Open an IT business in Singapore

Also known as a managed IT service provider, an IT business is made up of professional IT specialists who form the core IT team of the company. This team provides companies with expert IT advice and remotely manages their clients’ IT systems.

In addition, an IT business typically charge a monthly subscription fee to their customers. This approach allows them to have recurring monthly revenues, as opposed to one-time transactions.

Finally, in order to limit costs and improve efficiency, most information technology support business use Remote Monitoring and Management (RMM) solutions. An RMM allows them to remotely manage and troubleshoot workstations and servers. With an RMM, the support company can manage the IT of many customers simultaneously.

Pte Ltd or private limited company is one of the most popular IT business forms in Singapore. It is a type of legal entity that can have a limited number of corporate shareholders (20) and its shares are not publicly available. However, it has a clear set of advantages for investors and is subject to a simple incorporation procedure. Information technology support companies are generally limited liability companies.

In Singapore, cyber security matters are regulated by the Cyber Security Act 2018 (CA). Under Section 24 of the CA, any cyber security service provider will need to obtain and maintain a license before it can offer such services in Singapore. As such, IT business that amount to cyber security services must be licensed.

Also, and in accordance with Section 2(1) of the Act, this licensing requirement applies generally to any person or entity who wishes to provide a service for consideration primarily for or in connection with providing or safeguarding the cyber security of a computer or computer system belonging to another person.

Finally, licensed cyber security service providers must meet two criteria if they want to possess this license:

1. Possess “fit and proper person” status.

2. Maintain, for at least 3 years, records of each occasion they are engaged to provide their cyber security service.

To protect consumers, Singaporean companies are required to obtain an individual’s consent before they can collect, use or disclose any personal information about them (Personal Data Protection Act of 2012).

Singaporean citizens have the option to register their phone number in the “Do Not Call” (DNC) registry if they do not want to receive advertising. Singapore companies must therefore check their telemarketing efforts against the DNC registry before engaging in marketing, or face penalties. In this sense, the law balances the rights of individuals to protect their personal data with the rights of businesses to use that data for legitimate purposes. The government has set up a personal data protection commission to ensure compliance with this law.
By regulating personal data, the PDPA aims to make Singapore a leader in digital information management policies and consolidate its status as a global place to do business.

In addition, the PDPA’s other general provisions legally require companies to use personal data responsibly:

Ultimately, if your company is found to be non-compliant with the PDPA, the PDPC can impose a financial penalty of up to $1 million and order your company to stop collecting, using, or disclosing personal data in violation of the PDPA.

The Singaporean government has introduced tax incentives for R&D, innovation and product development activities in Singapore. Indeed, companies that bundle these activities often use an IT support business as they can benefit from the Productivity and Innovation Credit (PIC) scheme.

The PIC scheme is a tax benefit scheme that was first introduced in 2010 to encourage companies to engage in innovative and productive activities. Under this scheme, companies can receive a deduction or allowance of up to 400% of expenses incurred in each of the following eligible innovative activities:

Companies with low taxable income can then choose to convert up to S$300,000 of the tax deductions and allowances credited to them into a cash grant, up to a maximum of S$21,000 per year.

Companies can also exercise an option to convert up to S$100,000 of their expenses into a tax-free cash payment at a conversion rate of 30%. The cash payment rate will increase from 30% to 60% for up to S$100,000 of eligible expenses from FY2013 to FY2015.

An information technology support business may perform consulting services. Consulting services (e.g. engineering, accounting, legal) and other similar professional services are subject to GST.

However, if such services qualify as international services under section 21(3) of the GST Law, they may be zero-rated if the services are provided:

1. Under a contract with a person wholly in his commercial capacity and who, as such, is resident outside Singapore; and

2. Directly benefiting a person who is wholly in his or her commercial capacity and who, in that capacity, is resident outside Singapore.

3. From 1 January 2020, services are also zero-rated if they directly benefit a GST-registered permanent resident in Singapore.