We have already written a lot about the reasons for Singapore’s popularity in the business sphere. From the materials posted on our website, you could learn about the low level of taxation, sound economic policy, and favorable geographical location.
But many of you, dear colleagues, probably caught yourself on a certain understatement, a strong advertising component, because of which useful and necessary information is perceived with a certain caution and even bias. Constantly flashing phrases about tax-free paradise, calls to invest in the economy of Singapore, endless options for opening an account and registering a company…
We are ready to admit that we love this country and really consider it the best (or at least one of the best) jurisdictions for business, not only in the South Asian region but throughout the world. But faith alone is not a factor to be considered in the first place if you are determined to have a long presence in Singapore.
Therefore, it was decided to prepare a detailed material, which will consider and analyze all the advantages of this jurisdiction for business. We have tried to minimize the impact of the advertising component and operate with facts, some of which are unknown to a wide range of our readers. We hope this material will be not only informative but also useful.
The modern history of Singapore is usually counted from August 9, 1965, when the country withdrew from the Federation with Malaysia and declared independence. In the 54 years since then, many neighboring States have changed many Prime Ministers, political parties, geopolitical systems and even forms of government. For example, very close are Vietnam, Laos, Cambodia, Indonesia and Myanmar (Burma), which is extremely difficult to call stable.
But came to power Singapore’s people’s action Party had considered the socio-political upheavals and throwing between the powerful of this world are too expensive, so up until 1990, the country is “run”, Lee Kuan Yew. Someone thinks he’s a tyrant.
But the fact that this man has made Singapore truly great, strong and stable, no one argues. And the best proof of this is the current situation in the country. As for the father of Singapore’s economic miracle, after his death, a week-long national mourning was declared, and even political enemies came to the funeral.
Constantly striving forward
Is it possible to name the country in which for 54 years “only” 3 Prime Ministers were replaced, and the power remains in hands of one (!) a political force frozen in its development? Sure you can. But not when it comes to Singapore.
On the one hand, there are no significant changes in the political and economic course of the country. But this does not mean that Singapore, figuratively speaking, “fell into hibernation” and continues to exploit the legacy of Lee Kuan Yew. Rather, on the contrary. The base, laid by him, allows the country not only to remain a strong regional player but to be optimistic about the future and to go “one step ahead” of the nearest competitors.
By the way, not least it concerns economic innovations, including reducing the tax burden, simplifying the rules of doing business and gradually erasing the line between residents and non-residents. At the same time, we note that the country has not become a tax-free outcast, “friends” with American, European and world regulators, and offers favorable conditions for business.
The policy of racial harmony
More than 5.5 million people live in Singapore, which, with an area of 724.2 km2, gives an extremely high-density rate; almost 8,000 people per km2. And if we add that the country is inhabited by many nationalities; Chinese, Malays, Tamils, Bengals, Malayali and Indians, we could compare Singapore with a powder keg that “explodes” at any moment. After all, local conflicts and civil wars often arise for much less important reasons.
But there have been no such problems in Singapore since the mid-1960s. How the government managed to smooth over the national issue and avoid chronic conflicts is a mystery, but the fact remains. The problem, which is familiar to many States, including highly developed ones, is irrelevant here. But for racist comments or inciting ethnic strife in Singapore, you can easily go to jail.
Religion out of politics
The situation with it is almost the same. The country professes Buddhism, Christianity, Islam, Taoism, and Hinduism, but there are no conflicts because of beliefs. It is interesting that in the days of Wahhabism, the country was visited several times by emissaries of Saudi Arabia, but were actually expelled from Singapore with the wording “we do not need their money or their preachers.”
Many have recently accused Lee Kuan Yew of giving up oil money; he made a strategic mistake, losing “friends” in the face of the Saudi Kings. But history has proven that the father of Singapore’s economic miracle was absolutely right.
Business at government level
For officials and senior officials in most countries of the world, there are public or secret prohibitions on any business relationship. This is done in order to avoid bribery and bias. But Singapore has decided that any restrictions are a potential time bomb, which sooner or later will lead to a social explosion and a constant increase in the degree of control.
Therefore, during the global restructuring of the system, Lee Kuan Yew did everything to ensure that the role of the government is not limited to police functions alone. In other words, he has transformed the state into a full-fledged of the participant of market relations.
The consequences of this step were very instructive:
- Adopted laws necessarily take into account the interests of small, medium and large businesses.
- Minimal impact of “contractual” relationships.
- Extremely high degree of responsibility of officials for the made decisions. They receive very large salaries (for example, the Minister’s income is about 2.5 million USD!), but are under constant control of the Bureau of Corruption Investigation. Therefore, there are practically no bribes in the country, and officials really work and are afraid of losing their place.
Focus on business related to Singapore
The most interesting and promising economic directions in the country are controlled by the local business community. It is also worth considering that the laws make a particularly profitable business, directly or indirectly related to Singapore itself. In other words, in all spheres of business life, there is a clear consideration of national interests.
Constant communication via the Internet
Here it is time to once again recall the realities faced not only by all domestic businessmen but also by ordinary people. Need a certificate or official opinion? Do you need to draw up a contract or get an invoice for accounting? Need to provide tax proof of eligibility?
All these actions, as well as many others, are associated with many hours of standing in queues, collecting confirmations and certificates, communicating with officials, secretaries, inspectors, specialists, and other “necessary” and “important” people, took a lot of time, money and effort.
In Singapore, all such “charms” were eradicated in the mid 1970’s, and with the development of the Internet, in general, there was no need for personal visits to official offices. As a result, local business people can effectively and quickly solve emerging issues, sitting in his office or even on a bench in the park…
Very low taxes
In Singapore taxes can be conditionally called one of the means of stimulating business, so the rule “now pay and then at least the grass do not grow” does not work here.
Advantages of Singapore’s fiscal system:
- Corporate income tax is only 17%.
- Possibility to choose a more convenient financial year, different from the official (calendar).
- Significant discounts and concessions.
- The principal impossibility of double taxation.
- The transfer of losses in the books for future periods without restriction.
- Group tax benefits.
- Special tax regime.
- Absolutely transparent and clear procedure of calculation of taxes.
- And much, much more.
Please once again draw your attention to the phrase in the subtitle. The overall level of taxation in Singapore is really low, so, figuratively speaking, your company will not have to “fight for life”, being torn between fiscal requirements and the shortage of funds at the stage of formation.
We have tried to do without standard advertising stamps and as impartial as possible to tell you why Singapore is considered to be one of the best places in the World for doing business. Behind the brackets of the material were all the tourist attractions, excellent living conditions, stunning sunsets and a long-forgotten feeling of freedom, albeit limited by the glass, steel, and concrete structures.