Singapore is often referred to as an OFC, an offshore financial center. That means it provides financial and corporate services to foreign investors. Singapore offers attractive and favorable tax incentives, therefore, categorized as an offshore financial center.
In certain industries like global trading and offshore, it offers tax exemptions along with low tax rates. Banking secrecy is one of the top reasons to claim it under an offshore financial center. In the financial secrecy index, 2020, the county has come under the top 5. Its secrecy score has come out to be 65 which gives a contribution of around 5% share of the global market.
Under section 47 of the banking act, banking is under the contractual duty of confidentiality. This regulation ensures that no customer details shall be disclosed by a bank to any other entity except as stated in the act.
Therefore, it has been classified as a ‘tax haven., It offers financial secrecy and has a low and constructive taxation rate. In the list of many respectable international organizations, it has been mentioned as a tax haven as well. Despite the tax haven status, it has proved itself as a global commerce hub and international business center. It continues to be the prime destination for investors or business owners all over the world.
From the year 2000, there has been a special phase of entrepreneurship and innovation. Numerous measures were initiated to increase the attention of investors and foreign investors in the country. The tax rates were further lowered from 33% to 17% fit companies and for personally it was fixed at 20%. The period after 2000, witness the one-tier corporate system and a group relief introduction.
Key facts of tax system followed here-
- The corporate tax rates of Singapore are capped at 17%. It continues to attract good shares and investments from all over the world. A single-tier tax system is followed here. It means, that the tax paid on the profit of a company will not be imputed to its shareholders. Hence, the dividends here, are tax-free.
- Good and services tax(GST); was introduced in 1994. So there has been an increase in the resilience of taxes, as a citation of government revenue. 7% is the current GST rate here.
- It has no capital gains tax system.
- Singapore has opted for around 50 above bilateral comprehensive Tax treaties. Which will help the companies to reduce their tax burden.
- If the management and control of the business are exercised in Singapore, then it is referred to be a tax resident company. So, it becomes eligible for an income tax exemption scheme, which is generally launched for new start-up companies.
Singapore is one of the leading countries that continues to lower corporate income tax rates. You can look for corporate tax filing services from account firms.
Business tax rates here are one of the lowest in the world. Therefore, it is regarded as a business-friendly nation.
If we talk about the customs and excise duties, it asks for a low import and excise duty. Excuse duties are specially put on petroleum products, liquor, and tobacco.