Taxation of Companies in Singapore
Taxation of Companies in SingaporeUpdated on Tuesday 09th February 2016
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Entrepreneurs interested in expanding their business activity in Singapore should know the taxation system applicable to companies here. Singapore is an investment oriented country, interested in attracting foreign direct investments; as such, the Singaporean government has created a taxation system attractive to foreign investors. The business environment in Singapore is appealing to foreign investors due to a lower corporate tax and tax incentives offered to companies set out here; our Singaporean lawyers can provide you with further information on the taxation law.
Corporate taxes in Singapore
Singapore is one of the most important economies in the world; the legislative system is favorable to an easy process of doing businesses and the workforce here is highly educated and trained; as such, foreign entrepreneurs are interested in setting up a company in Singapore.
The taxation system applicable to foreign company is comprised of the following:
• corporate tax – applicable at a standard rate of 17%; the corporate tax has been reduced in six stages since 2001, when the corporate tax had a value of 25.5%;
• goods and service tax – a consumption tax applicable at rate of 7% for the import of goods;
• withholding tax on royalties, applicable at a rate of 10% of the gross amount of the dividends;
• withholding tax on interests, applicable at the rate of 15%.
Our law firm in Singapore can provide you with more details upon this subject.
Tax incentives for companies in Singapore
The Singaporean government offers a set of tax incentives to resident companies in Singapore. According to the local legislation, a company is considered a tax resident regardless of the incorporation place, as long as the place of control and management is set up in Singapore.
The Singaporean government offers a 100% corporate tax exemption for newly incorporated companies, for the first $100,000 taxable income in the first three year of financial activity. The business should meet the following criteria:
• the company is incorporated in Singapore;
• the company is a tax resident in Singapore;
• the business is owned by maximum 20 shareholders;
• it is compulsory for the business to have an individual shareholder who owns a minimum of 10% of the company’s shares.
Newly formed companies with a taxable income of maximum $300,000 can benefit of corporate tax reduction (applied at the reduced rate of 8.5%) for the first three years of activity.
If you need further information on the taxation of companies in Singapore, our Singaporean law firm can offer you with assistance on this subject.