Singapore and the Isle of Man have recently signed an Agreement for the Avoidance of Double Taxation (DTA) in London. The DTA incorporates internationally agreed standard for exchange of information for tax purposes and prevention of fiscal evasion. However, the agreement is not yet ratified and therefore does not have the force of law.
The Isle of Man is a self-governing British Crown Dependency located between the islands of Great Britain and Ireland in the Irish Sea. With the latest DTA, Singapore company registration specialist Rikvin recognizes that the republic has sought to widen its economic sphere and strengthen its position as a hub for businesses, especially from Europe.
Currently, Singapore has 69 comprehensive DTAs and seven limited DTAs in force. The main objective of these DTAs is to minimize tax barriers to the flows of trade, investment, technical know-how and expertise between two treaty countries. Through the provisions of a DTA, taxpayers engaged in cross-border trade can enjoy certainty on the taxing rights of both countries, benefit from the elimination of double taxation, and gain access to a platform to settle tax disputes.
Moreover, the Singapore government has initiated several business-friendly tax policies to further its claim as the location of choice for MNCs to start a company in Singapore and launch their operations in the Asia Pacific. “These include attractive corporate tax and personal income tax rates, ease of setting up and doing businesses, extensive network of free trade agreements, absence of capital gains tax, and lower lending rates offered by banks in Singapore,” informed Satish Bakhda, Head of Operations at Rikvin.
The Singapore corporate tax rate is approximately 8.5% for profits up to S$300,000 and a flat 17% for profits above that level. Additionally, a new private limited company with less than 20 shareholders enjoys zero tax on the first S$100,000 of taxable income for each of the first three years of assessment.
In addition, Singapore offers every business that opts for Singapore company setup an automatic 400% tax deduction or option for a 60% cash payout each year for investments made via the Productivity and Innovation Credit (PIC) scheme.
Another benefit is that Singapore-based holding companies or headquarters can repatriate dividends from their foreign subsidiaries to Singapore without incurring Singapore tax. “This is because Singapore adopts a territorial basis of taxation. Foreign-sourced income is taxed only when it is repatriated back into Singapore,” concluded Mr Bakhda.