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What is a Resident Singapore Company

04th January 2011
By Shayne in Business Law
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Singapore is popular for its attractive tax rates, positive and pro-business policies. Singapore taxes are much lower than most other developed nations and over the years, it has continued to slide down further. Taxes vary for a resident Singapore company and a non-resident Singapore company. The body responsible for administering, assessing and collecting Singapore tax is the Inland Revenue Authority of Singapore (IRAS).

A company is considered tax resident in Singapore if the control and management of its business is exercised from Singapore. A Singapore branch of a foreign company is generally not treated as a Singapore tax resident since the control and management is vested with an overseas parent company.

These are some of the common benefits enjoyed by a resident Singapore company, which a non-resident would not. It includes the following:

• Benefits conferred under the Avoidance of Double Taxation Agreements (DTA) that Singapore has concluded with treaty countries.
• Tax exemption on foreign-sourced dividends, foreign branch profits, and foreign-sourced service income under section 13(8) of the Income Tax Act.

• Tax exemption scheme for new start-up companies.
• Singapore resident companies are also eligible for partial tax exemptions in the form of lower effective tax rates capped at 8.5% on the first S$300,000 of its chargeable profits per year of assessment.
• A resident company enjoys tax benefits bestowed under the Avoidance of Double Taxation Agreements. An Avoidance of Double Taxation Agreement between Singapore and another country prevents double taxation of income earned in one country by a resident of the other country. It clarifies the taxing rights between Singapore and her treaty partner on different types of income arising from cross-border economic activities between the two countries. The agreements also provide for reduction or exemption of tax on certain types of income.

Finally, Singapore tax exemptions are allowed on foreign sourced profits and dividends that are remitted to Singapore if the headline tax of that country from where the income was sourced is a minimum of fifteen percent and the foreign income had been subjected to tax in the foreign country from which they were received. Irrespective of the headline tax rates of the foreign country, these foreign incomes will be fully exempt from Singapore taxes if not repatriated or remitted directly or indirectly to Singapore.

Find more information on how to form a Singapore company. Rikvin has successfully helped thousands of foreign entrepreneurs who wish to form a Singapore company by securing their work visas using employment pass route once they have incorporated a Singapore Company.
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