Everything You Need to Know About Singapore’s Updated Tax Transparency Standards
Singapore regularly updates its tax laws to ensure that the city-state makes income taxes filing transparent and maintains its reputation as a supportive jurisdiction for business. The latest Income Tax Act update came in 2014, which was after peer countries in the Global Forum under OECD reviewed Singapore’s Tax Act. The Tax Transparency Standards in the Global Forum also helps countries prevent cross-border tax offences.
IRAS Can Now Access Account Holder’s Information
The Inland Revenue Authority of Singapore can directly obtain information about banks and trusts from financial institutions. Before the revision, the access to such information would only be possible after the permission of the High Court of Singapore.
Convention on Mutual Administrative Assistance in Tax Matters
The Convention of Mutual Administrative Assistance in Tax Matters was first developed by the OECD and the Council of Europe in 1988. The convention is for tax co-operation between jurisdictions, and to tackle tax evasion or avoidance.
The Convention helps countries cooperate to create and operate tax laws effectively, at the same time, protecting the rights of the taxpayers. The convention helps countries to discuss prevalent tax issues and understandings in each jurisdiction. The aim is for every country to jointly improve tax law promulgation and collection.
With the latest revision to the Income Tax Act, Singapore has signed with the Convention, and now is one of 137 countries taking part in it.
Additionally, Singapore has now signed the exchange of information (EOI) Agreements with 83 jurisdictions in the world. Before 2014, the city-state had an agreement with 41 jurisdictions.
Singapore Has Signed the Foreign Accounting Tax Compliance Act
The foreign Accounting Tax Compliance Act is a United States federal law that requires all non-US financial institutions to share the identity and financial information about US taxpayers to the United States Department of the Treasury. Furthermore, the financial institutions will have to share the information about the assets of US citizens to the Inland Revenue Authority of Singapore.
What Do the New Tax Transparency Standards Mean to the General Taxpayer?
The new tax transparency standards don’t have a direct effect on how much tax a person has to file and when they should file it. However, the act will mean lower levels of privacy for a citizen because their data now can easily be accessed by the IRAS when needed. Furthermore, Singapore will be sharing its learnings and some information regarding taxes and taxpayers to the global community more readily.
Well, even if there will be a little less privacy for taxpayers, the updated guidelines will mean less money laundering and tax-related issues. It will be easier for countries to battle such problems, and at the same time, they will be improving their tax laws. After all, the Convention of Mutual Administrative Assistance in Tax Matters is a platform for tax territories to learn from each other.
What is the Tax Rate in Singapore?
Singapore has one of the lowest taxes, applying to both personal tax and corporate taxes.
The personal tax starts at 0% for anyone making a profit of less than $22,000. It is progressive depending on the income and can go up to 22% for individuals making more than $320,000 a year.
The Corporate Tax Rate is a flat 17%. However, a partial tax exemption and a three-year startup tax exemption is available for qualifying companies.
Under the partial tax exemption, 75% of the income from the first $10,000 is exempt from taxes. Furthermore, 50% of the next $190,000 income is tax-free for every company.
Under the start-up tax exemption, 75% of the first $100,000 income, and 50% from the next $100,000 is exempt from taxes. This incentive is applicable to every new Singaporean company for three years.
Conclusion
Singapore has one of the best tax systems in the world. However, the city-state is also responsible for helping the global society address tax-related issues. The new tax transparency guidelines is the country taking a step towards it.
You can contact 3E Accounting Singapore for the best tax protection services in Singapore. We ensure that you make use of every incentive available. Also, we can help to keep your tax status as private as possible.
