Why is Singapore considered a tax haven for foreign investors?
A tax haven is generally a foreign country that offers foreign individuals and businesses little or no tax liability in a politically and economically static environment. Can Singapore be considered a tax haven? Myth or reality, we shall study it in this article.
Tax in Singapore is imposed and collected by the Inland Revenue Authority of Singapore (IRAS). The most notable is income tax, which consists of corporate and personal taxes. Everyone who has met specific financial requirements has to pay it.
Singapore’s Corporate Tax Rate
To stimulate business activity, the government of Singapore has purposely kept the country’s corporate tax rate low. The more moderate cost of conducting business activities in Singapore draws the attention of multiple business people who come to the Lion City for company incorporation.
The rate taxed on wealthy foreign investors is relatively low; at just 22% for those in the highest tax bracket. The corporate tax rate is a flat 17% of all chargeable income earned by a company. This rate can be reduced through particular incentives which IRAS has put in place. Productivity Solutions Grant (PSG) and tax inducements are offered to start-ups in Singapore. Tax exemptions are also provided to foreign banks, global trading companies, and offshore funds.
Personal Income Tax Rates
The personal income tax rates are also moderate. The highest possible tax rate in Singapore is 22%, which is one of the lowest-maximum in the world. Anyone who earns less than S$20,000 per year is relieved from paying income tax. Additionally, capital gains and some dividends are tax exempt.
The status of a tax haven requires an absolute level of confidentiality and privacy related to financial and tax matters. Considering Singapore having one of the world’s strictest legal systems, which guarantees the privacy of everyone who owns offshore bank accounts here, it is much appreciated by investors and high net worth individuals around the world. You don’t have to reveal the identities of beneficiaries of your businesses based in Singapore to the authorities. Companies in Singapore can be incorporated through the use of nominee directors and shareholders. There are also no regulations restraining nationalities of those who are allowed to open a company in Singapore.
For foreign investors finding the sweet spot to run a sustainable and profitable business, yet enjoying high standards of living, exceptional connectivity and accessibility to the rest of the world, Singapore is your haven.