate someone (say a company) to set up the company for you if they have the papers, but you might be required as the company owner / shareholder / director to show up in person. So an in-person trip might not be avoidable.
Now there are some sticky things to deal with such as TAXES.
I’m not going to try to answer detailed questions about avoiding taxes or paying less taxes in this article as it’s an entire article just in itself and the viability of such depends on your business, your corporate structure, where you are a resident, and your citizenship.
Singapore has a flat corporate tax rate of 17 percent (vs HK’s 16.5%).
The question here is (and one that relates to those looking to create an offshore account to hold money, but pay no local taxes) do you have to pay taxes if you don’t live or reside and your business does not derive income from Singapore?
That answer is a complicated ‘maybe.’
It may be possible to set up a structure where you pay no taxes (at least for a few years).
Hong Kong is also famous for a tax loophole where you can use its territorial status to set up a shell trading company and pay no tax at all. The idea is to set up the company as a trading hub between two other countries (so money is not derived from Singapore itself). If you invoice things right, you pay no tax. This route is popular with freelancers, offshore companies who want to use the HK banking system, or digital nomads looking to have a global (offshore bank).
Can you do something similar in Singapore?
Yes, it’s possible to do something a bit similar in Singapore, but it’s not nearly as easy as Hong Kong. The problem is that Singapore will look at all money earned within Singapore or money taken in by a Singapore corporation as local income and thus taxable. So if you think you can create an offshore holding company to stash your cash in and use as a personal, tax-free bank account, think again.
However, it is possible to pay no tax in the first 3 years. Singapore allows up to $100k (about 75k USD) tax-exempt profits for the first 3 years of your corporation life. Anything over that amount and less than S$300,000 ($225k USD) is taxed at half the normal rate (so 8.5%). Amounts over S$300,000 are taxed at the normal rate.
So the key figure here is you need to earn less than $225k USD to keep your corp in a no to low tax status — and your corporation needs to be less than 3 years old.
For NEW companies trying to get on their feet, this might be a good situation. It’s certainly something to consider if you want to do business in a more tax-friendly country than your home country, provided your home country has higher corporate tax rates.
Singapore allow allows for generous tax deductions, especially when you buy equipment for the company. You can deduct up to 4x the value of equipment (for example, if you buy camera equipment for $10,000, you would be allowed to deduct $40,000 from taxes).
The end result here is that Singapore offers serious incentives for those who want to make an ‘on the ground’ corporation, with friendly start-up tax rates, huge tax deductions. However, they are not so friendly for those who just want to create an offshore shell company for banking, while paying no taxes.
Costs for Incorporation
Singapore isn’t cheap. A reputable company will charge you about $4k to $5k USD to set up a company. Singapore requires a local director, yearly tax filings, and depending on how you set it up, auditing and bookkeeping. As a ballpark estimate, figure on $5k to set up the company initially and $3k to 5k PER year to maintain the corporation (booking, audit, tax filing, maintaining local address, maintaining a local company director, etc).
So as you see, Singapore may not be the best country for creating an offshore company if you have no plans to live there and establish a business presence.
The closest similar competitor, Hong Kong, is more tax friendly, and cheaper to maintain a corporation, but it’s harder to get a bank account as of 2017.
So for now, I don’t consider either Hong Kong or Singapore the best solution for an easy-to-maintain, tax-friendly offshore company / offshore bank account.
The Final Word
If you do need an offshore bank account, Singapore is one of the best places being a financial hub with an outstanding reputation; if you are willing to set up a company in Singapore, it’s much easier to get a bank account than it is in Hong Kong.
However, for those looking for a offshore bank account solution (digital nomads, freelancers, small geo-location independent businesses) who do not intend to put down local roots in Singapore or who don’t intend to create a local presence in Singapore, you may be better off looking for another banking solution (Hong Kong or Estonia) as Singapore can be expensive to incorporate in and you will probably have to pay taxes, even if you don’t earn anything in Singapore.
I want to be clear though: you might be able to structure things so you don’t pay taxes in Singapore, but you’ll need to consult a Singaporean tax expert about this. The point is that unlike Hong Kong, which has historically been friendly to this sort of setup, it’s not as easy to do in Singapore.
If you need an offshore bank account and have a lot of money to put down as a deposit, it might be possible to just create a personal Singaporean offshore bank account without having to jump through the hoops, but for ‘normal people who can’t poney up hundreds of thousands (or millions), this won’t be practical.
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Tip: You might also consider applying for Estonian E-residency and incorporating there, if you are just looking for an offshore banking solution as say a freelancer / digital nomad, or to keep all your banking offshore from your home country.