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Situated on Tropical Island in Southeast Asia off the southern tip of the Malay Peninsula, Singapore is a city, a nation and a state. It is known as a City of Garden and nearly 50 percent of the island is green space. Being a thriving metropolis, Singapore offers a world-class infrastructure, a fully integrated island-wide transport network, dynamic business environment, vibrant living spaces and a rich culture largely influenced by the four major communities with each offering different perspective of life in terms of culture, religion, food, language and history. Over the years, Singapore has made significant strides in many areas and has attracted an encouraging number of international accolades which recognize the city as vibrant and world-class.
Singapore has a well-developed free market economy that is based primarily on trade, finance, and manufacturing. It ranked number one on the World Bank’s Ease of Doing Business survey for nine consecutive years. The geographical location of Singapore gives it the unique advantage of having access to the entire population of Asia, especially to other business hubs like China, India, Australia, and Malaysia. Doing trade in Singapore is beneficial due to its –
- Expansion of international economic space for local entities.
- Aims to secure a predictable and fair trading environment.
- It aims to minimize impediments to the flow of imports and exports.
- Import duties on liquor, tobacco, petroleum products, and motor vehicles remaining dutiable have been abolished.
Free Trade Agreements
Singapore’s Free Trade Agreement (FTA) with China, Korea, European Countries, Australia, Sri-Lanka and other countries eliminates trade barriers, which ;
- reinforce its role as a regional services hub;
- attract more inward Foreign Direct Investment, and
- secure preferential treatment and legal protection for Singapore investments abroad.
Singapore has zero tariffs and a “single window” (TradeNet) for all goods.
Singapore used as a gateway by Foreign Companies to explore opportunities, including via partnerships with Singapore companies, enjoying tariff savings, preferential access to certain sectors and enhanced IP protection.
A robust economy and no currency control
- No need for any local partners or shareholders to form an entity.
- No limitation on profit repatriation and foreign currency.
- Ease of Incorporation and Operation of entities.
- Availability of a High Skilled workforce.
Situated in the middle of the Straits of Malacca, Singapore is one of the world’s most important trading routes connecting the Pacific and Indian Oceans. It became the port-of-call for many trading companies due to the following reasons:
- Singapore is global trading centre for machinery, equipment, metals, minerals and
construction materials etc.
- Ranked highest in the world for its Trade to GDP ratio.
- Tax-efficient jurisdiction to hold intellectual property.
- Given sound infrastructure, expanded network of treaties, and the existence of tax on
local source income.
- Singapore is compliant with international standards for tax transparency.
Simple Tax Regime
Singapore follows a territorial basis of taxation, the entities, and individual persons are mainly taxed on Singapore sourced income. Foreign sourced income that is from branch profits, dividends, service income, etc. will be taxed when it is remitted or deemed remitted into Singapore. The Inland Revenue Authority of Singapore (IRAS) is known as the Inland Revenue Department. The financial year in Singapore is divided as:
For personal taxes – The tax year is a normal calendar year i.e. January 1 to December 31. The deadline for filing the corporate tax is April 15 of every year.
For corporate taxes – Every Entity in Singapore is free to decide its own financial year. The deadline for filing the corporate tax is November 30 of every year. However, the tax slabs in Singapore are as follows:
- The corporate tax rate is capped at 17%.
- Personal tax rates start at 0% and are capped at:
-22% above S$320,000 for residents; and
-a flat rate of 15% to 22% for non-residents.
- The current GST rate is 7%.
- Singapore has no capital gains tax.
- Tax-free distribution of dividends to shareholders.
- One of the lowest value-added tax rates in the world.
In Singapore, new firms receive significant tax breaks during their first 3 years reducing their tax rate to 0% for the first S$100k of income.
Singapore is very pro-business in its tax regime with a variety of business organization types that can be registered in Singapore. Types of business structures are:
If a person runs a business under his or her own full name as per NRIC, then no name registration is required.
All partners are required to declare their share of income while filing their Personal Income Tax.
- Private Limited Companies
- Exempt/Deemed Exempt Private Limited Companies
- Public companies
- Limited Partnership (LP)
Branch of a Foreign Company
For registration, it must have at least one Authorized person who is ordinarily resident in Singapore. The company registration procedure involves:
- Name approval;
- Document preparation; and
- Company registration.
In Singapore, RO is an interim entity of foreign companies which are keen to explore the viability of doing business in Singapore. Representative Offices are not permitted to enter into any business transactions on their own or on behalf of their parent company.
To know more, download our Booklet “About Singapore” by clicking the link below
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