One of the key reasons why the world chooses Singapore as their premier destination for business and immigration is the low-tax regime. Singapore boasts extremely attractive corporate and personal tax rates. The following also require special mention:
- ZERO tax on capital gains
- single-tier tax system
- an array of tax relief measures
- extensive double tax treaties with many countries.
Persons, including corporations, partnerships, trustees and bodies of persons carrying on any trade, profession or business in Singapore are chargeable to tax on all profits (excluding profits arising from the sale of capital assets) arising in or derived from Singapore and certain foreign-sourced income from such trade, profession or business.
Highlights of Singapore Tax System
- Singapore practices a territorial basis of taxation. This means companies and individuals are taxed primarily on income generated within the territory of Singapore.
- Extra-territorial or Foreign-sourced income (for eg. branch office profits, dividends, other income, etc.) will be taxed ONLY when it is remitted or deemed remitted into Singapore unless the income was already subjected to taxes in a jurisdiction with headline tax rates of at least 15%.
- A definitive rule on the source of income cannot be clearly defined. No universal rule can apply to every scenario. The source of the income often depends on the nature of the incomes and of the transactions which give rise to such incomes.
- Singapore corporate tax rate is capped at 17%. This makes it one of the lowest tax rates in the world. After applying tax incentives, newly incorporated companies can further lower their tax burden to as low as 8.5%.
- Singapore allows a single-tier corporate tax system, where tax paid by a company on its profits is not imputed to the shareholders (i.e. dividends are tax free).
- Singapore personal tax rates start at 0% and are capped at 20% (above S$320,000) for residents and a flat rate of 15% for non-residents.
- Goods and Services Tax(GST) was introduced in 1994. The current GST rate is 7%.
- Interest, royalties, rentals from movable properties, management and technical fees, and director’s fees paid to non-residents (individuals or companies) are subject to withholding tax in Singapore.
- For personal taxes, the tax year is the normal calendar year i.e. January 1 – December 31. Deadline for filing personal tax return is April 15. For corporate taxes, a company is free to to decide on its financial year. Deadline for filing corporate tax return is November 30. Taxes are paid on a preceding year basis.
- Singapore has no capital gains tax. Capital loss expenses are correspondingly not allowed as deductions.
- Singapore has concluded more than 50 bilateral comprehensive tax treaties to help Singapore companies minimise their tax burden.