Singapore as an Attractive, Competitive and Transparent Tax Jurisdiction
SingaporeBefore deciding upon a location for establishing an international business in Asia, there are many issues to be considered, and one of the key considerations is usually the taxation.
Singapore offers a very tax competitive tax regime with its low tax rate and a wide range of tax incentives. Businesses based here can also benefit from its network of 71 comprehensive taxation agreements and increasing.
Singapore operates a territorial and remittance-based tax system. This means taxes apply to income that is accrued to or derived by the company from Singapore or foreign-sourced income received in Singapore. Foreign-sourced income received in Singapore that meets certain qualifying conditions is exempt from Singapore tax, while foreign-sourced income that is not remitted into Singapore is exempt from Singapore taxation. Singapore follows a single-tier tax policy which means once the income has been taxed at the corporate level, dividends can be distributed to shareholders tax free. Those companies that do not meet the qualifying conditions can rely on the relief from double taxation treaties.
If we compare the taxes with Hong Kong company, smaller businesses or SMEs are in fact better off in Singapore. Newly established companies, subject to certain conditions, pays about 4.5% tax for the first S$300,000 chargeable income for the first 3 years of assessment. Companies that do not qualify for full tax exemption will still have access to partial tax exemption, ie the first S$300,000 chargeable income, the effective tax rate will be approximately 8.5%. Excess profits are taxed at 17%.
There are also various industry specific tax incentives that the government has to offer. SMEs have various tax rebates/benefits and even cash bonus to assist companies to increase their productivity that give them a competitive edge.
Singapore has strict banking secrecy laws, despite having applied the OECD standard on Exchange of Information (“EOI”) to all its existing bilateral tax treaties without the need to renegotiation, subject to the reciprocity by the tax treaty partner. With respect to the EOI requests, the Inland Revenue Authority of Singapore will no longer require a court order to obtain information protected the Banking Act and Trustees Act from financial institutions. While the court order will no longer be required, basic safeguards to taxpayers’ interests remain. Fishing expeditions are not permissible and information requests must be specific and reasonable. Singapore is determined to protect the integrity and reputation of Singapore as a trusted and transparent financial centre. It has also designate tax crimes as money laundering as predicate offence from 1 July 2013.
If one’s objective is to avoid paying taxes all together, it will be quite challenging to achieve through a Singapore company. However, if the goal is to avoid paying double taxes but let the income to be subjected to low tax regime of Singapore, incorporating a Singapore entity would be a perfect choice.
シンガポールは属地主義（Territorial System）を採用しており、シンガポールに源泉がある所得ならびにシンガポール国外源泉所得のうちシンガポールで受け取る所得が課税対象となります。シンガポールで受け取る国外源泉所得については一定の免税範囲があり、シンガポールで受け取らない分についてはシンガポールでは課税対象になりません。シンガポールはSingle-Tier Tax Policy（一層税制）を導入しており、一度法人税で課税されている場合、株主に対する配当については課税されません。