Launching a Startup in Australia vs Singapore

Country Snapshot

Both countries are renowned for being among the best places in the world to do business, and they share a common legal heritage derived from the UK. Both Singapore and Australia have great economic policies, a stable political environment, and thriving economic systems. Australia is known for its financial stability as well as a judicial system and banking rules that are among the world's most strict. Due to the government’s efforts to establish a business-friendly environment, Singapore is regarded as the world’s top destination for expansion. In the Forbes Best Countries for Business ranking, Singapore and Australia have very close positions, ranked 8th and 9th respectively.

Singapore has one of the most business-friendly frameworks to do business, thanks to its straightforward rules and streamlined administrative procedures. Singapore allows 100% foreign ownership of a company. Foreigners are allowed to register a company in Singapore remotely even if they do not plan to relocate to the country. Australia also has a company registration process that is quite easy and can be completed in just a few steps. In both countries, registration can be completed within a few days, with at least 1 director and 1 shareholder.

With the exception of certain industries such as defense and media, there are relatively few limitations on the kind of operations a foreign company can carry out in Singapore. Nevertheless, some activities may require approval from the appropriate government authorities or will be subject to licensing requirements. There are certain restrictions for foreign companies to own immovable property in Singapore. Australia has similar restrictions on acquiring real estate. A foreign investor who decides to conduct business in Australia could consider establishing a new company or acquiring an already established one. Though the Government has an open foreign investment policy, the country does have put limitations and restrictions on foreign ownership in certain “sensitive” sectors, such as banking, airports, shipping, and communication.

Overall, Singapore has more easy to understand rules and straightforward administration procedures that make experience of doing business in Singapore an easy journey. According to the 2019 World Bank's Ease of Doing Business Ranking, Singapore is second in the list and Australia has 14th place. The World Investment Report 2021 scores Singapore 4th for 2020, with US$91 billion of foreign direct investment inflows, while Australia is 14th with just US$20 billion.

Singapore has one of the world’s most attractive tax systems. Singapore’s tax filing procedures are much simpler than those of many other countries, and the system offers a lot of benefits for taxpayers, such as zero tax on dividend income, capital gains, and inheritance. Singapore holds the 7th position for ease of paying taxes, in the PwC 2020 Paying Taxes ranking, versus Australia’s 28th position. The Government keeps enhancing its tax system by implementing new incentive programs aimed at reducing the tax burden even further to stimulate the growth of new businesses. New startup companies are eligible for the Start-up Tax Exemption program, which offers a 75% tax exemption on the first S$100,000 of taxable income and a 50% exemption on the next S$100,000 during the first 3 years. Singapore also enjoys an extensive network of bilateral treaties on double taxation, which ensures that companies and individuals who receive income from overseas are not taxed twice.

To be considered a Singapore tax resident, a company does not necessarily have to be registered in Singapore, but it must be directly controlled and managed from Singapore, while a company will be considered an Australian tax resident if it is either incorporated in Australia or carries on its central management and control in Australia. Australian resident companies are taxed on their worldwide income, and non-resident companies are taxed only on their Australian-sourced income. Singapore follows a single-tier system, which means that Singapore companies that earn profits overseas would not face an additional tax in Singapore. If income was already subject to taxation overseas, no further tax will be imposed in Singapore.

Australia, on the other hand, has one of the most complex tax systems in the world; one that merits careful consideration from prospective foreign investors. In certain cases, dividend income paid to non-residents can be exempted from withholding tax; certain capital gains are also exempted from taxation. But overall, the tax system can be difficult to understand and complex for foreign entrepreneurs when it comes to determining the effective tax rate for your company’s income. That is why many entrepreneurs consider starting a business in Singapore from Australia.

The table reveals some of the differences in tax rates between the two countries.

Tax Rates

Australia and Singapore are considered prime destinations for business expansion, as both governments foster a welcoming environment for business. Both countries offer various government assistance schemes for businesses and plenty of tax incentives for newly established startups and well-established businesses.

Australia’s government agencies at both the federal and state levels foster economic growth by supporting selected enterprises. Direct grants or loans; tax breaks; administrative, research, and educational aid; competitive limitations and other measures are used to achieve this goal. Tax incentives are available for investors in the early stages. Basically, incentives provide a tax offset for the initial cost of investment as well as exemption from taxes on capital gains on the sale of shares. One of Australia’s government assistance schemes is the research and development tax incentive, which aims to foster innovation in the country. For qualified entities with an aggregated yearly turnover of less than A$20 million, the program provides a 43.5% refundable tax and non-refundable tax of 38.5% for other entities.

Australia offers more than 700 schemes that provide various types of support for local businesses. The government’s selective approach, aimed at supporting the development of specific regions and industries, is quite narrow, as some business support programs are available only for companies incorporated in a specific region. Compared to Australia, Singapore has around 75 national sector-specific business support programs, and this number continues to grow. These programs are available for all Singapore-incorporated companies, and some are available for foreign companies as well.

Due to Australia’s specific political system, the prime aim of Australia's state and territory governments is developing specific industries in certain regions of the country. The Government’s development assistance support efforts are focused on infrastructure and market development, trade facilitation, and development of the agriculture and renewable energy sectors. Singapore has a different approach. Since Singapore is a country with a small population and poor natural resources, its route to economic prosperity has focused on adopting innovative technologies and developing a technology-powered economy.

If you are thinking of launching your startup in Singapore, you should consider applying for government incentive programs to boost your business. Our “matchME™ with Incentives” tool will provide you with exhaustive information on all tax credits, grants, incentives, and funding sources that your company is eligible for. Contact our incentive experts for more details.

Australia has a well-developed employment system that provides both companies and employees with flexibility and certainty. The Fair Work Ombudsman and the Fair Work Commission are the two main organizations for workplace relations in Australia. In addition to the national government regulations, labor relations in Australia are also regulated by state and territory laws that govern occupational health and safety. Regional workplace authorities in each state also provide advice on relevant policy.

Labor relations in Australia fall under the terms and conditions defined by the National Employment Standards, which set out the minimum requirements related to employment in Australia. They cover the following entitlements: maximum permissible working hours per week, requests for flexible working arrangements, parental leave and related entitlements, offers and requests to convert from casual to permanent employment, annual leave policies, personal or carer's leave, compassionate leave and unpaid family and domestic violence leave, community service leave, long service leave, rules about public holidays, notice of termination and redundancy pay requirements, and other rules.

Similar to Australia, employment in Singapore is governed by a mixture of common law and legislation. The main legislation is contained in the Singapore Employment Act, which covers the minimum standard of terms and conditions that employers must follow; the Central Provident Fund Act, which prescribes the rules for social security contributions; and the Child Development Co-Savings Act, which covers employers’ obligations regarding maternity leave and maternity pay. The Employment Act protects all employees working in Singapore under a contract with an employer and both local and foreign employees; however, this does not extend to foreign domestic workers, whose employment relationships are solely governed by the Employment of Foreign Manpower Act. The latter document also covers the employment of foreign employees issued a work pass by the Ministry of Manpower.

All foreign workers in Singapore must have a valid work permit before they can start working in Singapore. The type of work permit required depends on the employee’s qualifications and salary range. Singapore allows online applications for all work permit types via the Ministry of Manpower website. Australia, on the other hand, does not have a work permit scheme but operates a visa system regulated by the Migration Act. Unlike Singapore, Australia has complex visa policies. Foreign employees can apply for one of three broad types of visa: short stay, temporary and permanent work visas; these are further divided into 23 sub-classes. The visa type or sub-class determines the selection criteria to be applied, the duration of the stay, and the costs and processing times for applications.

Singapore employment laws in general are more strict than Australia’s, however Singapore labor law rules are quite straightforward and easy to understand. Australian employment law allows a maximum of 38 hours of work per week, while Singapore permits a maximum of 44 hours per working week. The annual leave policy in Singapore is less favorable than Australia’s. Australia allows for 4 weeks of paid annual leave for full-time employees, while Singapore employees are entitled to 7 days of annual paid leave in the first working year. In Singapore and Australia, there is no general requirement for a written contract of employment, however it is strongly advisable in all cases.

Both Australia and Singapore have a multicultural and multilingual population and workforce. Both countries have an English-speaking workforce, which Singapore complements with three other national languages: Malay, Tamil, and Mandarin Chinese. Australia has other commonly spoken languages, including Mandarin, Arabic, Cantonese, Vietnamese, and Greek, as one in five people was born overseas.

Singapore's highly skilled and adaptable workforce is a big attraction for foreign corporations looking to establish operations in the region. Singapore continues to welcome deserving foreign talent despite fairly strict immigration policies, to foster business development in the country. As per the 2019 Global Competitiveness Report, Australia is ranked 23rd in labor market rankings, while Singapore ranks first. Singapore also does particularly well in terms of talent pool readiness and ranks 3rd for pay and productivity, while Australia ranks 39th. However, Australia supersedes Singapore in terms of the wage ratio of female workers compared to male workers. In this indicator, Australia was ranked 10th, whereas Singapore was ranked 31st.

Australia has a vast labor pool that is open to immigrant workers, with many visa programs for foreign workers. However, candidates interested in a job in certain industries may find the recruitment process difficult and annoying. Also, employers in Australia must follow minimum wage rules that can drive up business costs significantly. In addition, if employees are required to commute for long distances, employers may be required to pay those workers additional allowances. These factors can be a key consideration for potential investors with a tight budget in choosing Singapore instead of Australia, as Singapore doesn’t set such requirements.

Singapore maintains its competitive advantage over other economies by consistently investing in infrastructure and digital connectivity, which is essential for the development of a dynamic business ecosystem. Singapore is well connected with most of the world’s largest markets. Geographically, Australia is somewhat remote from most global markets, which could make logistics more difficult for some businesses. However, in some respects Australia could be the perfect option for companies wanting to reach a global market, as it is often viewed as a gateway between Asian and Pacific markets and the West.

Overall, both Singapore and Australia are strategically located in or close to Southeast Asia and major manufacturing centers such as China, Malaysia, Vietnam, and Indonesia. Potential entrepreneurs may find this a favorable factor as well as a great opportunity to reach other Asian markets.

In terms of technical readiness, Australia falls behind Singapore, particularly in areas such as Internet mobile penetration, availability, and adoption of cutting-edge technologies. Singapore is rated 2nd in Huawei’s 2020 Global Connectivity Report in terms of technological readiness, while Australia is 11th.

Aside from that, Australia's transportation system is not up to speed with Singapore's, ranked 29th according to the 2019 Global Competitivness Report, while Singapore is first in the global ranking. Generally, Australia has good road infrastructure, but congestion caused by competition between passenger and freight road users is becoming a growing concern in the big industrial cities. Singapore resolved this problem nearly 50 years ago. With a rapidly growing economy and population in Singapore came a rise in car ownership. By implementing a system of quotas, registration fees, and congestion charges, Singapore managed the traffic problems in the city.

Intellectual property (IP) rights are protected in Australia under both federal legislation and common law. Australia participates in the Agreement on Trade-Related Aspects of Intellectual Property Rights and is a party to multinational treaties administered by the World Intellectual Property Organization. These agreements set minimum standards for IP protection and enforcement.

Singapore's Intellectual Property Office advocates for IP protection that is both effective and simple, and enables enterprises to commercially utilize and monetize IP. Singapore is well known as the best jurisdiction for protection of IP rights, having an efficient and transparent judicial system with a specialized IP Court to handle increasingly complex IP cases.

Also, the Singapore Government provides support for companies involved in the acquisition of IP rights. The Productivity and Innovation Credit program provides tax advantages on costs associated with the acquisition and in-licensing of IP rights. Under this program, Singapore companies can get 400% tax deductions or allowances for qualifying expenditures. Additionally, eligible businesses can convert qualifying expenditures of up to $100,000 per year into cash, with a 60% conversion rate.

According to the 2021 International Property Rights Index, Singapore’s national protection regime ranked second in the world last year, while Australia was 11th in the global ranking. However, Australia outperformed Singapore in terms of R&D density rankings, holding 14th position, while Singapore was 21st. In a nutshell, intellectual property protection in both Australia and Singapore is strong and extends to a wide variety of areas, including trademarks, designs, patents, copyrights, trade secrets, and industrial designs.

Singapore is often rated as the most preferred relocation destination in Asia for expats due to its high standard of living. It is a top lure among world-class talents because of its clean and green environment and high peacefulness index. Singapore is the 3rd safest city in the world, according to the Safe Cities Index 2021, while Sydney is 4th and Melbourne 8th in the global ranking.

However, Australia can provide a higher quality of life for expats because of its large area and natural resources, as well as recreation, housing, and consumer goods availability. HSBC’s 2021 Expat Explorer Report, which surveys expatriates’ experience of living abroad and measures various destinations for expat living, aspirations, and future outlook, ranks Australia as the second destination in the overall global ranking, whereas Singapore is 9th on the list. Australia was ranked high via an assessment of the country’s economic situation, education environment, life expectancy, and overall citizens’ satisfaction with life in the country. According to the Mercer Quality of Living City Rankings 2019, Singapore was ranked as the best place to live in Asia, whereas Sydney is 10th and Melbourne 17th worldwide.