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Singapore

• Non-Resident Company
• Not perceived as offshore company
• Tax free if revenues arise abroad

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OFFSHORE-FOX.COM
with Michael Isaacson

Singapore, a city-state located on the southern tip of the Malay Peninsula, is our first Asian no-show on the OECD name-and-shame list of tax havens, despite sporting corporate tax legislation that makes this "Lion City" a zero-tax haven for a large number of non-resident controlled companies.

Once a British colony, Singapore joined Federation of Malaysia on its formation in September 1963, gaining full independence two years later.

Today's Singapore still retains close links with the British Crown and enjoys a legal system based on that of the English common law. English remains the main language of administration and commerce in this ethically diverse yet predominantly Chinese country of over 3 million people.

So far as corporate taxation is concerned, Singapore still offers non-residents a few benefits that have already been eliminated in the UK.

In the not too distance past, it was possible for non-residents to form limited companies in the United Kingdom but manage them from elsewhere, often a tax haven jurisdiction. To an outsider, such non-resident companies were superficially standard UK companies paying UK tax. But because these companies were not managed from the UK and were not generating income in the UK, they were in fact free from UK taxation.

Britain ended the practice in mid-1990’s and the Irish Republic moved into the market. Ireland too has now put a stop to this following pressure from the EU.

The practice is commonplace in Singapore. Singapore companies are taxed at a rate of 22% on income originating in Singapore; foreign income, on the other hand, is not taxed at all.

Singapore is a respectable jurisdiction and a sophisticated banking and trading centre, yet the country is not traditionally perceived as an offshore haven.

Whilst Singapore-registered companies can and do serve as solid tax-free vehicles, the country's corporate legislation will not necessarily appeal to those accustomed to the quick-fix culture of a traditional offshore tax haven:

  • Two directors are required, one of whom must be a Singapore resident;
  • Directors must be individuals; corporate entities cannot act as directors;
  • There must be at least two individual, or one corporate, shareholder;
  • Bearer shares are not permitted;
  • A local qualified company secretary is needed;
  • Audited accounts must be filed and a resident, qualified Singapore auditor must audit the accounts;
  • A general meeting must be held annually.

One factor that sets Singapore above many corporate centres is the high standard of incorporation and business support services, provided by the many industrious professionals who populate the city state.

As a matter of interest, it is believed that Singapore has the largest-denomination bank note in the world. The Paris-based Financial Action Task Force on Money Laundering (FATF) has long campaigned for the abolition of the 10,000 Singapore Dollar note valued at over US$ 5,500.

Asians routinely carry and use large amounts of cash and the FATF is best advised to stop interfering with traditional values of a part of the world whose heritage it does not understand. In Chinese, the word for "money" is the same as the word for "happiness".

 



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