Available Jurisdictions


Singapore

Singapore

  1. Investment basics

Foreign exchange control – There are no significant restrictions on foreign exchange transactions and capital movements. Funds may flow freely in and out of Singapore.

Accounting principles – These are the Singapore financial reporting standards.  Financial statements must be prepared annually.

Business entities – Are the public and private limited liability company, partnership, sole proprietorship and branch of a foreign corporation.

  1. Corporate taxation

Residence – A company is resident in Singapore for income tax purposes if its management and control is exercised in Singapore, and is often the place where the directors’ meetings are held.

Basis – Singapore taxes on a territorial basis. Tax is imposed on all income accrued in or derived from Singapore and all foreign income remitted or deemed remitted to Singapore, subject to certain exceptions.

Taxable income – Resident and non-resident companies are subject to tax on income accruing in or derived from Singapore and foreign income remitted or deemed remitted to Singapore. These include gains or profits from a trade or business, dividends, interest or discounts, charge on annuities, rents, royalties, premiums and other profit arising from property. Foreign income remittances in the form of dividends, branch profits and services income to resident companies are exempt from tax provided the income is received from a foreign jurisdiction with a tax of a least 15% in the year the income is received or deemed received in Singapore.

Taxation of dividends – Singapore operates a one-tier corporate tax system, under which corporate tax paid on a company’s profits is final. Dividends paid by Singapore resident companies are tax exempt in the hands of the recipient.

Capital gains – Singapore does not tax capital gains.

Losses – Losses may be carried forward indefinitely, subject to compliance with a shareholding test. Unutilized capital allowances carried forward are subject to both the shareholding test and “same business” test. Losses and unutilized capital allowances may be carried back for one year, subject to a cap of SGD 100,000 and compliance with the shareholding test.

Rate – The standard corporate tax rate is 17%; however, 75% of the first SGD 10,000 of normal chargeable income and 50% of the next SGD 290,000 of normal chargeable income are exempt from tax.

Surtax – No

Alternative minimum tax – No

Foreign tax credit – While some types of foreign-source income are exempt from Singapore tax, Singapore grants resident companies a credit for foreign tax paid on income derived from treaty and non-treaty countries that is received and assessable to tax in Singapore. The foreign tax credit amount may be computed on a pooled basis, subject to certain conditions.

Participation exemption – Dividends paid by Singapore resident companies are tax-exempt in the hands of the recipient. Gains from the disposal of ordinary shares in another company on or before 31 May 2022 are exempt from tax, provided the shares have been legally and beneficially held for a continuous period of at least 24 months immediately before the disposal and a 20% minimum shareholding requirement is met.  Gains from the sale of shares may be regarded as ordinary income if the taxpayer is in the business of trading in shares.

Holding company regime – No

Incentives – Various incentives are available for pioneer and expanding companies, headquartered activities, financial services, asset securitization, fund managers, international maritime activities, international trading and R&D.

  1. Withholding tax

Dividends – No withholding tax is levied on dividends paid by companies resident in Singapore.

Interest – Interest paid to a non-resident is subject to a 15% withholding tax, unless the rate is reduced under a tax treaty or an exemption applies under certain domestic concessions. The 15% withholding tax is a final tax and applies only to interest not derived by the non-resident form a business carried on in Singapore and not effectively connected to a permanent establishment in Singapore.

Royalties – paid to a non-resident are subject to a 10% withholding tax, unless the rate is reduced under a tax treaty or an exemption applies under certain domestic concessions. The 10% withholding tax is a final tax and applies only to royalties not derived by the non-resident from a business carried on in Singapore and not effectively connected to a permanent establishment in Singapore.

Technical service fees – Subject to the provisions of applicable tax treaties and certain exceptions payments for technical service fees are subject to a withholding tax at an “on-account” rate of 17%.

Branch remittance tax – No

  1. Other taxes or corporations

 Capital duty – No

Payroll tax – No

Real property tax – Property tax, levied on all immovable property in Singapore, is payable annually by the owner at the beginning of the year. Immovable property includes Housing Development Board flats, houses, offices, factories, shops and land. The annual property tax is calculated based on a percentage of the gross annual value of the property, as determined by the property tax department at the range of rates from 0% to 16%.

Social security – Employers and Singapore citizens or Singapore permanent resident employees are required to contribute to the Central Provident Fund on a monthly basis.

Stamp Duty – it applies only to financial instruments relating to stock and shares and immovable property. It includes the sale of mortgage of immovable property and shares and a lease of immovable property.

Transfer tax – No

  1. Anti-avoidance rules

 Transfer pricing – Transfer pricing guidelines cover the application of the arm’s length principle, documentation requirements, advance pricing agreements and requests to invoke the mutual agreement procedure under Singapore’s tax treaties. Transfer pricing rules have also been issued for related party loans and services.

Thin capitalization – No

Controlled foreign companies – No

Disclosure requirements – No

Other – Singapore has a general anti-avoidance provision.

  1. Compliance for corporations

 Tax year – The tax year generally is the calendar year, although a company is required to file its tax return based on the results of its financial year. Each tax year is referred as the “year of assessment”.

Consolidated returns – Consolidated returns are not permitted; each company is required to file a separate corporate tax return.  However, a loss transfer system of group relief allows current year unutilized losses, unutilized capital allowances and unutilized donations from one qualifying to be offset against the assessable income  another qualifying company within the same group. To qualify, companies must be, amongst others, incorporated in Singapore and be at least 75% owned, directly or indirectly, by another company in the group that is incorporated in Singapore, and must have the same accounting year end.

Filing requirements – Companies must submit an estimated chargeable income to the IRAS (Inland Revenue Authority of Singapore), within three months from the end of their financial year end. Penalties apply for late filing and for failure to file.

Rulings – A taxpayer can request an advance ruling from the IRAS on the tax consequences of a particular transaction.

  1. Personal Taxation

Basis – Singapore tax resident individuals are subject to Singapore income tax on income accrued in or derived from Singapore. Foreign source income received or deemed received in Singapore by an individual is exempt from income tax in Singapore, except for income received or deemed received through a partnership in Singapore.

Residence – A Singapore citizen is considered a tax resident in Singapore if he or she normally resides in Singapore, except for temporary absences consistent with the claim of being a resident. A foreigner is considered a tax resident if, in the calendar year preceding the year of assessment, he or she was physically present in Singapore or exercised an employment.

Filing status – Each individual, including married couples living together, is required to file a separate tax return.

Taxable income – Income includes gains or profits from a trade, business, profession or vocation, and gains or profits from employment (including food and services).

Capital gains – Singapore does not tax capital gains.

Deductions and allowances – Personal reliefs and tax rebates are granted only to resident individuals. Personal reliefs may be deducted against assessable income to ascertain chargeable income on which tax is computed.

Rates – Residents deriving chargeable income above $ 20,000 are taxed at progressive rates ranging from 2% to 22% with effect from the year of assessment 2017. Non-residents’ employment income are taxed at the higher of a flat rate of 15% or the resident tax rates, taking into account personal reliefs and rebates.

All other income of non-residents sourced in Singapore, including directors’ fees and consultants’ fees, generally are taxed at a flat rate of 22%.

Inheritance tax – No

Net worth tax – No

Social security – Only employees who are Singapore citizens or Singapore permanent residents and working in Singapore are required to contribute to the CPF, at a rate of up to 20%.

  1. Compliance for individuals

 Tax year – Calendar year

Filing and payment – An individual is required to file his or her Singapore tax return in respect of income from the preceding year by 15 April of the following year. Penalties apply for late filing and for failure to file.

  1. Goods and services tax

Taxable transactions – Singapore imposes a goods and services tax, which is similar to a European style VAT, on the supply of most goods and services and on most imports.

Rates – The standard rate is 7%, with a zero rate for international services and exports.

Registration – Subject to certain exemptions, a person is required to be registered if its taxable turnover exceeds SGD 1 million in a 12-month period.

Filing and payment – A registered taxable person is required to file a GST return on a quarterly basis with the comptroller no later than one month after the end of the relevant accounting period.  Any tax payable must be paid by the submission deadline.

Singapore has concluded 81 comprehensive tax treaties.

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