here are several reasons for investors turn to Singapore for establishing their operations and one of the determinants is Singapore’s tax regime – well-known for its attractive corporate and personal tax rates, tax relief measures, non-taxable capital gains, one tier tax system and extensive double tax treaties.
There are different types of taxes in Singapore.
Income Tax is chargeable on income of individuals at progressive tax rates, with current highest personal income tax rate at 22% and companies are taxed at a flat rate of 17% on its chargeable income regardless of whether it is a local or foreign company. Property Tax is taxes imposed on owners of properties. Motor Vehicle Taxes are taxes, other than import duties, that are imposed on motor vehicles. These taxes are imposed to curb car ownership and road congestion. For Customs & Excise Duties, Singapore is a free port and has relatively few excises and import duties. Excise duties are imposed principally on tobacco, petroleum products and liquors. Also, very few products are subject to import duties. These duties are mainly on motor vehicles, tobacco, liquor and petroleum products.
Goods & Services Tax (GST) is a tax on consumption. The tax is paid when money is spent on goods or services, including imports. This kind of indirect tax is also known as Value Added Tax (VAT) in many other countries. Currently the tax rate is at 7%.
For payment(s) of a specified nature (e.g. Royalty, Interest, Technical Service Fee, etc.) to a non-resident company or individual, it is required to withhold a percentage of that payment and pay the amount withheld to IRAS. This is called withholding tax. Singapore has a network of Double Taxation Agreements (DTAs) with more than 80 jurisdictions works to an advantage of any financial institution using Singapore as its regional or global hub. A DTA is an agreement concluded between Singapore and another jurisdiction (a treaty partner) which serves to relieve double taxation of income that is earned in one jurisdiction by a resident of the other jurisdiction including withholding tax.
Betting Taxes are duties on private lottery, betting & sweep-stake.
Stamp Duty is imposed on commercial and legal documents relating to stock & shares and immovable property
Others – The two main taxes are the foreign worker levy and the airport passenger service charge. The foreign worker levy imposed to regulate the employment of foreign workers in Singapore.
what are the payments that are subject to withholding tax.
Under the Singapore law, a person (known as the Payer) who makes payment(s) of a specified nature (e.g. Royalty, Interest, Technical Service Fee, etc.) to a non-resident company or individual (known as Payee) is required to withhold a percentage of that payment and pay the amount withheld (called ‘Withholding Tax’) to IRAS. So, what are the Payments that are subject to withholding tax? There are, Interest, commission, fee in connection with any loan or indebtedness; Royalty or other payments for the use of or the right to use any movable property; Payments for the use of or the right to use scientific, technical, industrial or commercial knowledge or information or for the rendering of assistance or service in connection with the application or use of such knowledge or information; Payments of management fees; Rent or other payments for the use of any movable property; Payments for the purchase of real property from a non-resident property trader; Structured products (other than payments which qualify for tax exemption under section 13(1)(zj) of the Income Tax Act); Distribution of real estate investment trust (REIT).
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