Singapore is considered a tax haven because of its low personal and corporate tax rates and other incentives for foreign investors. It levies 20% on personal incomes in the highest tax bracket, defined as incomes above 320,000 Singapore dollars, and does not tax capital gains. The city-state attracts international investment because of its strategic location as a gateway for companies planning to expand into emerging Asian economies. The Inland Revenue Authority of Singapore (IRAS), a statutory board of the Ministry of Finance, is responsible for collecting taxes. The island city-state located between Malaysia and Indonesia had a population of 5.5 million, as of May 2016, and has a reputation as a global hub for commerce and finance.
For years the government of Singapore have reviewed the tax systems of Singapore and put certain measures in place to go the point it is at today. Companies incorporated in the low tax haven of Singapore are taxed based on a territorial system. Singapore corporations are allowed to do business in and out of the jurisdiction.
Companies doing business outside of the jurisdiction are not taxed on their annual income which includes profits, dividends, interests earned. Income earned in tax haven Singapore is taxed at a very low rate of 18% of the annual profits realized by a Singapore corporation. All Singapore companies must pay to the government at the end of its financial year a license fee.
Offshore banking is a service which is highly regarded in tax haven Singapore. The country has a well established offshore banking system with some of the world’s leading financial institutions setting up branches in the jurisdiction. Singapore is one of the more respected jurisdictions offering offshore banking. The country’s banking system is very modern and sophisticated. Offshore bank accounts in the tax haven of Singapore are not taxed. Interest earned in an offshore bank accounting Singapore is tax free. This makes the tax haven of Singapore a perfect jurisdiction for investing capital since growth is guaranteed.
Aside from low or no taxation another characteristic of tax havens (one which have made them very popular) is their ability to provide privacy and confidentiality for clients. For offshore banking for example tax haven Singapore has very firm laws in place when it comes to the privacy of offshore bank account holders in the jurisdiction. Banking secrecy forms part of Singapore’s modern and much progressive legislation.
According to banking legislation of tax haven Singapore information which relates to offshore account holders and offshore bank accounts is not to be released by Singapore banks, banks employees, officers, directors and secretary among other persons who may ualify as bank officers. Disclosure of bank information in tax haven Singapore is punishable by a fine of $125, 000 or prison term of no more than three (3) years for an individual. Corporations who disregard this law can pay up to $250,000 in fines.
Tax haven Singapore also provides high level of privacy and confidentiality for corporations owners. There is no need to disclose the beneficial owners of Singapore corporations to the authorities in Singapore. Only one shareholder and one director is needed to incorporate a company in tax haven Singapore. Furthermore Singapore corporations can be incorporated using nominee directors and shareholders. There is no limitation on the nationality of persons who can incorporate companies in Singapore.