Singapore most tax-friendly economy; India, US at bottom in survey
October 29, 2009
GuideMeSingapore.com, a portal that provides accurate and up-to-date business-oriented information about Singapore, has said that a comparison of the tax burden faced by start-ups in six economies reveals significant variation with that country coming out as the most tax-friendly jurisdiction.
The survey compared tax policies of six countries—UK, USA, India, Australia, Russia, and Singapore. Among the six countries considered, the report said that the tax burden imposed on new firms is the least in Singapore while it is highest in India and the US.
To illustrate its findings, the report considered a case of a hypothetical start-up firm that expects to make an annual income of $300,000. Such a firm will have a total tax bill of $34,000 in Singapore while it would face a tax bill of about $60,000 in Russia, $63,000 in the UK, $90,000 in Australia, $100,000 in US, and $102,000 in India.
"The historical trend of corporate tax rates in Singapore over the last five years shows consistent reduction. Per government's stated policies, this trend is likely to continue in Singapore whereas in most other countries this trend is pointing upwards due to the rising budget deficits that these governments face," said Jacqueline Low, director for corporate services, Janus Corporate Solutions, which owns the GuideMeSingapore.com portal.
The lowest tax in Singapore is one of the reasons why India's National Stock Exchange's index Nifty was losing business to Singapore Stock Exchange (SGX). According to SGX data, Nifty futures generated 20% volume on the exchange out of 62 million contracts of all major Asian indices traded on it last year. SGX has been taking away a major portion of NSE volumes, which may be a cause of worry for the Indian bourse.
However, there are numerous reasons for which many overseas investors, including institutional investors, prefer to trade on SGX Nifty. The main reason being costlier securities transaction tax (STT) and stamp duties charged in India. In Singapore, the transaction costs are only two to three basis points of the trade.
Besides the lowest tax structure, SGX has extended trading hours that start as early as 6.30 am and goes till 6 pm. This may be the reason for a move in India to extend trading hours from 9 am to 5 pm on the bourses. -Yogesh Sapkale[email protected]