TAXATION IN SINGAPORE

Presented By Aditya Tiwari Pratik Roy

About Singapore

Conti..
GDP (PPP) - $ 327.557 billion Total Area - 716.1 km

Per capita - $ 61,046

Population - 5,399,200

HDI

- 0.895

President - Tony Tan Keng Yam Prime Minister - Lee Hsien Loong

History of Taxation
The end of World War II highlighted the need for new infrastructure and fresh sources of revenue. In 1947 Income Tax was introduced in Singapore under the British colonial government. 1948 the Income Tax Act was imposed. With Independence in 1965, Singapore promoted a policy of rapid industrialisation and building an export oriented industrial base. The Economic Expansion Incentives Act was introduced in 1967 Goods and Services Tax (GST) in 1994.

Singapore Tax Governing Authority

Singapore Tax Governing Authority

The Inland Revenue Authority of Singapore (IRAS), was formed in 1960. An efficient tax administrator and a servicefriendly tax collector Responsible for collecting income tax, property tax, goods & services tax, estate duty, betting taxes and stamp duties. Plays a role in tax policy formulation by providing policy inputs.

TAXES PAYABLE IN SINGAPORE

1. Income Tax 6. Goods & Services Tax (GST)

2. Property Tax

7. Betting Taxes

3. Estate Duty

8. Stamp Duty

4. Motor Vehicle Taxes

9. Others

5. Customs & Excise Duties

INCOME TAX

TAX JURISDICTION
Singapore essentially adopts a territorial tax system. Generally, income is taxable in Singapore if it is:a. accrued in or derived from Singapore; or b. received in Singapore from outside Singapore and falls in one of the heads of charge.

HEADS OF CHARGE
Gains or profits from any trade, business, profession or vocation Employment income (including stock options, accommodation allowance and car) Dividends, interests or discount; Pension, charge or annuity Rent royalties, premiums and any other profits arising from property Any gain or profits of an income nature

YEAR OF ASSESSMENT
Singapore adopts a preceding year basis of assessment. Tax for any given year of assessment is paid on the income earned:
for individuals: in the preceding calendar

for companies: in the financial year ending in the year preceding that year of assessment

TAXATION OF INDIVIDUALS

OVERVIEW
Different tax rates and tax treatment apply to tax resident and non-tax resident. Who are tax residents ?
Singapore citizens Permanent residents who established Singapore to be their permanent home Foreigners who stayed or worked in Singapore for more than 183 days in the calendar year

TAX TREATMENT
Tax Resident Non- Tax Resident 1. Expenses* 2. Donations** 3. Personal Reliefs 4. Tax treaty between Singapore and another country
*

Yes Yes Yes Yes

Yes Yes No No

Expenses must be wholly and exclusive incurred in the production of income and not specifically prohibited. ** Donations must be a approved charity or a registered grant-making philanthropic organisation.

Personal income tax rates

TAX RATES
Tax residents
Taxed at a progressive tax rate First $20,000 at 0% and subsequent amounts at marginal tax rate ranging from 3.5% to 20% with effect from YA 2010

Non-Tax residents
Employees : 15% Directors fees, consultation fees and all other income: 20%

TAXATION OF CORPORATIONS

OPTIONS AVAILABLE FOR FOREIGN COMPANIES

Foreign companies can carry out business in Singapore in one of the following forms: Representative Office; Permanent Establishment; Subsidiary company or Branch.

REPRESENTATIVE OFFICE
Representative office is:(a) not allowed to engage in commercial activities or provide any services for a fee; and generally not regarded as a taxable entity for tax purposes.

(b)

PERMANENT ESTABLISHMENT
Singapore follows the OECD model tax convention - Generally, a foreign company would be liable to tax in Singapore if it has a permanent establishment in Singapore and the permanent establishment has income accrued or derived from Singapore or any foreign income received in Singapore.

In Singapore, permanent establishment is defined as a fixed place where a business is wholly or partially carried on.

PERMANENT ESTABLISHMENT
Permanent establishment includes:
(a) (b) (c) (d) (e) (f) (g) (h) a place of management; a branch; an office; a factory; a warehouse; a workshop; a farm or plantation; a mine, oil well, quarry or other place of extraction of natural resources; and (i) a building or work site or a construction, installation or assembly project.

BRANCH AND SUBSIDIARY

Companies (whether foreign or local) are taxed at a flat rate of 17% on their chargeable income with effect from 2009.

Who are tax residents ?

Companies whose control and management is exercised in Singapore.

Like individuals, different tax treatment apply to tax resident companies and nontax resident companies.

Changes in Corporate income tax rates

1997-00 2001 2002 2003-04 2005-06 2007-09 2010-13

26%

25.5%

24.5%

22%

20%

18%

17%

Single-tier income tax system

No double-taxation for stakeholders. Tax paid by a company on its chargeable income is the final tax and all dividends paid by a company to its shareholders are exempt from further taxation.

Current Tax Rates in Singapore

Income Tax rate on corporate profits for up to 300,000 SGD Tax rate on corporate profits above 300,000 SGD Tax rate on capital gains accrued by the company Tax rate on dividend distribution to shareholders Tax rate on foreign-sourced income not brought into Singapore Tax Rate 8.5% 17% 0% 0% 0%

Tax rate on foreign-sourced income brought into Singapore

0 17% subject to conditions

TAX TREATMENT
Tax Resident 1. Expenses* 2. Donations** 3. Capital allowance 4. Tax treaty between Singapore and another country
*

Non- Tax Resident Yes Yes Yes No

Yes Yes Yes Yes

Expenses must be wholly and exclusive incurred in the production of income and not specifically prohibited. ** Donations must be a approved charity or a registered grant-making philanthropic organisation.

CAPITAL ALLOWANCES
Capital allowance is granted in place of depreciation. To claim for capital allowance:- capital expenditure was incurred on the provision of plant and machinery; and - the plant and machinery is used for the claimants trade, business or profession.

WITHOLDING TAX
Generally, the payer is obliged to withhold tax where he is liable to pay the following types of income to another person not known to him to be resident in Singapore: - interest; - royalties and know-how payments; - fees for technical assistance or services; and - management fees.

WITHHOLDING TAX RATE

Depending on the nature of the payment, the withholding tax rate applicable to a payment made to a non-resident could be 10%, 15%, 17% or the rate specified under a tax treaty.

GOODS AND SERVICES TAX

SCOPE OF GST
GST is chargeable on any supply of goods or services made in Singapore

GST is a consumption tax that is levied on the supply of goods and services in Singapore and the import of goods into Singapore. GST is an indirect tax, expressed as a percentage (currently 7%) applied to the selling price of goods and services provided by GST registered business entities in Singapore. Annual Turnover exceeds S$1 million.

IMPORT OF SERVICES
Generally, the importation of services in Singapore is subject to GST. A person who belongs in Singapore has to account for GST if a person who belongs outside Singapore supplies a service to him.

EXPORT OF SERVICES
Where a person supplies an international service to a person who belong outside Singapore, such service is zero-rated. International services broadly includes, inter alia,:
services connected to international transportation; services connected with offshore goods; services supplied to persons and business abroad; and international telecommunication services.

PROPERTY TAX

OVERVIEW
A tax on immovable properties including all houses, land, buildings and tenements but excluding inter alia, chattels and industrial plant and machinery used for the manufacture of goods.

PROPERTY TAX RATES

Current Tax Rate: - 4% per annum of one owner-occupied residential propertys annual value - 10% per annum of a propertys annual value

STAMP DUTIES

OVERVIEW
A tax imposed on certain legal and commercial instruments. The main categories of instruments currently liable to tax are sale or any disposal (including gifts) of immoveable property and shares.

STAMP DUTIES RATE

The rates of duties on the various types of instruments range from a fixed amount of $10 on an instrument of partition to ad valorem rates depending on the amount or value of the consideration paid in a sale and purchase agreement. Ad valorem: A tax based on the assessed value of real estate or personal property. Ad valorem taxes can be property tax or even duty on imported items. Property ad valorem taxes are the major source of revenue for state and municipal governments.

CUSTOMS AND EXCISE DUTIES

Overview
Excise duties are imposed principally on motor vehicles, tobacco, petroleum products and liquors. All dutiable goods imported into or manufactured in Singapore are subject to Customs duty and/or Excise duty in accordance with the Schedule to the Singapore Customs Duties Order

Calculation and Rate

An ad valorem rate is a percentage of the Customs value of the imported goods such as 20% ad valorem. A specific rate is a specified amount per unit of weight or other quantity such as $293.00 per kg. Formulae for computation of duty payable on liquors: a) Formula Duty = Total quantity in litre x $70.00 x % of alcoholic strength b) Example : Importation of 100 litres of Port Wine with alcoholic strength of 19% Duty = 100 x $70.00 x 0.19 = $1,330.00

Conclusion
The ease of setting up and operating businesses is a prime motivator. Another central determinant is Singapores tax regime well-known for its attractive corporate and personal tax rates, tax relief measures, absence of capital gains tax, one-tier tax system, and extensive double tax treaties.

Webiliography
http://www.customs.gov.sg http://www.guidemesingapore.com https://www.iras.gov.sg http://en.wikipedia.org/wiki/Singapore