| Singapore has a reputation for attractive tax rates, | | | | activities between the two countries. The agreements |
| positive and encouraging business policies. Singapore | | | | also provide for reduction or exemption of tax on |
| taxes are much lower than most other developed | | | | certain types of income. |
| nations and over the years, it has continued to slide | | | | A non-resident company does not get to enjoy these |
| down further. Singapore practice territorial and | | | | Singapore tax benefits. Singapore Companies are |
| single-tier tax system. The body responsible for | | | | taxed at a flat rate of 17% on income originating in |
| administering, assessing and collecting Singapore tax is | | | | Singapore. However, the income is not liable to |
| the Inland Revenue Authority of Singapore (IRAS). A | | | | Singapore income tax if received outside Singapore. |
| large number of foreign companies and business | | | | Tax Exempt Dividends: |
| professional are attracted to do business in Singapore | | | | Singapore taxation follows the single tier tax system in |
| owing to its low taxes and impressive world-class | | | | which the profits earned by the Singapore business |
| infrastructure. | | | | are taxed only one time. Therefore a shareholder of |
| Tax Residency of Companies: | | | | the Singapore Company will not have to pay any tax |
| In Singapore, the tax residence status of a company | | | | on the dividends he/she receives. |
| depends on where the control and management of its | | | | Capital gains or losses are not taxable or deductible in |
| business is exercised. A company is considered | | | | Singapore. There is allowance for full tax exemption |
| tax resident in Singapore if the control and | | | | on the first hundred thousand dollars for the first three |
| management of its business is exercised from | | | | years of assessment for a new company |
| Singapore. | | | | incorporated in Singapore provided the company is a |
| A Singapore branch of a foreign company is generally | | | | tax resident of Singapore. |
| not treated as a Singapore tax resident since the | | | | In Singapore the statutory income of year of |
| control and management is vested with an overseas | | | | assessment is based on the assessable income of the |
| parent company. | | | | preceding year (i.e. accounting year for companies / |
| The basis of taxation for a resident company and | | | | calendar year for individuals). There are various tax |
| non-resident company is generally the same. However, | | | | incentives for different industries. The granting of tax |
| there are some benefits that a resident company | | | | incentives is mainly administered by the Economic |
| enjoys which a non-resident would not. | | | | Development Board (EDB). |
| These are: | | | | Where a tax incentive is granted the company will |
| - Benefits conferred under the Avoidance of Double | | | | enjoy the tax incentive for the period granted and its |
| Taxation Agreements (DTA) that Singapore has | | | | qualifying income will either be exempt from tax or |
| concluded with treaty countries. | | | | taxed at a lower rate than the corporate tax rate |
| - Tax exemption on foreign-sourced dividends, foreign | | | | which is currently at 17%. |
| branch profits, and foreign-sourced service income | | | | Goods & Services Tax (GST) |
| under section 13(8) of the Income Tax Act. | | | | Goods and Services Tax (GST) is a tax on the supply |
| - Tax exemption scheme for new start-up companies. | | | | of goods and services made in Singapore by a |
| Singapore resident companies are also eligible for | | | | taxable person in the course or furtherance of any |
| partial tax exemptions in the form of lower effective | | | | business carried on by him and on the importation of |
| tax rates capped at 8.5% on the first S$300K of its | | | | goods into Singapore. Every Singapore business must |
| chargeable profits per year of assessment. | | | | register for GST if their annual taxable turnover is |
| Singapore tax exemptions are allowed on foreign | | | | more than S$1 million or currently making taxable |
| sourced profits and dividends that are remitted to | | | | supplies and the annual taxable turnover is expected |
| Singapore if the headline tax of that country from | | | | to be more than S$1 million. |
| where the income was sourced is a minimum of | | | | Taxable supplies cover both goods as well as |
| fifteen percent and the foreign income had been | | | | services supplied in Singapore, goods supplied abroad |
| subjected to tax in the foreign country from which | | | | from Singapore and any International services provided |
| they were received. Irrespective of the headline tax | | | | from Singapore. A Singapore business is expected to |
| rates of the foreign country, these foreign incomes will | | | | register for GST within thirty days from the time it is |
| be fully exempt from Singapore taxes if not | | | | deemed liable. |
| repatriated or remitted directly or indirectly to | | | | After registration, businesses must charge and |
| Singapore. | | | | account for GST at the prevailing rate. This is known |
| A resident company enjoys tax benefits bestowed | | | | as output tax. GST registered businesses can also |
| under the Avoidance of Double Taxation Agreements. | | | | claim the GST incurred on their goods and services |
| An Avoidance of Double Taxation Agreement | | | | purchased assuming certain conditions are met. This |
| between Singapore and another country prevents | | | | is known as input tax. GST is also levied on the import |
| double taxation of income earned in one country by a | | | | of goods from overseas which also claimed as input |
| resident of the other country. It clarifies the taxing rights | | | | tax. Singapore Customs is responsible for collecting |
| between Singapore and her treaty partner on different | | | | the import GST. |
| types of income arising from cross-border economic | | | | |