Singapore and International Tax Planning
One of the biggest advantages businesses in Singapore have is related to the tax system that maximizes the profits of every company there. Numerous laws protect companies against large taxes and it is very easy to reap all the benefits of your work as a business owner in Singapore without paying much towards taxes at the end of the year.
Although Singapore is considered to be a so-called “tax haven” it is so in a completely legal way. As a business in Singapore, you have a lot of benefits from the point of view of the taxes you have to pay towards the government, but all of these benefits are completely legal. That means that you will not even be tempted to commit tax fraud or tax evasion, because the taxation system will simply be good enough.
A very common practice out there is incorporating a business as a BVI (British Virgin Islands) company. These companies are not required to pay taxes and they are not even required by law to submit accounting reports, which makes them true “tax havens”. However, the Singaporean government has made sure that this option is not even attractive for those who want to open a business there by creating the perfect environment for offshore company incorporation.
One example of how the taxation system in Singapore works is the fact that corporations only have to pay %17 one-tier tax at the end of the year. Each shareholder’s profits though are not taxable and they can be kept by them in a completely legal way. This diminishes by a lot the sum of money a company loses through taxes and it allows its owners and shareholders to reap the products of their work in a more advantageous way.
When it comes to international tax planning, Singapore is extremely attractive. Here, there is no taxation on capital gains and that means that it is profitable to hold investments in countries with which it has signed treaties (such as India, for example).
Also, you can use the “no inheritance tax” policy in Singapore if you are about to inherit large sums of money. That means that you will not be taxed on what you inherit whatsoever and that you can keep all the wealth your received from someone who has chosen you as their inheritor.
Another great thing about the Singapore is that it does not levy taxes on foreign sourced income. Consequently, this means that you will not have to pay taxes for intellectual property taxes as long as you can show it as the property of an offshore company.
Furthermore, as a foreign entrepreneur, you can start a business that receives services income and foreign sourced income without having to pay taxes for that. Even more, in Singapore you can do the same thing for dividends as well, which can maximize your company’s profits by a lot.
As a business owner in Singapore you will never feel the need to “dodge” the law, because the law will be advantageous for you. You will not have to hire tax experts to help you minimize taxes illegally, but to help you get acquainted with the Singaporean taxation system and to its benefits. All in all, the entire tax system in Singapore is quite easy to follow and it can bring you a very large number of benefits (including not having to pay taxes as an offshore start-up company for the first S$100,000 in the first 3 years, for example). Furthermore, taxes can be paid at the end of the year with simple forms and they can be paid online as well.
If you decide that opening a business in Singapore is the best choice for you, then do try to acquire as much information as possible both on the way you can actually open the business and on the entire taxation system for international entrepreneurs. Talk to specialists and adopt a strategy that will be beneficial to your business!