In just over four decades, Singapore, one of the Four Asian Tigers that include Hong Kong, South Singapore and Taiwan, has established a thriving financial centre to international acclaim that serves not only its domestic economy but also that of the wider Asia Pacific region and the world at large.
Singapore’s financial centre offers a broad range of services that include banking, insurance, investment banking and treasury services.
Singapore is a leading provider of services in areas of international banking, trade finance, maritime finance, insurance, treasury operations, and asset and wealth management throughout the Southeast Asia region. A major financial and shipping hub, It is the fourth largest foreign exchange trading centre in the world after London, New York and Tokyo.
As one of the top four in the world’s leading global financial centres, Singapore is also the second largest over-the-counter derivatives trading centre in Asia, and serves as a major commodities derivatives trading hub. There are more than 121 commercial banks with over 115 foreign banks and three representative offices of banks in Singapore, all of which play an active role in banking and finance. With total assets of approximately S$1.2 trillion under management, Singapore continues to see a steady growth in its financial operations. In addition, it is recognized as one of the premier asset management locations in Asia.
A key aspect of Singapore’s strong financial centre is its deep and liquid capital markets. With one of the more well-established capital markets in Asia Pacific, the Singapore Exchange (SGX), it is the preferred listing location of close to 800 global companies. Today, Singapore has become the largest Real Estate Investment Trust (REITs) market in Asia ex-Japan that provides an extensive offering of investments in business trusts for shipping, aviation and infrastructure assets.
Singapore is an ideal location as well as a valuable pathway for expanding a business before it penetrates into the global market. It can be structured as an Investment Holdings and Asian Financial Hub, depending upon its management strategic planning. Due to its strong trade and investments, Singapore is a highly competitive Asian country and the world’s easiest place in which to carry out a company’s business activities.
In addition, Singapore has a safe, pro-business environment that is supported by a well-respected government with transparent and consistent policies that protect a company’s physical and intellectual-property investments. Its well developed governmental system is responsive to public comments and is ranked as one of the top countries in the world with an infrastructure that meets the most critical needs of a business community.
By situating your company in South Singapore, you will enjoy the following benefits
Being able to build a distinctive brand to conduct your business
Have access to a strong international network of agreements such as the Double Tax Agreements and other financial instruments
There are no Dividends or a Capital Gains Tax
Political Structure is Stable and Transparent
Enjoy a high quality of life in a stable and transparent political environment
Singapore’s economy is based on free enterprise without any restrictions on the foreign ownership of a business.
The repatriation of profits and import of capital are freely allowed. Singapore has a low corporate tax rate of 17% with an effect from the year 2009 (or YA2010) onwards as compared to other leading economies in the world. A company is taxed at a flat rate for its chargeable income; however, capital gains are not taxable. It includes three main types of taxes, namely a Corporate Income Tax, Personal Income Tax, Goods and Services Tax.
The Singapore tax system is territorial. An income tax is levied on the net income of companies from sources within Singapore and on income from foreign sources, if remitted into Singapore. Non-resident Singapore companies and businesses are taxed on the same basis.
Singapore has tax treaties for the avoidance of double taxation with more than 60 countries. A one-tier corporate tax system that results from the income tax payable on the normal chargeable income of a company is a final tax and shareholders will not be taxed on such a dividend income. A person (known as the payer) who makes payment(s) of a specified nature (e.g., Royalty, Interest, Technical Service Fee, etc.) to a non-resident company or individual is required to withhold a percentage of that payment and pay the amount that was withheld (known as a ‘Withholding Tax’) to IRAS.
There is no levy of withholding tax on dividends or a capital gains tax that is imposed in Singapore. Tax losses can be carried forward and set off against future tax profits; however, there is a Filing of an Estimated Chargeable Income within three months from the company’s financial year-end and the Filing of an Income Tax Return will not be later than 30 November of each year.
All income derived from Singapore transactions is liable to being taxed. Generally, overseas income that is received by an individual in Singapore is not taxable and need not be declared in his or her Income Tax Return. This includes overseas income paid into a Singapore bank account. However, overseas income is taxable in Singapore if:
If gains from your overseas employment is taxed in a foreign country, you may apply for double taxation relief to avoid being taxed twice for the same income. Individuals are either a “resident” or “non-resident” in Singapore tax purposes. Generally, a person is a resident if he or she is physically present or is employed in Singapore for at least 183 days in a calendar year or for a continuous period of at least 183 days, straddling two years or continuously for three consecutive years.
Regional representatives based in Singapore and employed by the representative office of an overseas company may be given a taxed concession on income pro-rated based on days spent in Singapore, provided that certain requirements are met. However, benefit-in-kind provided in Singapore is fully taxable. Income derived from short-term employment of 60 days or less is exempt from being taxed. The ‘60 days rule’ does not apply to a director of a company, a public entertainer or an individual who provides professional services in Singapore. Professionals include foreign experts, foreign speakers, the queen’s counsels, consultants, trainers, coaches and those in other professions.
When a foreigner’s contract for work is about to end or if a foreigner decides to work for another company, or plans to leave Singapore for more than three months, the employer must inform the Inland Revenue Authority of Singapore (“IRAS”) of their status. To ensure that the foreigner pays all required taxes before their departure from Singapore, the employer is required to withhold payment of all monies (including salary, bonus, overtime pay, leave pay, allowances, gratuities, lump-sum payments, etc.) due from the day he or she gave notification of their intention to leave their job or depart from Singapore.
The income of tax residents after deducting their expenses, donations and tax reliefs, is subject to paying an income tax at progressive rates ranging from 0% to 20%. The chargeable income of the first S$20,000 is taxed at zero value. A non-resident may claim expenses and donations to lessen their tax. However, non-residents are not eligible to claim tax reliefs. The employment income of non-residents is taxed at the flat rate of 15% or the progressive resident tax rate, whichever is higher. A director’s fees, consultant’s fees and all other income are generally taxed at 22%.
Allowable expenses, donations, reliefs and rebates are some of the common deductions that individuals claim to reduce their taxes.
You may be able to claim tax deductions on employment expenses ‘wholly and exclusively’ incurred in earning your income. This means that you used your own money to pay for expenses necessary to your employment such as travel expenses, entertainment expenses and subscriptions, etc.
The expense may be allowed when the following conditions are satisfied:
Tax reliefs and rebates are allowable if:
Some tax reliefs and rebates are targeted toward certain groups of taxpayers to promote specific social and economic objectives.
GST is a broad-based consumption tax levied on the import of goods as well as supplies of goods and services in Singapore (in other countries, GST is known as the Value-Added Tax or ‘VAT’).
GST exemptions apply to the provision of most financial services, the sale and lease of residential properties, and the importation and local supply of investment precious metals. Goods that are exported and international services are zero-rated.
GST is currently charged and accounted at the rate of 7% on the value of supply.
All Singapore companies with an annual turnover exceeding S$1 million are required by law to register for GST.
Companies with an annual turnover of less than S$1 million may choose to register for GST voluntarily.
Companies need to apply for GST registration within 30 days of the date on which their registration liability arises.
The Goods and Services Tax (GST) is a domestic consumption tax, which is chargeable on supplies of goods and services made in Singapore. In other countries, GST is known as the Value-Added Tax or VAT. The current GST rate is 7%.
GST exemptions apply to the provision of most financial services, the supply of digital payment tokens, the sale and lease of residential properties and the importation and local supply of investment precious metals. Goods that are exported and international services are zero-rated.
As a GST-registered merchant, you are effectively acting as a tax collecting agent on behalf of the GST, which you have charged on your local supplies of goods and services. Businesses are required to continually assess the need to be registered for GST.
In most cases, registering for GST is compulsory in the following circumstances:
You are currently making sales and can reasonably expect a taxable turnover of your business in the next 12 months to be more than S$1 million, e.g., the signing of a sales contract or business agreement. You must continuously monitor your company if you have any reason to believe (e.g., a confirmed contract or agreement that is bringing in a high revenue) that the taxable supplies will be more than S$1 million in the next 12 months (under “Prospective View”).
With effect from 1 Jan 2020, you may also be liable for registration:
On or after 1 Jan 2019, you are required to apply for GST registration within 30 days of the end of the calendar year or on the 31st day from the date of the forecast.
You can also choose to be voluntarily registered for GST even though your business turnover does not fall under the above specifications. However, approval is subject to an assessment by the Inland Revenue Authority of Singapore (“IRAS”). A deposit may be required from the applicant if the Comptroller deems it fit. The applicant is also expected to attend a course in the basic knowledge of GST in order to learn how to be in compliance with its laws.
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