Expert view: The tax incentives of being in Singapore
Thursday 16 June 2011 - by Yeo Tuan Yao
Financial institutions seeking to expand or diversify their business in Singapore can enjoy a favourable business environment, skilled and experienced workforce, excellent infrastructure and most importantly, cost competiveness and a competitive tax environment.
Singapore's corporate tax rate of 17 per cent is amongst the lowest in the Asia-Pacific. This corporate tax rate can be further reduced to an effective tax rate of approximately 5 or 8 per cent for the first S$300,000 under the tax exemption scheme for new start up companies or partial tax exemption scheme. In addition, all dividends payable by a Singapore company to its shareholders are exempt from tax.
Apart from an attractive corporate tax rate, Singapore has a range of other tax incentives for the financial services sector.
In 2004, the Financial Sector Incentive Scheme came into effect to provide for various tax incentives to attract financial institutions to set up and expand their operations in Singapore. This scheme is administered by the Monetary Authority of Singapore.
Under the FSI scheme, income derived from a FSI company from a range of activities enjoys a concessionary tax rate of either 5 per cent or 10 per cent.
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