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About Singapore and Singapore Taxation

Singapore has one of the advanced, open and stable economies in the world. The government support foreign investors. There are many reasons why business climate in Singapore is acknowledged as one of the most favorable:

  • Singapore is regarded as one of the top economically stable countries in Asia as well as worldwide

  • Top ranking worldwide for ease of doing business

  • Advanced and confidential banking sector

  • Strategic location for doing business in Asia Pacific region

  • Beneficial taxation regime

 

Singapore is able to provide the most wanted business agenda:

  • reputation

  • confidentiality

  • Low taxation

 

Singapore is major and one of the wealthiest international finance center. Its political and economic stability has attracted already world’s largest banks, international brands, IP and soft wear assets. While firm reputation of Singapore jurisdiction can hardly leave any doubt, and will devote another article to the Bank system in Singapore, here bellow we offer a brief guide of a truly unique taxation regime.

 

A TRULY UNIQUE TAXATION REGIME

Singapore taxation system is based on a principal of remittance & source of income. Corporate income tax applies if:

  • Income is sourced in Singapore, i.e. activities are carried on in Singapore

  • Income is remitted in Singapore, i.e. income is received on Singapore bank account

  • Board meetings of directors take place in Singapore

 

If the above principals are not supported by your company (you do not have Singapore bank account, nor Singapore clients or suppliers), than the tax on profit is not levied. Such company will be considered a non-resident.

 

On the other hand, resident companies enjoy the following taxation benefits:

  • Use double taxation treaties

  • Use tax Corporate Income Tax reductions

 

Corporate Income Tax For the first 3 years company profit is taxed as follows:

  • From S$0 up to S$100,00 – 0%

  • Remaining profit from S$100,000 up to S$300,000 – 8,5%

  • Remaining profit from S$300,000 and over – 17%

 

After 3 years company profit is taxed as follows:

  • From S$0 up to S$300,000 – 8,5%

  • Remaining profit from S$300,000 and over – 17%

 

Singapore operates on a single-tier corporate tax system, where as tax paid as corporate income tax is the final tax. Accordingly, dividends paid by Singapore resident companies are exempt from further withholding tax in the hands of shareholders.

 

Withholding tax

  • 0 % – for dividends paid to a resident or non-resident. Shareholders

  • 10% – royalties & know-how

  • 15% – for interests, commission, fees in relation to loan agreements, management fees, etc.

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