Singapore has been ranked as one of the best destinations by expatriates because it provides quality lifestyle, good economy, and one of the most exciting tax regimes in the entire world. To the expats, it is paramount to know how to advantage this structure without incurring double taxation to maximise the wealth and ensure long term financial targets.
Tax benefits of Singapore Understanding A tax Haven:
The taxation framework in Singapore is a simple one with progressive personal income tax rate at 22% maximum. More to the point, it is based on a territorial tax system-it is only taxed when the income is received in Singapore or is remitted. In addition to having opportunities to make strategic income and investment planning there are generally no withholding obligations and the income is usually foreign sourced and never within the boundaries of Singapore.
Also, there are no taxes on capital gains, inheritance tax or on foreign-sourced dividends, in Singapore. As far as expats are concerned, this entails the fact that the proceeds of assets sales or those made in offshore investments can usually be retained in full, but it depends on how they are structured.
Escape of Double Taxation
The probability of risk, in this case, is that of Double taxation whereby your home country taxes your earnings gained in Singapore on top of the local taxes. In a bid to reduce this, the expats are able to utilize the Singapore (Avoidance of Double Taxation Agreements (DTAs) with close to 80 countries. These treaties will provide that your income can’t be taxed twice or tax credits can be given in your home jurisdiction.
When your country lacks a DTA with Singapore, then strategic tax planning becomes very important. It may include changing the method you receive and where you receive your income to offshore accounts or using residency laws to minimise tax exposure.
The importance of Professional Advice
Although the tax system in Singapore is straightforward as compared to others, the interaction between jurisdictions may be complicated. Wealth managers at a professional level ensure that the law of Singapore and the country of residence is observed and structures are optimised to maintain wealth.
Bottom line
With the right guidance of a Wealth Manager for Expats in Singapore can enjoy the city-state’s tax benefits, protect their assets, and grow wealth without falling into costly double taxation traps.
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