What so great about the Tax system in Singapore for Singapore resident companies?
Business friendly tax regime
- Corporate income tax rate: 0-17%
Newly incorporated company enjoys a 3 year tax exemption on first $300k for each year. All other companies are given partial tax exemption of 50% on the first $300k and thereafter at 17%. Comprehensive tax incentives scheme available ranging from exemption of international shipping profits, income of venture company/shipping investment enterprise, further deduction for expenses relating to approved trade fairs, trade exhibitions, trade missions or to maintenance of overseas trade office, expenditure on research and development project, exemption and concessionary rate of tax for insurance and reinsurance business/Finance and Treasury Centre/global trading company/financial sector incentive company/shipping investment manager/container investment enterprise/ship broking and forward freight agreement trading to Pioneer and its related service companies.
- Additional investment Allowances on certain expenditures on qualifying fixed assets investment on top of the capital allowances.
- Wide coverage of double tax agreements to eliminate instances of double taxation which can arise from cross-border trade and investment activities.
- Low personal income tax rate: 0-20% and overseas income received in Singapore is not taxable.
- Dividends paid by Singapore resident companies are tax-free. Foreign dividends received by Singapore resident are also tax-free.
- No tax on capital gains. Generally, gains from the sale of a property, shares and financial instruments in Singapore are generally not taxable. However, gains from “trading in properties” may be taxable. We will discuss the situations when a person is deemed to be trading in properties in the next bulletin.
- Tax credit pooling against any items in the foreign income. This allows offset of foreign tax paid by pooling the tax paid against any items of foreign income received in Singapore.
- Where double tax relief is not available due to the absence of DTA, unilateral tax credit is available for all Singapore resident company with income taxable in Singapore.
- Low withholding tax on income paid to non-resident from 10% to 17%.