1.1 OVERVIEW OF THE INCOME TAX ACT4
1.2 TYPES OF INCENTIVES AND ITS EFFECTIVENESS (Income Tax Act)5 1.3 ARTICLE ON INCOME TAX ACT7
2.1 OVERVIEW OF THE DOUBLE TAX AGREEMENT8
2.2 TYPES OF INCENTIVES AND ITS EFFECTIVENESS (DTA)9
2.2.1 Tax Credit Relief9
2.2.2. Tax exemption9
2.2.3. Reduced tax rate9
2.2.4. Relief by deduction10
2.2.5. Tax sparing credit10
2.3. SCENARIO OF GRANTING TAX RELIEF UNDER DIFFERENT METHODS11 2.4. ARTICLE OF DOUBLE TAX AGREEMENT (DTA)12
2.5. BENFITS FROM DOUBLE TAX AGREEMENT (DTAs)13
3.1 OVERVIEW OF ECONOMIC EXPANSION INCENTIVES ACT (EEIA)14
3.2 TYPES OF INCENTIVES AND ITS EFFECTIVENESS (EEIA)15
3.3. TABLE OF STATISTICS AND GRAPHICAL DATA18
4. ISSUES OF HAVING TAX INCENTIVES19
4.1. Institutional issues19
4.2. Infant industry” issues19
Singapore has been rated as the most business-friendly economy in the world, with
thousands of foreign expatriates working in multi-national corporations.
As such, the government is given an important role and responsibility of granting the financial matters of incentives to help Singaporeans. Every allocation of incentives is attributed to the requirement of the amount of investment involved, the technical output, the export potential, the employment opportunities and the general conduciveness to Singapore economic activity.
The purpose of this report is to understand how the incentives can bring into help to
Singapore and other countries, by encouraging the use of foreign capital inflows as
well as investment.
Let’s discuss the following ways of how Singapore income tax, Double tax agreement and Economic expansion income tax act benefited to us in their incentives.
This will be further elaborated and discuss how the use of these will bring the
4 OVERVIEW OF THE INCOME TAX ACT
Singapore offers a range of different tax incentives to ensure that it attracts global
Investments that help in reducing corporate income tax rates. It has a single-tier
territorial based flat rate corporate income tax system which is well known for its
effective and as one of the lowest tax rates that contributes to economic growth and
foreign investment into the city- state.
Single-tier income tax system has been adopted by Singapore since Jan 1, 2003, which indicates there is no double tax for shareholders. Dividend paid under the one-tier system is exempt from tax in the hands of the shareholders. There is no withholding tax on dividend payments.
In addition, there is no tax on capital gains in single tier system; such examples of
capital gains are gains on foreign exchange on capital transactions, gains on sale o
f fixed assets etc.
Nevertheless, companies can also apply for tax incentives through International Enterprise Singapore, Economic Development Board and the Monetary Authority of Singapore. The concessions and incentives set out in the Income Tax Act are administered by the Inland Revenue Authority of Singapore (IRAS).
1.2 TYPES OF INCENTIVES AND ITS EFFECTIVENESS (Income Tax Act)
Singapore tax rate has been constantly changing going down over the years. As of year 2010, the corporate income tax rate will be further reduced from 18% to 17%. This is also one of the alternatives in helping the investment an attractive one to different jurisdiction.
The incentives and its tax concession summarize below effectively on how the tax incentives brings into good use to Singapore:
|Incentive |Tax Concession | |Distribution of dividends |No withholding tax on dividend payment | |Double deductions for R&D expenses |Double deduction of...