A tax haven is defined as a country or territory which imposes very low income tax rates or in some cases, no income tax at all. Many countries and territories around the world are classified as tax havens. Among the most notable of these countries and territories are Ireland, Switzerland, Hong Kong, Luxembourg, and the Netherlands. Another major tax haven in the world today is Singapore.
Why Singapore Is a Tax Haven
Singapore is known for its low tax rates. In Singapore, there are also many incentives for business owners in the country. These facts have caused Singapore to qualify as a tax haven. The highest income tax rates on personal income is 22%, which is one of the lowest maximum personal income tax rates in the world. This rate of 22% is imposed on all taxpayers who earn at least S$320,000 every year. There is also no taxation imposed on capital gains.
The pro-business tax policies in Singapore work with its many tax incentives and, coupled with its location which provides access to the larger Asia-Pacific market, have made Singapore one of the world’s leading locations for foreign investment and international commercial activity.
Should you require any assistance with the management of your Singapore taxes, we at Paul Hype Page & Co are always ready to be of assistance. Our tax experts have helped a great many of our clients achieve the most favorable results in relation to their Singapore tax obligations, and you will receive the same after you have contacted us.
How Companies Benefit from Singapore’s Tax Haven Status
The corporate income tax rate in Singapore is 17%, which is once again among the world’s lowest. The fact that many choose to start a company in Singapore because of the many tax benefits provided serves as clear evidence that Singapore is indeed a tax haven. Furthermore, there are tax incentives which have been introduced by the Inland Revenue Authority of Singapore (IRAS). Through these tax incentives, all eligible companies in Singapore are permitted to reduce their tax burden by significant amounts.
One of the most important tax exemptions which exists in Singapore is the Start-up Tax Exemption scheme. According to the details of the Start-up Tax Exemption scheme, all eligible companies which have been newly incorporated in Singapore may take advantage of a tax exemption of 75% of the first S$10,000 of income earned during the company’s first three consecutive years of business activity. The subsequent S$190,000 of income earned by the company will receive a tax exemption of 50% during the company’s first three consecutive years of business activity. A company which is eligible for the Start-up Tax Exemption is one which has been incorporated in Singapore and has a maximum of 20 shareholders. Among these shareholders, one of them must be an individual who holds a minimum of 10% of all of the shares of the company.