UPDATE ON SINGAPORE BUDGET 2009
The Implications on Taxation for Singapore Companies
Singapore's corporate tax rate for YA 2009 (Tax Year Jan 2008 to Dec 2008) is 18%, however for YA 2010 (Tax Year Jan 2009 - Dec 2009) the government has reduced the tax rate to 17% in view of the current economic crisis.
For companies incorporated in 2008 or earlier, Singapore offers the following attractive tax benefit: For the first 3 years from incorporation $100,000 profit is tax free, and the next $200,000 is taxed at 9% (half the corporate tax rate), giving you an effective tax rate of 6% on your first $300,000 profit, per year.
Companies currently enjoying the scheme will enjoy a reduced tax rate in YA2010 of 8.5% for the $100,001 - $300,000 bracket of income. The same scheme will continue to apply for new companies incorporated in 2009.
Foreign Sourced Income
In addition to Singapore's low corporate tax rate of 18% (now 17%) it has Double Taxation Avoidance agreements (DTA) in place with 60 countries, making Singapore a very attractive jurisdiction to manage regional business transactions. This means that if you have paid tax for the income at source (to a country that has a DTA with Singapore), your income remitted to Singapore will not be subject to Singapore Tax (subject to certain IRAS guidelines).
Hence, business owners and investors are often unaware that foreign-sourced income remitted into Singapore is exposed to Singapore taxation if tax has not been paid to the source country.
Many people have the perception that their foreign income is non-taxable so long as there is a DTA agreement between the country (from which the ...