Difference between Incorporating an Offshore Company in a Tax Haven and Singapore

Why investors, entrepreneurs, and corporate are rushing to incorporate an offshore tax haven company?

Famous Tax Havens

Some of the countries are famous for being the tax havens for the investors. British Virgin Islands, Bahamas, Caymans Islands, etc, are a few of the examples. These territories have changed their tax structure so drastically, that they apply negligible or no amount of tax to their subjects.

An offshore tax haven company is a legal person in these countries. It benefits from such a tax structure. Foreign investors and corporate who incorporate their companies in such places benefit from the very low or no corporate and personal income taxes or capital gains taxes. These companies have a very few or no reporting requirements, or restrictions on their employment policies.
The investors all over the world want to pay minimum amount of taxes. It is true for the corporations too. It leaves more money in their hands to save in profitable ways. Today, the international finance is a vast flow of investment. The companies are no more restricted to the jurisdictions they were incorporated in.

They have become global entities. The pressure and requirements of going international have increased the complexity of their corporate structures. Likewise, they have to plan on a much large scale to stay competitive and survive. The tax havens offer them a perfect opportunity to save huge sums of money in taxes.

Some of the investors want to invest in various regions of the world. However, their interest in a particular scheme may increase the cost of investing in it that is why they want to do it anonymously. On the other hand, some of them want to hide under the cloak of anonymity and reap the profits.
Incorporating offshore companies in tax havens is not everyone’s piece of the pie. Those, who are already doing business overseas, best draw its benefits. It is also required that they are not dealing with the country they intend to incorporate their offshore company in. Because, their income generated in the country offering tax haven is taxable. The income and the profit generated elsewhere are free of taxes.

Doing Business in Singapore

Singapore offers favorable tax rates to the global investors. Singapore applies territorial based taxation system. Only the income generated in Singapore, is taxed. The corporate tax is a single-tier based affair. There is no capital gain or inheritance tax. However, Singapore is not a tax haven.

The companies incorporated in Singapore needs to comply with the strict rules and regulations. They need to file their accounts and taxes in the manner defined by the government agencies.

Singapore encourages its corporate sector to achieve and increase productivity and efficiency and compete with the foreign companies. Singapore supports its start-up, small and medium-level companies as these are useful in cutting down the unemployment rate.

Singapore offers plenty of grants, subsidies, and programs to improve the skills and educational competence of their workforce. They also offer tax exemptions, rebates, and incentives to their locally registered companies in order to reduce their operating and compliance costs and increase their financial position. Singapore and Hong Kong both apply strict rules to prevent money laundering and terrorist finance.

Singapore ranks very high in the list of territories which offers ease of doing business. Both Singapore and Hong Kong authorities have made it simple for the entrepreneurs, investors, and corporate to incorporate their businesses.

Read about Setup company in Singapore

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