Singapore is a republic with a parliamentary system of government. Its taxation system is well controlled and is significantly less than in the other developed nations. It utilizes territorial basis of taxation where taxes are levied on the earnings derived. The source of income is determined mostly from the place where the services are rendered. IRAS Inland Revenue Authority of Singapore administers, evaluates and collects the taxes.
Corporate Tax – A corporate tax filing Singapore provider pays tax on its earnings in the country or when it receives earnings from another nation. Singapore is among the countries that follow a Single Tier Tax system i.e., the profits earned from the business is only taxed once. Quite simply the dividends received by the shareholder of the firm are completely tax-free.
For a recently Incorporated Company – Total Tax exemptions for example 0% tax on the initial $100,000 for the first 3 years for a new company that is incorporated in Singapore, is a tax resident in Singapore and has less than 20 shareholders holding minimal 10% of the stocks are given. Singapore resident organizations are entitled to a partial tax of around 9 percent on $300,000 per annum. Any income over this will be billed a headline tax that is currently at 18%.
Tax Exemptions for Holding Companies and Non-Resident Businesses – Exemptions are awarded on foreign sourced dividends and gains which are remitted in Singapore if the Headline tax of the nation from where the income is sourced is at least 15 percent and if the income was subjected to taxation. Foreign source income that is retained outside Singapore is not taxed. There is not any tax on Capital profits in Singapore and it also does not impose Withholding Tax on dividends. A provider is referred to as a resident business if its central management is in Singapore and a non-resident if it is elsewhere. A Non-resident company is not qualified for the double tax treaties. The income is not liable to Singapore income tax on foreign source income if it is not received in Singapore. Therefore non-resident organizations are attractive options as global holding companies.
Goods and Services Tax GST – A business must register for GST if at any moment at the end of a quarter their taxable supplies exceed S$1 million for a quarter and the immediate past three quarters, or even if their taxable supplies are predicted to exceed S$1 million for the next 12 weeks. Taxable supplies include goods and services provided in Singapore, products exported from Singapore and global services. A provider is supposed to register for GST within 30 days of becoming liable.