Singapore imposes a lower corporate tax rate of only 17 percent as compared to India's headline tax rate of 30 percent
Singapore (PRWEB) December 06, 2014
Buoyant by Singapore Government’s foreign direct investment policies, efficient corporate tax regime, robust intellectual property safeguards, and exemptions on qualifying foreign-sourced incomes, several big Indian companies such as Flipkart, InMobi, Crayon Data, Zipdial and Mobikon have made the city-state their incorporation destination. To assist other Indian companies, which want to follow these market leaders and be based in the city-state to enjoy the above mentioned benefits, a new guide was published recently by Rikvin, a company incorporation and work visas consultancy in Singapore.
The guide starts by detailing the salient features of India – Singapore Comprehensive Economic Cooperation Agreement (CECA). It include provisions to avoid double taxation (DTA), tariff elimination, Rules of Origin clause for targeted concessions, good customs procedures, and facilitation of investment instruments such as intellectual property rights protection, business licenses and permits.
Notably, according to the CECA, Singapore-based companies enjoy reduced tariff of up to 100 percent while exporting their electrical, electronics, instrumentation, pharmaceuticals, and plastics products to India.
“The Agreement was amended in 2011 whereby a tax resident of either Singapore or India that is deemed to be a shell or conduit company will not be eligible for benefits under the DTA. The two qualifying condition for a company not to be considered a conduit include a listing on a recognised stock exchange in either countries, or a total annual expenditure of SS$200,000 if the resident is in Singapore, or 50,00,000 Indian rupees if it is in India,” explained Christine Lim, General Manager of Rikvin.
Also, to provide certainty on the status of goods at the country of import, the Agreement has provisions of Advance Rulings on the eligibility of originating goods for preferential tariffs and tariff concession.
Noting that avoidance of double taxation is an important concern for companies operating in the two countries, Rikvin's guide devotes a separate section on India-Singapore DTA.
“Apart from the clauses on interest income, royalties and fees for technical services, DTA lists the tax pertaining to foreign-sourced dividend as well. While dividend distributed by the Indian subsidiary to it's Singapore holding is not subjected to withholding tax in India, the country does levy a dividend distribution tax of 16.22 percent. This dividend is exempted from tax in Singapore under the city-state's foreign-sourced income exemption scheme,” said Lim.
Lastly, the guide also mentions other obvious benefits available to Singapore-registered companies due to the city-state's low corporate tax regime.
“Singapore imposes a lower corporate tax rate of only 17 percent as compared to India's headline tax rate of 30 percent. Moreover, schemes such as Corporate Tax Rebate, Start-up Tax Exemption and Foreign Tax Credit (FTC) Pooling, can lower the effective payable tax even further,” concluded Lim.
Please click here to read the full guide.
Established in 1998, Rikvin has partnered with thousands of investors, entrepreneurs and professionals who want to work or do business in Singapore. Rikvin’s areas of expertise include company Singapore company registration, accounting, taxation and other related corporate services. Rikvin is also a licensed employment agency and offers a full spectrum of Singapore work visa services for professionals who wish to relocate to Singapore.
20 Cecil Street, #14-01, Equity Plaza, Singapore 049705
(+65) 6438 8887