International tax planning is a complex field where a deep understanding of the international tax knowledge (tax laws) and multiple tax jurisdiction and there are many fundamental issues to consider before establishing the optimum tax corporate structure.
Why Incorporate a Singapore company for your Tax planning?
Singapore continues to be an attractive location for foreign investors to set up a business in. Besides the low corporate tax rate of 17%, there are many pertinent tax features that make Singapore attractive, such as:
There is no tax on capital gains in Singapore.
There is no withholding tax on dividends paid by a Singapore resident company.
A company resident in Singapore will be able to avail itself of the various tax benefits afforded under the wide network of Singapore Double Tax Agreements.
Certain types of foreign-sourced income are fully tax exempted such as dividends, branch profits and service fee income derived by Singapore companies
There are no thin capitalisation rules in Singapore and therefore, this allows the flexibility in using debt to fund the acquisition of subsidiaries of a holding company in Singapore.
Singapore has further strengthened its position as a viable tax residency country for tax treaty or planning purposes.
Who and what needs tax planning?
Many corporation operations that could have an offshore Singapore company for international tax planning include:
Intellectual property reassignment
Financing and banking matters
Administration and Treasury Management
Insurance and Re-insurance
International Trade and Provision of Services
Executive recruitment and Employment
Ship registration and management
Below are some examples and is not exhaustive.
1. Intellectual Property
Intellectual properties including computer software, technical knowledge, patents, trademarks, trade secrets, and copyrights. The right of these intellectual properties generating royalties and licensing fees is assigned to another offshore Singapore company via license or franchise agreements hence minimise tax.
International tax planning is very useful for groups of companies that have lot of intra-company and inter-company financial management functions, such as granting of loans for project finance or working capital requirements. Singapore has many double tax agreements with more than 80 countries that allow interest payments to be tax deductible in the country of the borrower reducing the overall corporation tax liability.
3. Investment Holding
Using Singapore company as an international investment holding company where it’s parked investment assets such as stocks, shares, securities, bonds, and mutual funds allows for confidentiality of ownership and significant tax advantages by reducing or eliminate withholding taxes on investment income.
4. Property Ownership
An effective international tax planning with the right structure of ownership allows shareholders of the offshore Singapore company that own real estate property both in the international jurisdiction of incorporation and other countries including the country of residence reduce capital gains and inheritance taxes.
5. International Trade and Provision of Services
International tax planning is very useful for companies’ international trade such as re-exporting and transhipment trade or consulting Services in the form of international marketing and promotion in international markets. With an effective tax planning the resulting profit can be parked in a tax beneficial regime offshore that attract lower tax liabilities.
6. Tax Incentives
To encourage foreign capital inflows, Singapore provides a comprehensive program of incentives based primarily on consideration such as total investment involved, technical input, export potential, employment opportunities and general cohesiveness to the development of industrial and financial activity.
International Tax Planning Advisory for Private Individuals
1. Individuals with inherited wealth
Individuals who inherit wealth can use offshore structures such as Singapore where there is no inheritance tax. To achieve a successful process, it is advisable to set up before inheritance of wealth.
Entrepreneurs who start off with an offshore Singapore Company and their own residence’s company/offices can helps to protect their assets and minimise tax from local authority.
3. Owners of Intellectual Property
By assigning intellectual property rights and innovation rights to an offshore Singapore corporation, inventors, engineers, and designers can ensure revenue and royalties are received through an offshore corporation, as the owner of such rights, rather than have these revenues come to them personally. Singapore Tax residence receiving foreign sourced income from offshore corporation does not attract any tax.
4. International Investors
For having an offshore Singapore company where it can act as holding areas for investments made in a number of different markets and countries. Singapore company receiving dividend, services income and other are deemed as foreign source income does not attract any tax.