Singapore

Singapore is a republic with an enviable record of political stability and the government actively encourages foreign investment by offering fiscal and non-fiscal incentives to businesses pursuing certain types of activities. Singapore's corporate tax rate has been revised gradually and steadily downwards and its current corporate tax rate is one of the lowest in the Asia Pacific region. Together with an extensive treaty network, Singapore is well positioned as a desirable location for setting up business operations. Singapore's tax regime is based on a territorial concept and income is assessed to tax on a preceding year basis. Singapore-sourced income and, subject to certain exceptions, foreign-sourced income received in Singapore, are subject to income tax. Nevertheless, foreign-sourced dividends, branch trading profits and service income are exempt from Singapore tax upon receipt in Singapore, provided certain conditions are satisfied. There is no capital gains tax in Singapore. However, gains of a recurring nature may be regarded as income and are subject to tax accordingly. As a result, the distinction between a capital gain and a revenue gain becomes important. This is a question of fact which depends primarily on the taxpayer's intention. Current year unutilized losses, capital allowances and approved donations of a Singapore company can be offset against the assessable income of another Singapore company within the same group. Both the company transferring such attributes and the recipient company must be incorporated in Singapore, belong to the same group of companies and maintain “ordinary shareholdings of 75 percent” and have the same accounting year-end. A company is a resident for Singapore tax purposes if the control and management of its business is exercised in Singapore. Payments made to a Singapore tax resident are not subject to withholding tax. Certain types of payments made to a non-resident company are liable to withholding tax. The payer is obliged to withhold tax at certain specified rates. There are withholding tax exemptions for, amongst others, certain interest payments made by banks and similar financial institutions to non-residents, certain payments to approved branches if Singapore banks and payments to a non-Singapore entity for services performed outside Singapore. There is no withholding tax on dividends paid to non-resident shareholders. Singapore has an extensive tax treaty network. At the time of writing, Singapore has entered into comprehensive double taxation agreements with 69 countries, and a further 11 treaties are awaiting ratification.