Singapore has long been recognised as a prestigious Asian jurisdiction and one of the world’s leading international financial centres. Its stable legal system, transparent regulations, and high level of trust in government institutions attract international companies, investors, and professionals from around the globe. At the same time, Singapore is often grouped with offshore jurisdictions, which has led to a strong offshore image. In this article, we will analyse whether this perception is justified.
What is an Offshore Jurisdiction?
Singapore offers attractive conditions for company registration, a stable economy, and a well-developed infrastructure. These factors have helped Singapore achieve high rankings in global indexes. For example, Singapore ranked first in the 2024 Global Competitiveness Index. However, such favourable business conditions have also contributed to Singapore’s reputation as an offshore jurisdiction.
The term “offshore” is usually used for countries and territories that share several features, such as:
- Very favourable tax regimes (sometimes with zero tax),
- A high level of corporate confidentiality,
- Simplified accounting and financial reporting requirements, and
- Limited or no participation in the international exchange of financial and tax information.
These features have historically been typical of a number of small countries and dependent territories, often called classic offshore jurisdictions.
However, today, almost no jurisdiction fully matches the classic offshore criteria. As a result, whether a country can be considered offshore requires a detailed analysis. Against this background, it is especially interesting to see how these features apply to modern Singapore.
Singapore’s Corporate Tax System
Like Hong Kong companies, Singapore companies are taxed on a territorial basis. This means that only the following are subject to tax:
- Income earned in Singapore,
- Income from Singaporean sources, and
- Income from outside Singapore if it is remitted to a Singapore bank account.
If a company earns profits solely from activities outside Singapore, and these profits are not brought into Singapore, they are not taxed.
At the same time, Singapore has a well-developed system of tax incentives and exemptions:
| Tax Incentives | Details |
|---|---|
| Corporate Income Tax |
The standard corporate tax rate is 17%. However, companies benefit from the following exemptions: – 75% exemption on the first SGD 10,000 of taxable income – 50% exemption on the next SGD 190,000 of taxable income Newly registered private companies (meeting certain conditions) enjoy further tax benefits: – 75% exemption on the first SGD 100,000 of taxable income – 50% exemption on the next SGD 100,000 of taxable income These apply for the first three assessment years. |
| Withholding Tax |
No withholding tax is levied on dividends paid by Singapore companies to non-residents. Withholding tax rates for other payments to non-residents: – Interest: 15% – Royalties: 10% Lower or zero rates may apply if a double tax agreement is in place. |
In addition to the taxes listed above, Singapore also has:
- personal income tax,
- Goods and Services Tax (GST), which is similar to Value Added Tax (VAT),
- stamp duty, and
- property tax.
Therefore, despite the territorial tax system and a well-developed range of tax incentives, Singapore cannot be considered a tax-free jurisdiction.
Singapore’s Tax Treaties and Participation in International Information Exchange
At present, Singapore has over 100 double tax agreements (DTAs), including with the United States and several countries in the CIS, Europe, and Asia. Such an extensive network of tax treaties, which also includes legal assistance in tax matters, is not typical for classic offshore jurisdictions that usually do not impose taxes locally.
Singapore’s DTAs contain provisions for the exchange of information for tax purposes. In addition, Singapore has joined the International Convention on Mutual Administrative Assistance in Tax Matters. This means Singapore exchanges information:
- on request from relevant authorities,
- automatically, based on bilateral agreements with other countries,
- and spontaneously, when certain conditions are met.
Singapore has been carrying out automatic exchange of information since 2018. This means the Singapore tax authority regularly and automatically shares details about accounts held in Singapore banks by individuals who are tax residents of countries with which Singapore has signed the relevant bilateral agreements.
As a result, Singapore’s participation in the international exchange of financial information shows its commitment to global standards of tax transparency.
Financial Reporting and Audit for Singapore Companies
Singapore companies must keep and maintain accounting records and other documents that explain their transactions and financial position. These records are also needed to prepare accurate financial statements. In most cases, the financial statements of Singapore companies must be audited.
However, so-called small companies may be exempt from auditing their financial statements. A “small” company is a private company that meets at least two of the following three criteria for two consecutive financial years:
- Its total annual revenue does not exceed SGD 10 million,
- Its total assets at the end of each financial year do not exceed SGD 10 million,
- It has no more than 50 employees.
Even if a company is exempt from audit, it must still keep proper accounts and prepare and submit financial statements.
Transparency of Company Data in Singapore
Singapore law requires companies to maintain:
- a register of their registrable controllers, in other words, the beneficial owners of the company;
- a register of nominee directors; and
- a register of nominee shareholders.
The register of controllers must include:
| Individuals | Legal Entities |
|---|---|
| Full name | Name |
| Other names (if any) | Registration number |
| Residential address | Registered address |
| Citizenship | Legal form |
| Passport number | Country of registration |
| Date of birth | Name of registering authority |
| Date when controller status started and ended | Date when controller status started and ended |
As for the registers of nominee directors and nominee shareholders, similar details must be recorded for both the nominees themselves and the person or persons on whose behalf they hold their positions in the company.
The information in the register of controllers is not publicly available. Only officers of the government regulator (ACRA) and, if necessary, other competent Singapore authorities can access these details. However, the registers of directors and shareholders are open to the public.
The legal changes requiring companies to keep these registers are part of a global move towards de-offshorisation, which Singapore is also following.
Conclusion
Although Singapore is often mentioned alongside offshore jurisdictions, it is not an offshore centre in either a formal or practical sense. In fact, unlike many classic offshore locations, Singapore is an independent country with its own policies and the following key features:
- a stable tax system and corporate taxation,
- laws that ensure transparency about key persons managing Singapore companies,
- rules requiring Singapore companies to prepare and submit financial statements and undergo audits,
- a network of international tax agreements and participation in global automatic exchange of financial information.
Overall, Singapore remains a strong choice for setting up a business, especially for working with Asian markets.