Background to Tax Business in Singapore
Singapore is a far cry from the small and underdeveloped country that it used to be and for a small country, has firmly established itself as a global business hub, especially for transfer pricing and tax prospects. Recently overtaking Hong Kong as the top place in Asia for multinational corporations to set up headquarters, it sits in a strategic location allowing corporate tax and treasury business to be easily carried out across Asia. As 46% of multinationals choose to locate their regional headquarters in the busy city, it’s not surprising Singapore influences tax business around the world.
The financial district located at the mouth of The Singapore River is home to the world’s most competitive economy. With its rational tax system, Singapore’s corporate tax, at 17% is amongst the lowest in the world. As of September 2019, the country has a GDP of $50,000, a remarkable feat when considering this figure sat as low as $500 fifty years ago. Singapore’s ever-growing economy, tax rates and liberal immigration policies are what make it so universally successful – and attractive to tax professionals.
Attractive to Business
With its political and economic stability, Singapore naturally entices foreign investors and entrepreneurs through business-friendly policies allowing foreign ownership and no minimum share capital requirements. Relatively low tax rates and tax exemptions exist across many foreign banks, global trading businesses and offshore funds. The net result being a large network of double tax treaties across the globe which in turn lowers the tax burden for many multinationals.
Singapore is viewed as a strong base for IT, financial and pharmaceutical services. Examples include Bosch, Actavis, Microsoft and the French financial service CIC. The country places second out of 190 countries for the second year in a row, beating the United States and Denmark, in the Ease of Doing Business according to the World Banks, ‘Doing Business’ report 2019.
To this day Singapore provides one of the most productive workforces in Asia as talent is pulled from around the world as well as the highly skilled and driven local employees.
Figure 1 Foreign Direct Investment – 2016 – 2018
|Foreign Direct Investment||2016||2017||2018|
|FDI Inward Flow (million USD)||73,863||75,723||77,646|
|FDI Stock (million USD)||1,112,642||1,393,380||1,481,033|
|Number of Greenfield Investments***||391||390||420|
|FDI Inwards (in % of GFCF****)||83.4||n/a||n/a|
|FDI Stock (in % of GDP)||369.2||n/a||n/a|
Figure 2 – Main Invested Sectors 2017 in %
|Main Invested Sectors||2017, in %|
|Financial and Insurance Services||54.5|
|Wholesale & Retail Trade||18.5|
|Professional & Technical, Administrative & Support Services||7.2|
|Transport and storage||2.0|
|Information and Communications||1.9|
The Worlds Investments Report 2017 states Singapore was the fifth largest country to receive foreign direct investment flows in 2017. The country’s Foreign Direct Investment increased by a staggering 30,000 SGD million in the first three months of 2019. . Main investors include the United States and The Cayman Islands, with the United States accounting for 20% of Foreign Direct Investments which directly exceeded $244bn. Consulting and finance companies from the States employ more than 200,000 workers on the island.
Etiquette is extremely important while doing business in Singapore due to large amounts of immigrants with different backgrounds and customs. Business networking is essential in the city, however, should be carried out in a respectful manner. Handing out business cards is standard practice. Typically, business cards are given and greeted with both hands as a sign of courtesy and respect. It is seen as ill-mannered to place a business card directly in a pocket. The dress code tends to be business casual as a result of the warm and humid weather.
Singaporeans thrive when it comes to technology and social media so knowledge in this region is pivotal to your success. Serving more than 120 airlines and flying to over 350 cities in 100 countries, Singapore’s Changi Airport is a global gateway. The island allows 50% of the world’s population to be reached within six hours of flying. This includes the capital of Western Australia, Perth. Known for its recession-proof economy and a recent boom in business as a result of natural minerals and tourism, it’s no surprise it has an ever-growing expat community. Perth itself can be reached seven times a day from Singapore, in five hours, and the move between countries does not consist of a time zone change.
Now you know how to do business in Singapore, here are our other blogs on things to do in Singapore:
If you are interested in a move to Singapore or anywhere else in the world and would like to speak to Kingpin International about International Tax Opportunities, please contact a member of the leadership team. Alternatively, please browse our current international tax vacancies.
Source – Figure 1, Figure 2 – Santander (Singapore Stats)