STARTING A BUSINESS IN SINGAPORE
Singapore offers a highly conducive environment for companies that are looking at new opportunities in the Asia region. Its robust regulatory framework, coupled with a stable political and economic structure, pro-business government and a well-established judicial system, have created the ideal platform for investment and made it a major commercial, financial- and wealth management hub.
Singapore is recognised for its high government efficiency and competitiveness while its robust legal and regulatory regimes make it the most transparent country in Asia. The World Bank and other organisations consistently rank Singapore as the easiest place to do business worldwide. In addition, it has a highly educated and skilled workforce that speaks excellent English as well as multiple Asian languages.
With one of the lowest corporate tax rates in the region (17%), on top of a host of other tax schemes and incentives, Singapore is one of the best countries in Asia from which to grow a business. Corporate tax on foreign-sourced dividends, foreign-sourced branch profits and foreign-sourced service income into Singapore can be minimised, if not completely exempted, provided certain conditions are met.
With over 80 double tax treaties, Singapore has one of the most comprehensive networks in the world. Singapore residents can therefore benefit from reduced rates of withholding tax on the repatriation of profits from cross border investments. The absence of tax on capital gains and the lack of withholding tax on dividend payments to non-residents makes Singapore an excellent location in which to incorporate a holding company for cross border investments.
USE OF SINGAPORE COMPANIES
Singapore companies are recommended for the following purposes:
Active trading businesses – Singapore offers a number of advantages for companies carrying on trading operations and is a highly efficient and easy platform for companies with international activities. Singapore’s system of taxation is territorial and remittance-based, such that business income is generally not subject to Singapore Income Tax (SIT) if it is not derived in or remitted to Singapore.
Service companies – Singapore is an increasingly popular jurisdiction for service companies. However, care should be taken when services are not provided in Singapore. The Inland Revenue Authority of Singapore (IRAS) deems that income from the provision of services has its source in Singapore unless those services are provided through a permanent establishment (PE) outside Singapore.
Holding companies – Neither capital gains nor dividend income from other Singapore companies are subject to tax. Foreign-sourced dividends remitted back to Singapore are generally taxable but can be completely exempted if: the country from which the dividend is paid has a headline tax rate of 15% or higher; and the dividend been subject to taxation, either because it is paid out of taxed profits or has suffered withholding tax.