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15 Facts About Singapore’s Taxation Regime

Last modified: June 2, 2016
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Singapore’s lawmakers made every effort to simplify their taxation regime, in order to make Singapore tax filing cheaper and easier for the taxpayers. The policy was helpful in bringing in a torrent of foreign direct investment in Singapore.

Why Entrepreneurs and Corporate Prefer Singapore to Establish Their Business

Foreign entrepreneurs and corporate simply, prefers to  establishing businesses in Singapore. Some of them do it for ease of doing business in Singapore, while others,

  • Zeroes in on its closeness to the Asian markets
  • State-of-the-art Business infrastructure
  • Pro-business attitude of the government
  • Political stability
  • Intolerance to corruption
  • Multilingual workforce
  • Lower tax rates, etc.

Facts about Singapore Taxation System

The Singapore taxation is a simple and the number of taxes in force is not big. It reduces the complexity of tax compliance for both, the individual and corporate taxpayers. The tax services in Singapore are there to offer world-class assistance for faultless Singapore tax filing to these entities.

  1. There are almost no restrictions on the foreign exchange transactions and the movement of funds, in or out of Singapore. Today, Singapore is a major source of investment of for many economic zones.
  2. One of the most important facts to know about Singapore taxation is that it is territorial based. Income derived from Singapore or that derived offshore and remitted or deemed remitted to Singapore is taxed.
  3. Standard corporate income tax rate is pegged at 17%.
  4. The individual income tax rate is tier-based and ranges from 2 – 20% for Singapore citizens and permanent residents.
  5. Nonresidents, working in Singapore for more than 60 days, are charged with 15% of personal income tax. Those working for less number of days do not have to pay tax.
  6. Directors and consultants have to pay 20% of personal income tax on their earnings in Singapore.
  7. The corporate tax rate for a new startup, on its initial taxable income of S$100,000 is 0%, next S$200,000 of its taxable income is taxed at 8.5% and that above S$320,000 is charged at 17%.
  8. Existing Singapore resident companies qualifies for partial tax exemptions.
  9. If a Singapore company has to pay tax on its earnings in another country, it qualifies for Foreign Tax Credits which are given to it as a compensation for its loss.
  10. Property tax rates in 2015, for non-owner-occupied homes are in the range of 10% – 20%. For the owner-occupied homes, the rates are in the range of 0% – 16%.
  11. When a Singapore resident company pays to a nonresident, a part of the payment is held by the payee. It is then submitted to the Inland Revenue Authority of Singapore (IRAS) as the withholding tax.
  12. Goods and Services Tax (GST) is a consumption tax (7%) that is levied on the supply of goods and services in Singapore. Traders need to opt for GST registration in Singapore, if their turnover crosses S$1 million in the preceding or succeeding 12 months. Normally, they have to abide by GST quarterly filing; alternatively, they can apply for a period of their choosing for special GST filing in Singapore.
  13. Employers as well as Singapore citizens and permanent residents need to pay their Central provident Fund (CPF) to the appropriate authorities.
  14. Singapore authorities are very strict about the statutory compliance regarding Estimated Chargeable Income, ECI filing and filing of audit and financial statements. The offenders are penalized.
  15. Singapore does not subject its taxpayers to Capital Duty, Capital Acquisition Tax, Inheritance/Estate Tax, or, the Net Wealth/ Net Worth Tax; Capital Gain and Dividends distributed by the companies to the shareholders are tax free.

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