Thursday, December 20, 2012

Asia Pacific Tax Guide

As 2012 comes to a close, Singapore company registration specialist Rikvin released an Asia Pacific Tax Guide to help prospective investors and entrepreneurs make informed decisions for the coming year based on a sound understanding of tax features in key economies in the Asia Pacific region. The report focuses on comparing the headline tax rates of APEC member countries in the region namely, Australia, China, Malaysia, Hong Kong, Indonesia, New Zealand, Japan and Singapore.

Among these Asia Pacific economies, Japan has the highest effective rate of. 38.01% according to the report while Hong Kong’s headline corporate tax rate is the lowest (16.5%). However the report concludes that  Singapore’s effective corporate tax rate is the most competitive due to the partial exemption scheme it offers to startups. For example, a newly-incorporated Singapore company with a chargeable income of S$300,000 will have an effective tax rate of 8.36% only, which is less than half of the headline tax rate:

Prevailing corporate tax rate is 17%. However, 75% of the first S$10,000 of chargeable income and 50% of the next S$290,000 of chargeable income are exempt. Therefore, for qualifying companies, the effective tax rate on the first S$300,000 is 8.36%. A private exempt company may be exempt from tax on the first SGD 100,000 and on 50% of the next SGD 200,000 of chargeable income for its first 3 consecutive years of assessment. Therefore, a startup with a annual taxable profit of S$100,000 will have an effective tax rate of 0% and a startup with S$300,000 will have an effective tax rate of 5.67%. This reinforces the strong attraction that the country holds for investors and corporations. Source - Asia Pacific Tax Guide
The report concludes that all Asia Pacific economies are focused on maintaining an enterprise-friendly tax regime in the current economic uncertainty and Korea, Malaysia, Indonesia and Singapore are keen on stimulating SME growth. For this purpose these countries have rolled out measures to reduce the tax burden on them.

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