According to statistical analysis, if Singapore tax rates, most of the Investors choose Singapore to establish their businesses for many reasons. The prime motivator of setting up any operation in any country is ease. The ease comes from another fundamental determinant that is Singapore’s tax regime. Singapore’s tax rates always consider an essential factor because it has desirable corporate and personal tax rates. The tax relief measures, which is another great deal of operating any business, is also not an issue in Singapore. Investors also think of Singapore because of the absence of capital gains tax and a one-tier tax system, which is a rarity. There is also an extensive double tax treaty in Singapore for investors.
Any individual, including all the corporations, trustees, and partnerships, who wish to set up any new trade, or profession in Singapore, is chargeable to tax on all profits. Any income which generates revenue from Singapore is tax chargeable. The only situation where tax rates differ is when we exclude all the gains that arise from the sale of capital assets.
There is an opportunity for all the investors in this ultimate guide about Singapore tax rates and tax systems.
Current Stats about Tax Rates in Singapore
The following are the current statistical analysis of current tax in Singapore, so it indicates how tax rates are working are currently in use in Singapore.
- The tax rate on any corporate profits until 300,000 SGD in a company – Operating tax rate at 8.5%.
- The tax rate on commercial profits for more than 300,000 SGD in a company is – 17%.
- The tax rate on capital gains accumulated by the company – 0%
- The tax rate on bonus allocation to shareholders – 0%
- The tax rate on any foreign-sourced income that will not generate in Singapore – 0%
- The tax rate on all the foreign-sourced income will generate into Singapore – 0 – 17% subject to conditions.
Important Facts – Singapore Income Tax System
- Singapore, many times, follows a regional and national basis of taxation. In simpler words, all the companies and individuals working in Singapore and generating revenue in Singapore are tax-attaining. Any company or an individual generating foreign-sourced income (service income, branch profits, shares) are known to be taxed only when it is known as remitted into Singapore. The case is distinct if the payment is visible to tax in a state with the headline tax rates of 15%. The concept of a local source of income is simple, but the revenues often become complicated. The reason is mainly that universal rules cannot apply to every scenario. For example, whether any profit arises in or generates revenue from Singapore, it primarily depends on the profits, which helps give rise to such profits.
- Singapore’s corporate tax rate is limited to a maximum of 17%. Singapore is trying to keep corporate rates competitive to attract a fair share of foreign investment, and Singapore is continuously attracting many foreign investors. Singapore supports a single-tier corporate tax system. The single-tier tax system is where the company pays the tax only when the company is generating profits and is not attributing to the shareholders, which includes tax-free dividends.
- Singapore’s tax rates take the initiative at 0%, and the maximum it can reach is up to 22% (exceeding S$320,000) for the residents of Singapore. For all the non-residents of Singapore, a flat rate of 15% to 22% applies.
- You can also increase the flexibility of taxes in Singapore as a source of government revenue. In 1994 they introduced a GST system, which is Goods and Services Tax. The current GST rate is not over 7%.
- All the non-residents living in Singapore and generating revenue in Singapore, including companies and individuals, are subject to tax in Singapore.
- Singapore does not work with capital gains tax. As for the capital loss expenses in Singapore, they are correspondingly not allowed for a tax deduction.
- There are more than 50 bilateral comprehensive tax treaties in Singapore, helping all the Singaporean companies minimize their tax burden.
Essential Types of Taxes in Singapore
- Income Tax–The Chargeable on any individuals and companies generating revenues are subject to income tax.
- Property Tax – Enacted on property owners, but built on rental values of the stuff.
- Estate Duty–This tax type is no more since February 15, 2008.
- Motor Vehicle Taxes – Taxes, excluding all the import duties, are imposed on motor vehicles.
- Customs and Excise Duties – Singapore is considered a free port and has excise duties and import duties. Excise duties are exposed mainly to tobacco, petroleum products, and liquors in this category.
- Goods & Services Tax (GST) – A tax on consumption. This kind of tax is mainly known as VAT (Value Added Tax) in other countries.
- Betting Taxes – Tax on all the private lottery, betting, and sweepstake.
- Stamp Duty – Tax imposed on any commercial and legal documents related to stock and shares.
- Others – The two central taxes that fall in this category are the foreign worker levy and the airport passenger service charge. The foreign worker levy enacts to legalize the employment of foreign workers in Singapore.
Singapore Tax Governing Authority
The IRAS (Inland Revenue Authority of Singapore) was formed in 1960 to integrate all the critical revenue collection agencies into a single body. IRAS is primarily liable for collecting significant tax types like income tax, property tax, GST, betting taxes. IRAS work as the primary administrator for the Ministry of Finance in Singapore and plays a vital role in formulating tax policies.
2000 and Beyond
2000 and beyond is an era of innovation and entrepreneurship in Singapore. After 2000, there were several measures introduced mainly to attract foreign talent and investment. Tax rates were reduced and currently limited up to 17% for companies and 20% for people. This period also observed the introduction of group relief in Singapore. The one-tier corporate tax system shows up after 2000.