Singapore’s taxation system consists of direct and indirect taxes. The main characteristic of the Singapore taxation system is that taxes are levied based on residency. Foreign companies operating in Singapore benefit from certain advantageous tax deductions which also cover profit repatriation. Singapore companies with profits earned outside the country, including dividends and bank interests will be exempt from paying any taxes. This ways, profit repatriation in Singapore is free of tax. Foreign profits will not be considered to be earned from Singapore if it derives from the activities of a permanent establishment, according to the city state’s double taxation agreement. However, incomes derived from employment outside Singapore will be taxed in the city-state.
For information about how tax residency is determined you can ask our lawyers in Singapore.
Repatriation of profits in Singapore refers to the earnings brought into the country by companies operating outside the city state. According to the Singapore tax system, dividend payments, interests and royalties are subject to withholding taxes and once these taxes are levied there are no further taxes applied to these profits. Our Singapore lawyers can provide you with information related to the taxation of dividends, royalties and interests.
With respect to foreign companies repatriating profits made in Singapore, the Inland Revenue Service does not impose any restrictions on money movements. The only exception applies to cash movements, any amount above 30,000 SGD must declared when entering or exiting the country.
Considering Singapore does not impose any restrictions on profit repatriation, dividend payments made by Singapore companies to foreign shareholders are exempt from taxation. Companies repurchasing their shares are considered to have paid the Singapore dividend tax out of their distributable profits. Other profits that can be repatriated in or outside Singapore are management or technical fees which could be subject to withholding taxes. However, these fees could be exempt from taxation or benefit from reduced rates according to Singapore’s double taxation treaties.
For detailed information on taxation matters, please contact our Singapore law firm.
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