For every employer looking to manage the company’s payroll efficiently, it’s important to have a sound knowledge of Singapore corporate taxation as well, to help manage the cash flow situation effectively.
In general, Singapore follows a territorial tax system, which means that tax is imposed on all income accrued in or derived from Singapore, as well as on all foreign-sourced income remitted to the country, with certain qualifying exemptions (dividends, branch profits, service income).
There are no capital gains tax or withholding tax on dividends in Singapore. Furthermore, there are no capital duty, capital acquisitions tax, inheritance or estate tax, or even net worth/wealth tax in the city-state. Importantly, it is possible for there to be advance rulings on taxation as well. Additionally, as there are no significant restrictions on foreign exchange transactions and capital movements in Singapore, it is possible for funds to move in and out of the country freely.
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Singapore sets its corporate tax rate at 17 percent. This rate is derived by calculating the following: taxable revenues less allowable expenses and other allowances, which is otherwise known as the company’s chargeable income. This attractive rate is one of the world’s lowest. However, should you make full use of government incentives, subsidies, and schemes, your effective tax rate will be even lower.
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