Making the most out of the 17% corporate tax.
According to Janus' Singapore Business Formation Statistics Report, the top three business sectors with the highest number of company registrations in 2012 were wholesale trade (21%), financial services (15%), and head offices and management consultancies (9%).
Companies in the IT, Retail and Food & Beverage industries each accounted for 5% of company incorporation activity. Construction, real estate, education, and business administration accounted for the remaining number of company registrations.
An analysis of the 2011 and 2012 business formation data revealed significant increases in company registrations in the following industries- head offices and management consultancy (28%), computer programming and consultancy (22%), retail trade (15%), food and beverage (12%), and wholesale trade (10%).
The increase in companies engaged in head office activities could be related to the increase in companies with more than $500,000 share capital.
In the face of the economic uncertainty and stagnant growth in United States and Europe, Singapore provides an attractive relocation option for multinational companies looking to restructure and rationalize their operations.
Singapore not only offers a lower cost of operations but also one of the lowest corporate tax rates in the world. Singapore-based companies are taxed at the flat rate of 17%. Many tax incentives are available based on industry.
On top of these, there are no capital gains and dividend taxes in Singapore, making the country very attractive to foreign companies engaged in financial investment and trading activities.
It is possible that more companies providing IT services are being set up in Singapore as a result of the increase in the number of head offices and management consultancy companies.
The larger scale and more sophisticated operations of such companies necessitate greater support from these services. In addition to the above, more retail and food and beverage companies are now being set up in Singapore.
This could be attributed to several factors, such as Singapore’s stable economy, full employment, and the high income of its residents. In recent times, it has been observed that companies from Japan and other countries are just as likely as local ones to set up retail and food and beverage businesses in Singapore.
Companies from other countries could be drawn to Singapore as much as they have been pushed away by the economic slowdown in their home countries.
Last but not least, wholesale trade has long been considered a major growth engine for Singapore’s economy. The fact that wholesale trade experienced a 10% increase in company registrations only serves to underscore Singapore’s openness to trade.
Singapore’s wholesale trade industry has withstood challenges from the global economic uncertainty and the industry’s long term prospects remain positive. The country’s open trade policy, simple tariff structure, transparent and efficient border administration, excellent transport infrastructure, and minimal trade barriers have made it a hub for trading companies in recent years.
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