Facebook co-founder Eduardo Saverin’s recent decision to be based in the Republic will bode well for businesses here and create employment for Singaporeans.
Analysis by Rikvin shows that after relocating to Singapore in 2009, Saverin has invested in a Singapore-based company Anideo, which known for its video-streaming application Denso. Other projects include a cosmetics line by Rachel Kum, Singapore’s 2009 entry in the Miss Universe pageant and Perx, a Singapore-based loyalty card mobile application.
“Saverin making Singapore his home benefits the city-state in multiple ways. Firstly, by investing in Singapore startups, Saverin has created employment primarily for Singaporeans. This is in line with the Singapore government’s appeal for companies to create opportunities for the core Singaporean workforce. Secondly, more American entrepreneurs and angel investors may follow his example and consider Singapore as the best place to seed fund high-potential startups. This will increase the economic pie for everyone by creating a positive cyclical effect,” said Mr. Satish Bakhda, Head of Rikvin’s Operations.
Meanwhile, Saverin is one among a growing number of people are renouncing their U.S. citizenship in recent years, primarily for tax reasons. Data from the Inland Revenue Services (IRS) shows that approximately 1,778 people have renounced their U.S. citizenship in 2011 as a means of legally relinquishing stringent tax filing duties. “This trend could sway in the Republic’s favor as it offers a simpler and more attractive Singapore corporate tax and Singapore personal income tax system,” added Mr. Bakhda.
To start with, the amount of income tax paid depends on one’s tax residency in Singapore. An overseas Singaporean need not file Singapore income tax. Also, the maximum personal income tax rate for residents is 20% for a taxable income of S$320,000. Non-residents are taxed at the flat rate of 15% or the residential rates, whichever is higher. Moreover, an e-filing option is available for all taxpayers and there is no hefty exit tax for renouncing citizenship. There is also an option to withdraw all pension from the central provident fund. Additionally, Singapore does not impose a capital gains tax.
“Singapore’s inland revenue department, IRAS, has made it easy for residents and non-residents to comply with their tax filing duties by making it uncomplicated, affordable and quick. The United States could take a cue from Singapore’s system and avoid further brain drain. In the meantime, we are optimistic that our tax structure will compel more people to relocate here via the Singapore employment pass as a way of complementing the local workforce and eventually opt for Singapore permanent residence via the PTS Scheme,” concluded Mr. Bakhda.