The Republic of Singapore is a Commonwealth country located at the tip of the Malaysian peninsula occupying an area of 622 square kilometres. Singapore was formerly part of Malaysia which later gained independence from Britain in 1957. Eight years later in 1965, Singapore broke away from Malaysia and become a sovereign state in its own right. Because of its close past connections with Britain, the business language remains English and the English common law system applies.
The local currency is the robust Singapore Dollar and there is an excellent professional infrastructure with good legal services. Most of the large accountancy firms have offices in Singapore as do most of the major international banks.
Communications are excellent with state of the art telecommunications network and a world renowned airport which serves as a regional hub for over 100 destinations.
In a short span of four decades, Singapore has established itself as a reputable regional financial centre in the Asia-Pacific interim. With an open economy shaping a conducive business environment, the minimal restrictions on foreign investment and the free flow of capital in foreign currencies has made Singapore highly attractive to global investors. Singapore is known for its deep and liquid capital markets, possessing one of the more well-established markets in Asia Pacific; namely the Singapore Exchange (SGX) which is one of the preferred listing locations in the region. Furthermore, the Singapore Real Estate Investment Trust (REITs) market has grown to be the largest in South East Asia. Today, Singapore is one of the top 4 most active foreign exchange trading centres in the world. It is also currently the second largest over-the-counter (“OTC”) derivatives trading centre in Asia, and a leading commodities derivatives trading hub. With over S$1.2 trillion of assets under management, Singapore is the premier asset management location in Asia.
On top of the comprehensive network of Double Tax Agreements with more than 60 countries, Singapore offers businesses one of the lowest corporate tax rates (17%) in Asia Pacific in a highly competitive tax rate environment. The robust regulatory framework coupled with a stable political democratic structure and a well established judicial system endorses good corporate governance practices making Singapore a strategic financial investment hub.
Singapore’s tax system is based on the principles of source and remittance. Only income and profits that are derived and arisen in Singapore will be subject to tax and foreign sourced income remitted back to Singapore. Capital gains are not taxable. Furthermore, dividend receipts in the hands of individuals are exempt from tax. The current corporate income tax rate is 17% but generous partial exemptions are available. Individual income tax is collected at graduated rates with the highest tax bracket at 20% for income exceeding S$300,000.
Registration for Goods and Services Tax (“GST”) is applicable to businesses that have an annual turnover of taxable supplies exceeding S$1,000,000. Singapore GST is currently levied at 7%.