Territorial taxation in Singapore does not constitute tax evasion

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Back in 2016, the Singapore IRAS has announced the introduction of territorial taxation has nothing to do with tax evasion.

Pursuant to Article 10(1) of the agreement, Singapore imposes taxes only on the profit definitely or presumably gained inside Singapore.

Unfortunately, unlike Hong Kong, which has endorsed the same principle, the IRAS didn’t publish any circular note, which would provide a distinctive clarification on what is considered onshore and offshore companies. To get professional consultation on this account, the IRAS recommended applying to specialists.

The territorial principle makes Singapore a unique instrument in international tax planning. No doubt that there are a limited number of jurisdictions that divide profits into offshore and onshore to impose taxes only on onshore companies. It also should be noted that the time when taxes could be avoided has long gone, and Singapore remains the jurisdiction that enables effective management of the tax burden.