Plenty of sabre rattling in the news yet none targeted at good old Singapore directly. We had the oldest bank in Switzerland, Wegelin, shutting its doors after a US tax probe earlier this year and Cyprus caving more recently.
“Tax haven companies are companies registered in tax havens mainly for offshore purposes. Most of the world’s tax havens are also offshore financial centers. Offshore company incorporation is just one of many services offered by tax havens. Some of the more developed and respected offshore tax havens which offer the incorporation of offshore companies are the British Virgin Islands, Dominica, Anguilla, Seychelles, Nevis, Dubai, Delaware, Mauritius, Vanuatu, Singapore, Hong Kong, the Republic of Panama, Cayman Islands and Belize among other jurisdictions. These offshore jurisdictions are also known for providing offshore banking, offshore foundation and trust formation and investment fund management among other services.” Source : http://www.taxhavens.biz
So Luxembourg, Liechtenstein and Cyprus, for that matter, are not tax havens ?
There is a thin line between tax havens and evasion or even money laundering.
Reports on Cyprus allude to their tax haven status without outright accusations of money laundering. It could be true that most of the money in Cyprus are legitimately made. Yet it is true that the money would not be there if not for predominantly tax reasons.
Is tax evasion a crime ?
I get all these pop up banner ads advertising for UK companies to set up shop in Singapore, openly acknowledging tax savings. So perhaps, “tax savings” is not wrong. Australian friends are also setting up Singapore offices to register sales so they would not be taxed at home, particularly internet sales which are questionably unpatrolled by the tax authorities (except for the US Senate passing the online sales tax bill last month).
The fight for taxes has just begun at all angles – from the massive Libor manipulation fines to money laundering settlements involving our household name banks and petty fines for trading misdemeanours.
“The U.S. has asked Liechtenstein to hand over data on foundations that may have been used to hide untaxed American money from the Internal Revenue Service, a step that may threaten Swiss banks.” Bloomberg
“Germans See Hope In Leak For Fighting Tax Evasion
….The leaked records reported on Thursday include data mainly from the British Virgin Islands, the Cook Islands and Singapore.” NY Times
When the topic came up during various conversations with friends, it does not seem awfully illegal to me. All the means of obtaining the funds were legal and there was nothing wrong with setting up in Singapore and keeping the profits in a property they could use as a holiday home. Best public example is Eduardo Savarin who saved almost a 100 million just by moving here. It’s no wonder that he could throw a few million the way of Miss Singapore.
Singapore Taxes Made Easy
- Tax rate for corporations with profits <100k = 0% (for first 3 years)
- Tax rate for corporations with profits <300k = 8.5%
- Tax rate for all others 17% flat
- Personal income tax capped at 20% above 320k
- No tax on dividends
- No capital gains tax
- No estate or inheritance tax
Singapore Inc does not need more taxes, they can’t even spend half of what they earn in the first place with the government running surpluses year after year and accumulating reserves that is the envy of the world.
I obviously do not know my tax law.
You pay taxes on the jurisdiction of your primary residence. Why would Russians want to put money in Cyprus or Germans put their money in Liechtenstein when they do not live there ? Just as Singapore is now plagued by dozens on end of trusts and foundations whose beneficiaries do not really live here ?
Singapore does not like the tax haven label and its a taboo topic with a chinese paper censured for mentioning an association last year.
was the headline in October in the NY Times with little mention on the fire fighting efforts.
And this Yahoo article from last week is clearly asking for trouble with the authorities here. (note that HongKong is not on the list)
I cannot form an opinion on the matter for I cannot see a direct impact on my life except that it has done wonders for our financial system which many depend upon for their livelihoods and constitutes a growing segment of our GDP. The funds are the lifeblood of local and regional industry funding, construction funding, trade funding and keeps mortgage rates low.
In other words, we have to care.
Singapore’s bank deposits to GDP ratio is about 400-500%, I am guessing from HongKong’s number. It looks pretty innocuous if you start comparing with Cyprus’s 700% and some source put Luxembourg at 2300% !
However, US is going <100% (thank you, Bernanke).
It is something we have to sit up to because it is not just the rich guys at stake here. It is going to be the price of your property and your mortgage rate going ahead. Whilst I think the chances are that they will tread more carefully in this rosy paradise part of the world that is near all the new darlings of Myanmar, Thailand, Indonesia and Philippines, and unscathed by the bird flu, natural disasters and economic crises, there is no telling when that black swan will strike. By that, I am supposing the authorities may start taking some pre-emptive measures before fingers start wagging.
Let’s wait and see. And in the interim, perhaps look to lighten up on those excess properties.