Offshore financial centers are coming under strict scrutiny because of the regulatory pressures exerted by organizations such as OECD. In the present scenario Singapore with a strong reputation as an international financial center offers a tax system that is equally attractive to resident and non resident companies alike.
“Recent developments in tax and corporate law in Singapore have made Singapore an even more appealing offshore jurisdiction. Singapore has abolished the two-tier tax system. Income of a corporation is only taxed once, i.e., at the corporate level. Dividend payments by a Singapore company are not taxable to the recipients. Offshore incomes that are not received in Singapore are not taxable in either. Additionally, capital gains are not taxable in Singapore. The current corporate tax rate on taxable profit is 17% Start-up companies receive full corporate tax exemption on the first $100K annual profits for the first three years.”
Singapore’s status and reputation as a trusted and responsible business and financial hub committed to the international efforts to combat cross-border tax evasion, is attracting high net-worth individuals and companies who seek unsullied image along with effective tax management. Singapore Company, if properly-structured is an attractive, tax-efficient corporate structure to conduct international business. Certain inherent provisions make a Singapore resident company an attractive entity for holding foreign investments.
A non-resident company is eligible for the partial tax exemption.
A. Exempt amount
B. All foreign income of non-resident company is subject to 17% tax after the above Partial exemption. They are also not eligible to avail for DTA benefits.
Features of Singapore Company
- Minimum paid-up capital of just S$1 and allows 100% foreign ownership
- Minimum 1 shareholder is required and corporate shareholders are allowed, the details of shareholders appear on public register, however nominee shareholders are allowed. Nationality of the Shareholder does not matter.
- Minimum of one director and need at least one Singapore resident director. Corporate directors are not permitted. The details of directors appear on public register
- Details of beneficial owners are publicly accessible
- A natural person must be appointed as company secretary who can also act as a director, but in the case of sole director the same person cannot serve as company secretary and director.
- Must file annual accounts
- For companies with an annual turnover exceeding S$ 5 million, annual audited accounts are required to be filed with the Registrar. The accounts are required to be audited by Singapore auditors. For companies with an annual turnover less than S$ 5 million, annual accounts need to be filed but there is no auditing requirement.
- Must conduct Annual General meeting
- A registered office in Singapore is required
Merits of Singapore Company
- A Singapore company is resident and domiciled in a country with a highly regarded international reputation
- Singapore has political stability, sound economic and financial fundamentals, and reasonably comparable client confidentiality standards of other offshore jurisdiction
- No restriction on the free entry and repatriation of funds
- Foreign sourced income which is earned and retained outside Singapore is not taxed in Singapore.
- Singapore follows a territorial tax system whereby tax is levied only on incomes sourced in Singapore or received in Singapore
- Subject to certain conditions a Singapore company can enjoy tax exemption from its foreign-sourced dividends, foreign branch profits, and foreign-sourced service income that is remitted into Singapore
- Singapore follows a single-tier tax system whereby the dividends in the hands of shareholders are not taxed
- No tax on capital gains
- Attractive tax rate of just 17% and with the available incentive schemes and exemptions effective tax rate is as low as 8.5% for new startups and for small and medium sized companies
- Singapore has over 58 Double Taxation Treaties, Singapore resident companies can access the benefits of DTA
- Redomicilation is not permitted
- Details of company members and directors is available on public registry
Did you know?
Singapore is not regarded as a “tax haven”. Unlike countries such as Switzerland and Liechtenstein, Singapore is not viewed as a prime location for asset protection and wealth management, but instead, simply a low-tax country. As such there has not been as much pressure on Singapore from tax agencies across the globe battling against tax evasion activities in these tax havens.
|Currency:||Singapore dollar; US$1 was worth S$1.40|
|Language:||English is widely used. Mandarin, Malay and Tamil are official languages|
|Time zone:||GMT plus 8|
|Centre’s expertise:||A major international financial centre, not an offshore tax haven|
|Type of entity||Private limited company|
|Type of law||Common Law|
|Shelf company available||Yes|
|Time to establish a new company||can be incorporated within 2 hours|
|Taxation||Effective corporate tax rate of 17%, International profits earned outside Singapore are not taxed; personal tax rates are from 2 to maximum of 20%|
|Double taxation agreements||Yes, double taxation agreements with more than 50 countries|
|Language & name restrictions on companies||Registrar approves name|
|Minimum paid up||S$1|
|Minimum number||1, who must be Singapore resident individual|
|Company secretary & qualifications||Required and must be local and qualified|
|Publicly accessible records||No|
|Minimum number||One individual or a corporate shareholder. !00% foreign shareholding allowed|
|Publicly accessible records||Yes|
|Obligations for annual meetings||Yes|
|Location of AGM||Anywhere|
|Requirement to prepare||Yes|
|Audit requirements||Yes, but exempt private companies with fewer than 20 shareholders and turnover of less than S$5 m. are exempt|
|Account filing obligations||Yes|
|Publicly accessible accounts||Yes, with exceptions|
|Requirements to file annual return||Yes|
|Change in domicile permitted||No|
|Need to registered office||Yes|
|Number of companies set up in last year||17,153 of which 16,899 local private companies, 109 local public companies, 143 foreign|
|Total number of companies on register||141,870|