Startup Funding – How India fairs to Singapore – Advisory, Tax and Regulatory Compliance in India, Singapore and USA

Startup Funding – How India fairs to Singapore

Corporate Law & Intellectual Property Rights | By Soumik Kumar Sen | Last updated on Aug 31, 2019

Singapore and India are open economies where the environment for business investments is gathering attention. Both Singapore and India have become one of the most favorable destination for startup ecosystem. Singapore is favored since it has a robust financial market, advanced infrastructure, easier tax regime. India is grabbing both domestic and foreign investors attention since it is a growing economy where the environment for business is dynamic and is rapidly undergoing changes in order to facilitate growth and development and provide a platform which supports conducting business becoming hassle free.

Let us compare both these countries under various parameters affecting startups and try to analyse their performance.

SUBJECT	SINGAPORE	INDIA
Capital Gain	Singapore does not impose Capital gain taxes on any resident person thus making startup funding much lucrative for any angel investor/ VC	A capital gain tax of 10% to 20% is levied on the income realised by the investors.
Intellectual Property Rights	IPR forms an integral part of any Tech Start-up. Singapore IPR laws is recognized as best in all over Asia.	India is slowly improving its IPR Laws but a long road needs to be crossed to become a world leader in this regards. It is currently ranked at 36^th in the world.
Valuation Report and Angel tax	No valuation report is required for startup funding. It is usually decided through a negotiation between investors and start-ups. There is no component of angel tax in Singapore. On contrary there is a tax incentive scheme available for such investors.	A valuation report by a registered valuer or a merchant banker is usually required while raising funds without which regulators might impose Angel tax on the start-ups and even harass the investors
Government assistance	Government Agencies provide an aid to start ups to access to funding sources , mentor ship programs and thereby help turn innovative business ideas into thriving companies	Though GOI provides various assistance for start-ups; yet there exist a lot of difference between planning and implementation and entrepreneurs often complain that they are stuck in various bureaucratic red-tapism
Permanent Residency	In view of grabbing investor’s attention, Singapore has a Investor Scheme,whereby investors who have invested a certain corpus of fund will be eligible to receive permanent residency in Singapore.	India has just announced a scheme similar to this. However, not much information is available in this regard.
Tax Regime	Singapore has attractive tax regime. It offers various incentives, tax holidays and concessions to all startups. Tax imposed on corporate is maximum 17%. And	Indian Taxation system is complex in nature. No blanket tax exemption is usually not available to startups. Companies are taxed at rates ranging between 25% to 40% depending upon the types of companies and the profit earned.
Approval by different Regulators	Barring few sectors approval is not required by different regulators in Singapore and single window approval is given during fund raise	India is quite stringent on foreign investments and there exists different Act rules and regulations to be followed while making investments. In instance, approval and reporting to RBI, DIPP, MCA might be required for making angel investments.
Documentation and time consumption	Documentation in Singapore is fairly limited since there are not reporting to be done for making investments. Thus, time taken to complete the funding procedure is quite minimal.	Documentation in India is done at various levels since approvals at many levels by different authorities is required. Hence concluding funding in India is time consuming affair.
Investor Rights Protection	Singapore has well established Investor Protection Framework and is highly ranked in the world. Hence, this establishes that there is transparency at various levels to protect minority investors rights.	India also realizes the need to protect the interest of the investors. In view of this, series of measures has been taken to address the investor grievances and to protect their rights.

If you are raising funds in either India and Singapore and want our help in compliance and structuring the deal feel free to write to us at info@taxmantra.com

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Let us compare both these countries under various parameters affecting startups and try to analyse their performance.

SUBJECT	SINGAPORE	INDIA
Capital Gain	Singapore does not impose Capital gain taxes on any resident person thus making startup funding much lucrative for any angel investor/ VC	A capital gain tax of 10% to 20% is levied on the income realised by the investors.
Intellectual Property Rights	IPR forms an integral part of any Tech Start-up. Singapore IPR laws is recognized as best in all over Asia.	India is slowly improving its IPR Laws but a long road needs to be crossed to become a world leader in this regards. It is currently ranked at 36^th in the world.
Valuation Report and Angel tax	No valuation report is required for startup funding. It is usually decided through a negotiation between investors and start-ups. There is no component of angel tax in Singapore. On contrary there is a tax incentive scheme available for such investors.	A valuation report by a registered valuer or a merchant banker is usually required while raising funds without which regulators might impose Angel tax on the start-ups and even harass the investors
Government assistance	Government Agencies provide an aid to start ups to access to funding sources , mentor ship programs and thereby help turn innovative business ideas into thriving companies	Though GOI provides various assistance for start-ups; yet there exist a lot of difference between planning and implementation and entrepreneurs often complain that they are stuck in various bureaucratic red-tapism
Permanent Residency	In view of grabbing investor’s attention, Singapore has a Investor Scheme,whereby investors who have invested a certain corpus of fund will be eligible to receive permanent residency in Singapore.	India has just announced a scheme similar to this. However, not much information is available in this regard.
Tax Regime	Singapore has attractive tax regime. It offers various incentives, tax holidays and concessions to all startups. Tax imposed on corporate is maximum 17%. And	Indian Taxation system is complex in nature. No blanket tax exemption is usually not available to startups. Companies are taxed at rates ranging between 25% to 40% depending upon the types of companies and the profit earned.
Approval by different Regulators	Barring few sectors approval is not required by different regulators in Singapore and single window approval is given during fund raise	India is quite stringent on foreign investments and there exists different Act rules and regulations to be followed while making investments. In instance, approval and reporting to RBI, DIPP, MCA might be required for making angel investments.
Documentation and time consumption	Documentation in Singapore is fairly limited since there are not reporting to be done for making investments. Thus, time taken to complete the funding procedure is quite minimal.	Documentation in India is done at various levels since approvals at many levels by different authorities is required. Hence concluding funding in India is time consuming affair.
Investor Rights Protection	Singapore has well established Investor Protection Framework and is highly ranked in the world. Hence, this establishes that there is transparency at various levels to protect minority investors rights.	India also realizes the need to protect the interest of the investors. In view of this, series of measures has been taken to address the investor grievances and to protect their rights.

If you are raising funds in either India and Singapore and want our help in compliance and structuring the deal feel free to write to us at info@taxmantra.com

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