For many entrepreneurs, their moment of dealing with paperwork starts after fundraising. In many situations, investors prefer to put money into jurisdictions where they feel the rule of law generally sides with them. This often means Singapore. However, to open a Singaporean entity usually means startup founders have to jump through multiple hurdles just to match requirements – such as finding a board member who’s actually a local and so on. This is true not only for Singapore but many other Southeast Asian countries.
For the many founders who hail from this region, it usually isn’t a problem. But how about if you hail from the opposite side of the world, but decided to setup a startup in Southeast Asia? Sorry to say, incorporation might just be the start of your headache (besides work permit requirements for yourself and your foreign staff), until now…
Enter E-Residency by Estonia
Over 3 years since the e-residency program was established, it has racked up more than 31,000 e-residents, myself included. In fact, it is relatively easy to apply, and one simply does it online with a one-time application fee of EUR 100. For people from this region, you can collect your ID after about 1 month, from the Estonian consulate in Beijing, China or when representatives from the consulate visits Singapore (typically every 2-3 months).
At least for now, the functions open for an e-resident is quite limited, but sufficiently powerful. As an e-resident, one can open a bank account in Estonia (but you must be physically there). On top of that, e-residents can register companies, pay taxes and sign official papers – all online. It is no wonder why this program is so popular amongst digital nomads.
Why Estonia – just the broadstrokes
1. For one, if you are a crypto investor, there’s no tax or any particular legislations on crypto so far, and no plans for that. Infact, Estonia plans to issue its own state-backed cryptocurrency.
2. Low corporate taxes in general, at 21 percent with no double taxation on dividend income. In addition, it has 100 percent tax exemption on foreign income.
3. Possesses educated workforce who speaks English as a second language.
4. Strategically, it makes sense for any business who wants access to the EU market.
We at Momentum Works are expecting e-residency to be extremely popular in coming years, as entrepreneurs who build value continue to escape unfriendly environments – be it high taxes, tight regulations or political instability. Countries who fail to cater to entrepreneurs will lose potential sources of revenue and will fall behind in innovation and creative workforce.