In the first place, the tax system in Singapore is already highly competitive. Singapore practices a one-tier tax system which means that companies are only charged 17% as part of corporate tax rate. Dividends and other profits are shared among stakeholders. This basically means that they enjoy the fruits of their labour. Of course, you can also say that tax haven companies do not pay any tax at all or even if they do, it will not be as much as 17%. Still, it is safe to say that this would be one of the major advantages of tax haven companies. However, Singapore companies still benefit from other incentives, schemes and services that are offered by the Singapore government.
Additionally, in answer to the fact that Singapore is not perceived as a tax haven, the local government are tightening certain regulations to ensure that foreign companies do not use legal loopholes in order to enjoy extremely attractive tax rates. One of the methods used by the government is the signing of the double taxation treaty with other nations. This means that companies which have a presence both in Singapore and any other nation within the purview of the agreement will end up paying tax one way or another. Thus, this pretty much erases the benefit that tax haven companies might have over Singapore companies i.e. no liability to pay taxes.
In terms of safety and security, Singapore is deemed as the financial capital of South East Asia. This is one of the reasons why companies tend to utilise Singapore’s existing regulations in order to legally circumvent the system. After all, banking laws have always been private and thus, no information can be leaked out in any instance. However, most individuals are not aware that there are circumstances and situations where such things do occur i.e. banks have the responsibility to provide confidential information. The Singapore government has also passed new regulations that allow the country to give information in matters arising from criminal affairs even if such information is confidential and private in nature i.e. banking information.
As can be seen, the benefits of traditional tax haven companies have slowly been eroded as a precautionary step by Singapore to ensure that it is no longer viewed as being soft on business and banking transactions. Besides the one-tier tax system, Singapore companies enjoy many schemes and incentives which are offered by the government to both local and foreign companies. The only thing that might prove to be a stumbling block to those looking to move from tax haven companies to Singapore companies would be the fact that certain rules and regulations will now have to be met. The regulatory conditions and requirements would be deemed as slow moving by those used to the quickness of tax haven companies. However, in the long run, incorporating or registering a Singapore company as opposed to a tax haven company is still a good idea as its benefits are numerous indeed.