Tax Minimization in Singapore

Tax minimization refers to employing legal means through which an individual or a company can optimize the taxes they pay. This technique is nowadays very often used by companies trying to take advantage of a country’s taxation system. Tax minimization is also known as tax planning or tax optimization because it allows companies to structure the payment of their taxes. Singapore is one of the states where tax minimization is possible thanks to the city-state’s taxation system which provides for numerous exemptions, credits and double tax treaties. As a matter of fact, Singapore has some of the most advantageous double taxation agreements in Southeast Asia.

If you need a clearer definition of the tax optimization concept, you can ask the legal advice of lawyers in Singapore or you can watch the video below:

Singapore’s tax system as tax optimization method

Singapore’s taxation system is so efficient that both companies and natural persons can benefit from various tax exemptions. With respect to companies, start-ups are exempt from the corporate tax during the first three years of activities. Individuals, on the other hand, are taxed progressively. Every financial year the minimum amount earned by an individual can benefit from a 0% tax rate. Foreign citizens must be aware that they must be tax residents in order to benefit from this rebate.

Double tax treaties as tax minimization solutions in Singapore

At the moment Singapore has one of the largest networks of double tax treaties in the world, which is why foreign investors are keen on opening companies here. The city-state’s double tax conventions provide for reduced taxes or no taxes on the following types of incomes:

• -          dividend payments;
• -          interest payments;
• -          income derived from royalties;
• -          profits of permanent establishments of foreign companies operating in Singapore;
• -          income derived from immovable property;
• -          employment incomes;
• -          directors’ fees;
• -          business profits.

Almost every income can be optimized so that the taxes paid are minimal. One of the most employed structures for tax minimization is the trust. Setting up a trust in Singapore can bring various tax deductions on the investments made.

If you need legal advice on choosing the best tax minimization solution, you can contact our law firm in Singapore for assistance.