Singapore Tax Advantages for Companies

By: Clint Jhonson


Singapore is a country known for low taxes and pro-business policies. Singapore taxes are much lower than most other developed nations and each year continue to slide down further. Income tax system in Singapore is territorial and single-tier. The Inland Revenue Authority of Singapore is responsible for administering, assessing and collecting Singapore tax. A large number of foreign companies and business professional are drawn to Singapore due its low taxes and world-class infrastructure.

A company has to pay tax in all its earnings in the country in which it receives its income or when it receives some income from a different country. Singapore taxation follows the single tier tax system in which the profits earned by the Singapore business are taxed only one time. That is the shareholder of the Singapore company will not have to pay any tax on the dividends he might receive. For a new Singapore business setup, the Singapore corporate tax rules are very attractive. The Singapore taxation allows full tax exemption on the first hundred thousand dollars for the first three years when a new company is incorporated in Singapore provided the company is a tax resident of Singapore. Singapore resident companies are also eligible for a partial Singapore income tax of 9% on $300,000 per year. Any income earned above this will be charged the normal Singapore tax which has now come down to 17%.

Singapore tax exemptions are allowed on foreign sourced profits and dividends that are submitted in Singapore if the headline tax of that country from where the income was sourced is a minimum of fifteen percent and if the income was subjected to tax already. Foreign source income which is kept outside Singapore is not taxed at all. The Singapore income tax does not apply to capital gains and nor does it enforce withholding tax on dividends.

A Singapore company is said to be a resident company if it is centrally managed from Singapore and it is called a non-resident company if it is managed from elsewhere. A resident company enjoys the benefits that are bestowed under the Avoidance of Double Taxation Agreements that Singapore has just ended with treaty countries. A non-resident company does not get to enjoy these Singapore tax benefits. But the income is not liable to Singapore income tax if it is received outside Singapore. Hence, non-resident companies are said to be a great option as international holding companies.

Other kinds of Singapore tax include the GST or Goods and Services Tax which every Singapore business must register for if their taxable supplies for a quarter cross the S$1 million as also for the immediately previous three quarters or if the taxable supplies are supposed to cross the mark for the next one year. Taxable supplies cover both goods as well as services supplied in Singapore, goods supplied abroad from Singapore and any International services provided from Singapore. A Singapore business is supposed to register for GST within thirty days from the time it is deemed liable. On the whole the Singapore income tax regime is very attractive and offers significant savings to people who are ready to relocate.

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To learn more about the topics discussed here, see Singapore tax and Singapore income tax guides available at the leading Singapore company portal.

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