By Vlad Cuc, specialist in company formation matters
The Singapore automotive industry has started picking up at the beginning of 2017 following an upward trend which is registered all over the world. The city-state’s status as one of the most advanced countries in the world in terms of innovation in connection to the latest developments in the electric cars industry has driven one of the most significant increases of this industry in the past year. Several reports indicate the automotive sector in Singapore has registered the highest growth in the last 10 years in 2016.
Investors seeking to start a business in the automotive industry which does not comprise only the manufacturing of car spare part can also set up taxi or even car rental companies in Singapore. With years of experience behind, our Singapore company formation specialists can help foreign investors who want to set up car rental businesses in the city-state.
Choosing a business form for a car rental company in Singapore
The first thing to consider when deciding to start a business in Singapore, no matter the field to operate in, is the type of structure as it can have a great impact on the liability and taxation of the business owner. The same criteria apply when setting up a company in Singapore as a car rental company.
The limited liability company is a preferred business form by local and foreign investors coming to Singapore, as it offers similar advantages and registration requirements. Foreign citizens interested in setting up this type of company will also need to consider obtaining a Singapore residence permit.
choosing and reserving a suggestive trade name for the company to offer car rental services;
choosing a registered address for the company and finding suitable premises for the car fleet;
having the company’s Articles of Association drafted, notarized and filed with ACRA for incorporation;
registering for tax purposes with the Inland Revenue Authority in Singapore and obtaining a GST number;
applying for the necessary operating licenses with the Land Transport Authority in Singapore.
It is important to note that in the case of foreign citizens seeking to offer car hire services, an international driver’s license is required and must be valid at the time the documents to be filed with the Land Transport Authority are submitted. Another option for foreign business owners is to simply act as shareholders in the car rental business and hire Singapore citizens or residents.
If you want to open a branch office in Singapore as a foreign investor and need assistance, our local advisors are at your disposal.
Drafting a business plan when opening a car rental company in Singapore
Business planning is essential when starting any type of business and no matter the part of the world it will operate. Singapore, however, is very competitive as local and foreign investors find the city-state a great place to open companies which makes this step a very important one even when opening a car rental business.
The business plan must carefully consider the competition and how the company will succeed in attracting clients and making profits. Luckily, automotive is one of the industries that can take advantage of all technological developments and those who want to open car rental businesses in Singapore can choose to have a fleet made of electric vehicles considering the city-state’s infrastructure which is perfect. Also, the size of Singapore makes a great place to offer eco-friendly transportation services.
Apart from these, there is also ridesharing which is quite popular in advanced countries such as Singapore and one of the best ideas is to create a car fleet that can be rented to people offering ridesharing services.
When considering such operations, which rely on consistent investments in more expensive cars, the business plan is the first step to success.
Our company formation advisors can help foreign investors who want to convert their innovative ideas into reality by setting up a company in Singapore as a car rental business here.
Expenses related to starting a Singapore car rental company
When opening a car rental company in Singapore an investor must consider not only the costs of registering the business, but also various expenses. This is why, the amount of money to be invested in the venture during the first stage of the operations is more important in this case compared to activities in other sectors.
Here are the main expenses to consider when establishing a car rental business in the city-state:
- the acquisition of the car fleet – one will need at least a few cars to start with;
- car insurances and servicing – a contract that can be signed with a mechanical shop or by hiring an on-site professional;
- salaries for other employees;
- office space and parking lot costs;
The last point, marketing is very important when setting up a car rental company as it will need at least a website where the services and rates will be posted and that also represents an important advertisement channel.
Also, when choosing to offer innovative services such as electric car rental, the budget should be a little larger.
If you want to start a car rental business, the startup can be a good choice from several points of view. Our company registration consultants in Singapore can help you create a startup in the city-state. Through it, you can obtain various tax benefits.
How to create a car rental venture as a startup
The startup is a great way of raising money and Singapore is one of the Southeast Asian states that has a great potential for such ventures as there are many business incubators and angel investors looking for investment possibilities. This is also why providing electric car rental services is the innovative idea one can use to differentiate him or herself from the competition.
The creation of a startup does not imply any additional steps compared to a traditional business which is why it can be set up in just a few days.
If you want to open a company in Singapore and are considering a car rental enterprise, you can rely on our specialists for guidance in creating it as a startup.
Incentives for electric car users in Singapore
The 2021 budget provides for several incentives for those who want to switch from using petrol and Diesel cars to electric vehicles which is why setting up a business which relies on a fleet made of eco-friendly cars can represent a great business idea. From lower tolls to lower auto vehicles registration taxes, business owners can also benefit from these advantages.
Car rental and ridesharing is on the rise in Singapore, as people choose this comfortable solution to go from one place to another. Statistics for the past few years indicate that:
- there were around 800,000 clients for Singapore’s largest ridesharing company, Gojek, in 2019;
- in 2020, there were approximately 71,000 private cars for hire at the level of the city-state;
- the same year, the number of Singapore citizens who bought their own cars dropped because of the pandemic.
If you want to open a Singapore car rental company and need guidance, our local officers can provide you with detailed information on the latest changes in the legislation and subsidies for the automotive industry.
Services offered by car rental companies in Singapore
Considering the competitiveness in the car rental industry, one must consider the type of cars for rent, as well as the services included in the offer. Among the services a Singapore car rental company can offer are:
- daily rentals, which usually cover the needs of individuals;
- long-term rentals, which are very sought by companies in Singapore;
- various types of insurances;
- towing services in case of accidents or other events.
We also invite you to watch our video on how to open a car rental business in Singapore:
Operating as a car rental company in Singapore
An entrepreneur who wants to open a Singapore company and offer car rental services through it has various options. After the company registration procedure is completed, the car rental business must register with the Land Transport Authority (LTA).
One of the advantages of setting up a car rental company in Singapore is that it can tailor its services to the request of its clients. Most Singapore citizens rent cars for everyday business trips, for going on vacations or for various special events. For some of these events the services will also mean hiring a driver.
Singapore car rental companies which also offer private hire driver must comply with a few requirements imposed by the LTA, among which:
- the drivers must pass a medical exam;
- the drivers must hold valid driver’s licenses class 3/3A/3C/3AC;
- the drivers must have passed the private hire car driver’s vocational license course.
Responsibilities of car rental companies in Singapore
Under the local legislation, companies offering car rental services in Singapore have several responsibilities, among which the most important is related to verifying the persons the cars are rented to.
The following regulations must be respected by those hiring the services of a car rental company and by the Singapore car rental business:
- only persons with the age of 21 are allowed to drive cars in Singapore (the company renting the car must verify that);
- drivers with ages between 21 and 25 will be subject to a specific fee when renting cars in Singapore;
- foreign citizens who want to rent cars in Singapore will need several documents when renting cars in Singapore;
- if the driver’s license is not in English, an international driver’s permit or license and a notarized translation of it is required;
- for citizens in ASEAN countries the driver’s license conditions are more relaxed in Singapore.
Also, each car rental company in Singapore can impose additional requirements or conditions upon the rental of auto vehicles.
If you decide to open a company in Singapore and need advice on how to proceed, do not hesitate to ask our company registration agents for help.
Taxation of car rental companies in Singapore
The taxation of companies in Singapore, including car rental businesses, will occur the same way as for any other type of company, depending on the structure used. However, an important aspect to consider is that such companies can claim various deductions, according to the Singapore tax authority. Among these, the company can claim the deduction of all the expenses generated by the private hire of cars. Various capital allowances are also available when purchasing the cars for the fleet.
Singapore car rental companies also have several obligations, among which separating the income earned from the car rental services from other incomes. They are also required to keep separate accounting books for the rental services and other services offered (if any).
Why open a car rental company in Singapore?
There are many reasons for which local and foreign investors decide to open car rental companies in Singapore, among them being the fact that such services are quite sought in this city. Also, Singapore is one of the countries in which owning a vehicle is not among the preferences of residents, considering the public transportation system is quite developed and the services offered by carrental companies are affordable.
Starting a car rental business in Singapore is quite advantageous from a taxation point of view. Car rental services enter the same category as offering taxi services in the city-state and the Inland Revenue Authority provides for various tax allowances for these companies.
If you decide to open a company in Singapore in the field of car rental, our local representatives are at your disposal with full information about the requirements and steps to complete in order to have your business running in the shortest time possible.
If you want to start a car rental business and need assistance, do not hesitate to contact us. You can rely on us for help with the company formation process in Singapore.