Is Singapore truly a Tax Haven?

[BerlusconiSchmidt]

I was looking into various Asian countries to minimise my corporate and personal Tax and I came across NZ and Singapore.

I read on this forum some users saying that Singapore corporate tax does not apply if your income is not sourced from Singapore and also if it's not remitted within Singapore,
however I could not find any info online regarding this. Is there any solid evidence that clearly says Singapore corporate Tax is not due when income is sourced and not remitted in Singapore?
Are there any real life examples of this?

 

[daniels27]

It was mainly me promoting this idea. While there is many information available online. I was in touch with Sovereign and they confirmed this as well. I posted the relevant law in the other threads. You may want to read this one for example.
https://www.incorp.asia/blogs/singapore-offshore-company/
It you want to incorporate I am happy to send you my contact at Sovereign. You can also contact them on their website directly.

 

[BerlusconiSchmidt]

It was mainly me promoting this idea. While there is many information available online. I was in touch with Sovereign and they confirmed this as well. I posted the relevant law in the other threads. You may want to read this one for example.
https://www.incorp.asia/blogs/singapore-offshore-company/
It you want to incorporate I am happy to send you my contact at Sovereign. You can also contact them on their website directly.

Do they ask for proof that the company is tax resident of another country tho?

And what about dividends, can they be issued to the directors even if the company is Tax exempt?

 

[Sols]

To answer the question in the topic line, it depends on how you define tax haven and how you use your company. If by tax haven you just mean places like BVI and Caymans where there's no corporate tax ever, Singapore doesn't qualify.

If you want to start a business in a low tax environment with access to a highly skilled talent pool, friendly regulations, strong banking sector, regional economic powerhouse, and one that looks good to potential investors or when making an exit — add Singapore to your shortlist.

And if you run a Singapore company in a way that income doesn't derive from and isn't transferred to Singapore, you can in many cases end up with a company that's not subject to any local tax in Singapore (similar to BVI/Caymans).

Reference materials:
https://taxsummaries.pwc.com/singapore/corporate/taxes-on-corporate-incomehttps://www.iras.gov.sg/taxes/corpo...c-guide-to-corporate-income-tax-for-companieshttps://www.iras.gov.sg/taxes/corpo...ions-for-companies/taxable-non-taxable-incomehttps://www.iras.gov.sg/taxes/corpo...exemption-on-specified-foreign-sourced-income

Do they ask for proof that the company is tax resident of another country tho?

Usually not.

And what about dividends, can they be issued to the directors even if the company is Tax exempt?

Yes.

 

[Marzio]

I see 2 main problems with the SG non resident company:

1. who will open a bank account for a SG company?
2. since the company is managed outside SG it could be considered tax resident where you are tax resident. You need to choose wisely your tax residency or constantly be on the move (at some point you'll be tired of that)

 

[daniels27]

1. who will open a bank account for a SG company?

You just open any EMI like WorldFirst, Airwallex etc. Just make sure that it is not in Singapore. Normally, the real director and owner opens the account.

2. since the company is managed outside SG it could be considered tax resident where you are tax resident. You need to choose wisely your tax residency or constantly be on the move (at some point you'll be tired of that)

Yes, that is true with all companies. I think we are mainly looking for a place that is safe not to ever get a tax bill from where you are incorporated. Many people like the service in the lounge and in economy class.

 

[TheCryptoAnt]

I see 2 main problems with the SG non resident company:

1. who will open a bank account for a SG company?

Most banks/EMIs will do, even wise does.

2. since the company is managed outside SG it could be considered tax resident where you are tax resident. You need to choose wisely your tax residency or constantly be on the move (at some point you'll be tired of that)

True, rather go live in a mismanaged place or be on the move.

 

[daniels27]

True, rather go live in a mismanaged place or be on the move.

What is your favourite place to live for this case?

 

[Marzio]

I don't understand what SG has to gain by allowing this kind company: no taxes paid in SG and no money flowing to SG banks.

 

[TheCryptoAnt]

What is your favourite place to live for this case?

Most of the non-Western world really.
TH is nice

I don't understand what SG has to gain by allowing this kind company: no taxes paid in SG and no money flowing to SG banks.

Me neither tbh more than making their jurisdiction useful? And hence bringing more business to it.

They are very business friendly, their tax system is a good example of it.

 

[12345]

I don't understand what SG has to gain by allowing this kind company: no taxes paid in SG and no money flowing to SG banks.

paying state fees to SG , hiring SG accounting

 

[Marzio]

Me neither tbh more than making their jurisdiction useful? And hence bringing more business to it.

Allowing this specific company to exists imho gives to SG a "shady image" instead of "prestigious jursidiction" like they want to be perceiced.

It will attract bad PR and it's dumb because they already have mindshare for being a top holding location.

paying state fees to SG , hiring SG accounting

Do you mean for the company renewal? This is minutia.

What do you need accounting for if the company is tax exempt?

I assume that could be something you could do by yourself.

 

[12345]

Allowing this specific company to exists imho gives to SG a "shady image" instead of "prestigious jursidiction" like they want to be perceiced.

It will attract bad PR and it's dumb because they already have mindshare for being a top holding location.

Well it is the same in USA in some states and US doesn't have "shady image" I think

Do you mean for the company renewal? This is minutia.

What do you need accounting for if the company is tax exempt?

I assume that could be something you could do by yourself.

Yeah like state fees to incorporate the company, renew it, do some changes, I don't know how it works in SG in particular though

Isn't there audit / annual report requirement in SG? So SG accountant is required. I'm not sure, I'm don't have much knowledge about it

 

[BerlusconiSchmidt]

Can you open real Bank accounts in Europe or New Zealand for a Singaporean company?

 

[TheCryptoAnt]

What do you need accounting for if the company is tax exempt?

Ive spend some time today researching this and even tho the company is tax exempt you have to keep books + do it with a local firm (usually the one that set you up with the resident director).

Allowing this specific company to exists imho gives to SG a "shady image" instead of "prestigious jursidiction" like they want to be perceiced.

Honestly Ive got no answer to this but hey Im not gonna be the one complaining.

 

[daniels27]

Ive spend some time today researching this and even tho the company is tax exempt you have to keep books + do it with a local firm (usually the one that set you up with the resident director).

Most offshore places need accounting now. But you may be able to do it yourself and just send the P&L to the agent for filing.

 

[Marzio]

Well it is the same in USA in some states and US doesn't have "shady image" I think

US is in a league of its own, the only thing that have similar is that if the company isn't managed from within the country doesn't pay taxes.

US allows non us residents to form companies in US and open bank accounts so that $$$ flow to US.

Im not gonna be the one complaining.

I'm not gonna complain either, i'm just specultaing on the fact that SG non resident company doesn't make any sense for SG and IRAS could change that overnight like Cyprus did for the CY non resident company.

I wouldn't build my business on a temperary loophole.

 

[Sols]

I don't understand what SG has to gain by allowing this kind company: no taxes paid in SG and no money flowing to SG banks.

They don't have much to gain but also not a lot to lose. It's a loophole that Singapore could close quite easily if they ever need to. It just doesn't seem to be a big enough problem. People looking for these kind of setups are often on a shoe string budget and go for Seychelles/Belize instead to save a few grand a year.

People are still paying a few thousand SGD a year for the incorporation and accounting. If you employ people/contractors in Singapore (whom you could pay from a foreign bank account), I guess that adds value to the local economy. I haven't looked into whether that would create a taxable situation for the company, though, beyond payroll stuff.

 

[JohnLocke]

2. since the company is managed outside SG it could be considered tax resident where you are tax resident. You need to choose wisely your tax residency or constantly be on the move (at some point you'll be tired of that)

What tax rate would this company pay then? I assume the corporate tax rate in the country of where you as a person is resident right ?

 

[Marzio]

What tax rate would this company pay then? I assume the corporate tax rate in the country of where you as a person is resident right ?

Right.