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Asian Tax Havens

Tax Haven Hong Kong and Tax Havens Singapore are often referred to as offshore tax havens, though the governments and admisntrator of these offshore financial centres prefer to be called low tax jurisdications.

Many countries consider Hong Kong an ‘offshore’ jurisdiction; the attitude of the government however is that the territory is not an offshore centre in the traditional sense of the word but rather a low tax area which levies tax according to the territorial principle. The tax laws of Hong Kong are extremely simple compared to other onshore jurisdictions and the fiscal advantages of operating there could be summarized as follows:

  • Tax rates are extremely low by OECD standards. (See below for further details). Taxation case law is minimal since the low tax rate means that the costs associated with challenging a decision of the revenue authorities usually outweigh any monetary gain.
  • Taxes are levied according to the “territorial principle” meaning that taxes are only levied on income “derived from or arising in” Hong Kong and not on income sourced outside the Territory.
  • A number of taxes that exist in most jurisdictions do not exist in Hong Kong. Thus there are no capital gains taxes, no withholding taxes, no sales taxes, no VAT, no annual net worth taxes and no accumulated earnings taxes on companies which retain earnings rather than distribute them. In the long term it is intended to completely phase out stamp duty on the sale and issue of shares and securities and to reduce direct taxes further.

Tax Rates in 2011

Singapore Scope of Corporation Tax

A company is resident in Singapore if its central management and control of the business is exercised there. Singapore-resident companies are generally taxed on their worldwide income; non-resident companies are taxed on their Singapore-source income only, which can prove attractive to international holding and trading companies.

Non-resident companies do not benefit from double tax treaties signed by the Singapore government.