London has often defeated the rest of Europe to claim the title of the region’s top economic powerhouse. Despite voting to leave the EU, the UK’s advanced economy emerged as the strongest by the end of 2016, with growth accelerating in the months that followed.
On the other hand, Singapore, one of the tiniest nations in the world, was formerly a part of the British Empire. But since gaining its independence, Singapore has successfully made the transition from Third World to First, doing it in less than a decade. After London and New York, the city-foreign state’s exchange hub is currently the third largest worldwide.
A business must take into account the limited but significant variations between the two jurisdictions when deciding whether to conduct business in Singapore or the UK, in areas like the workforce, immigration, and taxation.
| Singapore | United Kingdom | |
| Corporate Tax | 0% (on Foreign Profits) | 19% |
| Withholding Tax | 0% (on Dividends) | 20% |
| Time to Incorporate a Business | 3 days | 8 – 10 days |
This report acts as a comparison tool.
Financial Overview
Due to the strength of its services sector, which generates more than 75% of the UK’s GDP, it is the fifth largest economy in the world.
Due to the reputation the UK has built in this industry, financial services are actually the greatest export from the UK. The nation is also the eleventh-largest manufacturer in the globe. Aerospace, pharmaceuticals, and the automotive sectors are important ones.
Singapore, the most competitive corporate nation in Asia, is strategically situated in the center of important Asian trade lines.
Similar to the UK, the major sources of income for the economy are exports of electronics and chemicals, even if development is stimulated by a booming financial services sector. Singapore is ranked #10 in terms of GDP per capita, while the UK is ranked #23.
Environment for Business
The UK is ranked #7 out of 190 economies in terms of how easy it is to do business, taking into account things like corporate tax rates, start-up costs, energy prices, and transparency (World Bank Doing Business Report 2018). In contrast, Singapore is ranked #2 in the world after New Zealand.
Here are some major comparisons at a glance:
The English legal system is one of three that make up the United Kingdom; it is applicable in England, Wales, and Northern Ireland.
Scots law, which is applicable in Scotland, is founded on common law and civil law principles.
Judges in Singapore continue to make use of English case law as well as pertinent Singapore cases because they inherited their legal system from the British, who established modern Singapore. However, changes made to the legislation have somewhat altered the law.
Singapore is placed 13th globally in the World Justice Report’s 2017-2018 Rule of Law Report, whereas the UK is ranked 10th.
Workforce
In the UK, the labour force participation rate (LFPR) is 78.8%, compared to 67.7% in Singapore. While the male LFPRs were recorded at 68% and 77% respectively, the female LFPRs in the UK and Singapore were comparable at 57% and 60% in 2017.
In Singapore, there is no set minimum wage, whereas the UK’s is £7.83 (for those over 25).
All employees in the UK have the legal right to request flexible work schedules after working for 26 weeks. However, businesses in Singapore are eligible to apply for grants and incentives for their flexible work arrangements.
Business Language
The English spoken and written in the UK is known as British English. Welsh and Scots are some other widely spoken languages. One-third of UK nationals are fluent in French, German, and Spanish, compared to two-thirds who cannot speak any other language.
In Singapore, English is the primary business language. Most Singaporeans also obtain official education in their second languages, like as Malay, Mandarin, and Tamil, in accordance with their ethnic backgrounds.
Business Formation & Incorporation
Sole Trader, Partnership, Limited Liability Partnership, and Limited Liability Company are the four primary types of business entities in the UK. Similar to other countries, Singapore recognizes the Private Limited Company, Subsidiary Company, Representative Office, and Sole Proprietorship as legal entities.
In Singapore, incorporation takes only two steps and may be finished in a single day, compared to the UK, where starting a company involves four steps and takes 4-5 days.
Requirements for Filing
General meetings are not mandated for private corporations in the UK. Private limited corporations, however, are required to submit comprehensive yearly reports and company tax filings to Companies House and Her Majesty’s Revenue and Customs (HMRC). However, public businesses are required to hold annual general meetings (AGMs) within six months of the conclusion of every fiscal year.
AGMs and annual reports filing are requirements for all Singapore-incorporated businesses.
Regulations for Immigration
One can apply for a Tier 1 (Entrepreneur) visa if they want to start a business in the UK. This visa has a maximum validity of three years and four months, and the applicant must have access to investment money with a value of at least £50,000. Alternately, investors can apply for the Tier 1 (Investor) visa if they have access to at least £2 million in investment money.
Foreign professionals, managers, and executives who earn a minimum monthly salary of S$3,600 in Singapore may be granted an Employment Pass. Additionally, foreign business owners who intend to launch and run a new enterprise in Singapore can apply for the EntrePass.
Income Tax
Singapore boasts the lowest effective tax rates in the world, with a progressive tax rate that can reach 22%. In the UK, income tax rates can reach 45% for higher income tax bands.
Corporate Tax
While the headline corporate tax rate in the UK is 20%, it is only 17% in Singapore for businesses with taxable income.
Tax Exemptions & Incentives
Newly registered businesses in Singapore are entitled to a complete three-year tax exemption on their first S$100,000 in chargeable income. Small business organizations in Australia are eligible for a corporate tax rate of 28.5% if their annual revenue is under AUD 2 million.
In the UK, a business may apply for R&D tax breaks for creative initiatives that aim to increase general knowledge or skill in a particular subject.
Withholding Tax
A 20% withholding tax is applied to payments made by a resident company to a non-resident company. Dividends are not required to have withholding taxes taken out of them.
The withholding tax in Singapore ranges from 10% to 17%.
Foreign-Sourced Income
In the UK, resident companies are subject to foreign income tax, unlike non-resident companies. Profits made and kept outside of Singapore are not subject to taxation.
| TAX | SINGAPORE | UK |
| Corporate Tax | 17% (For the first 3 years, new businesses who qualify receive a full exemption on their first $100,000 in revenue) | 20% |
| Branch Tax | 17% (with some exemptions on the first $300,000) | 20% |
| Capital Gains Tax | – | 20% |
| Income Tax | 0% – 22% | 0% – 45% |
| Withholding Tax – Dividends – Interests – Royalties | 0% 15% 10% | 0% 20% 20% |
| Double Taxation Relief | Yes | Yes |
| Foreign-Sourced Income Tax | If received or perceived received in Singapore, it can be taxable. | Yes |
| GST/VAT | 7% | 20% |
Quick Views of Country Rankings
| YEAR | CATEGORY | SINGAPORE’S RANK | UK’S RANK | SOURCE |
| 2018 | Ease of Doing Business | 2 | 7 | World Bank, Ease of Doing Business Report |
| 2018 | Freest Economy in the World | 2 | 9 | Heritage Foundation’s Index of Economic Freedom |
| 2018 | World’s Most Competitive Economy | 3 | 20 | IMD, World Competitiveness Yearbook |
| 2017-2018 | Most Competitive Economy in the World | 3 | 8 | World Economic Forum, Global Competitiveness Report |
| 2016 | Most trade-friendly nation | 1 | 8 | World Economic Forum, Global Enabling Trade Report |
| 2018 | Top-Ranking Business Country | 8 | 1 | Forbes Best Countries for Business List |
| 2018 | Most Innovative Economy in the World | 5 | 4 | INSEAD Global Innovation Index |
| 2017-2018 | Protection of Intellectual Property | 4 | 7 | World Economic Forum, Global Competitiveness Report |
| 2017 | International Talent Competition | 2 | 3 | INSEAD, The Global Talent Competitiveness Index |
| 2013 | Most Risk-Free City in the World to Hire and Relocate Workers | 2 | 4 (London) | AON Consulting’s People Risk Index |
| 2018 | Tax payment simplicity | 7 | 23 | PWC, World Bank’s Paying Taxes Survey |
As a Final Thought
The UK is regarded as the center of the world’s financial sector and is a top business destination. Singapore is the favoured entryway to Asia and continues to be a highly sought-after investment destination for business development, even if the UK serves as the ideal access point for the rest of Europe.
Why UK businesses might choose Singapore after Brexit
Singapore offers UK businesses seeking entry into Asia’s developing and quickly expanding markets an appealing option.
There have been several Brexit-related comparisons between Singapore and the UK. Both have sizable neighbors who are aware of their geographic effect and, as a result, economic influence, while being physically modest economies.
Given that it is one of the more developed economies in Southeast Asia thanks to Singapore’s innovative economy, business owners in the UK evaluating their post-Brexit strategy should be quite positive.
Following Brexit, UK businesses might think about expanding in Singapore for the following five reasons, in addition to more obvious similarities.
A Gentle Entry into Asia
Singapore was placed third overall in the ability of their economies to sustain inclusive growth according to the World Economic Forum’s Global Competitiveness Report 2017-2018.
Singapore tops the global rankings for higher education and training, transportation infrastructure, and public sector performance. This indicates that entrepreneurs can launch a business with little red tape and a robust labor market.
With a sizable and liquid stock market, Singapore ranks third internationally in terms of financial market complexity and development.
These favorable elements, along with Singapore’s high GDP per capita and Southeast Asia’s lowest sovereign credit risk, make Singapore an ideal staging ground for businesses setting up regional headquarters when aiming to grow within the area.
Enter a Rapidly Expanding Economic Zone
UK businesses are now more likely to seek prospects outside of the EU, claims Carol Wheatcroft, a UK-based journalist for a Singapore-based publishing company. Brexit is forcing the UK government to encourage exporting outside of the EU more openly than it has in the past.
Whatever the outcome, I believe that Brexit itself may increase the likelihood that UK enterprises will view non-EU markets as having opportunity.
Southeast Asia, the third-largest economy in the world with more than 600 million people spread across ten nations, is accessible from Singapore.
Companies typically establish operations in Singapore as their base throughout the region because it is so simple to set up a business there. More than half of the 37,400 multinational corporations having Singaporean headquarters base their Asia Pacific operations there.
Due to its location and investments in the economies of its neighbors, Singapore is economically connected with the rest of the region. It is the biggest investor in Asia, and in 2019 it exposed 40% of its worldwide real estate portfolio to the continent.
Due to Singapore’s long history as a trade surplus country, these solid economic ties continue to facilitate trade with the region.
Front-Runners Among The Fastest-Growing Industries
Singapore is at the forefront of hot economic growth industries including e-commerce and financial technology, or fintech, thanks to access to top talent, government initiatives, and assistance.
The Monetary Authority of Singapore, the nation’s central bank, has established a regulatory sandbox that enables fintech startups to test out cutting-edge financial products or services with the right safeguards in place to limit the effects of failure. This was done in recognition of the inevitable penetration of fintech into financial services.
Additionally, it is investing up to S$225 million by the end of 2020 to grow the fintech industry. A portion of the funds will be invested in a 100,000 square foot fintech innovation hub for experimentation and teamwork in this quickly expanding industry.
Less than 3% of all retail sales are made in the region’s e-commerce market, which is similarly relatively underdeveloped. With 142 million broadband subscribers and 250 million smartphone users, the potential for e-commerce in the area is enormous, and Singapore may act as a launching pad.
Commercialize Your Concepts with the Backing of the Government
The Singaporean government has been actively enticing companies to spend money on research and development (R&D) to address pressing problems.
The government will invest S$19 billion between 2016 and 2020 as part of the Research, Innovation and Enterprise 2020 Plan to promote research and collaboration in fields such advanced manufacturing and engineering, health and biomedical sciences, urban solutions, and the digital economy.
The Prime Minister Lee Hsien Loong and several ministers are among the government members on the Research Innovation Enterprise Council, which also includes industry leaders from significant organizations including the Volkswagen Foundation, General Electric, and Huawei Technologies. A lot of cross-disciplinary firms have been started in Singapore thanks to the strong private-public backing for R&D.
Strong Intellectual Property Regulations can help you protect your ideas.
Innovative enterprises may protect their intellectual property (IP), brands, and patents by operating in Singapore. The most complete and effective IP regulatory structure in Asia is found in Singapore.
In a research on the most cutting-edge IP offices worldwide, Singapore’s Intellectual Property Office (IPOS), a statutory entity under the Ministry of Law, came in second place to the European Union.
One of only two IP offices in the world, IPOS also supports IP-based loans, which opens up capital prospects for entrepreneurs with creative business ideas. While it is still uncommon to raise money for intellectual property, innovation financing is becoming more popular as knowledge-based capital fuels economic expansion.
Singapore-UK Double Tax Treaty
For the UK, the Singapore tax owed on income obtained from Singapore will be recognized as a credit against the UK tax due on that income. The UK tax due on income received from the UK may be applied as a credit against the Singapore tax due on same income.
In order to manage relief from double taxation in relation to income tax, corporation tax, capital gains tax, and taxes of a similar character and to improve trade and investment flows between the two countries, this guide provides an overview of the bilateral tax treaty between the Governments of the Republic of Singapore and the United Kingdom of Great Britain and Northern Ireland (UK).
The most recent protocol was agreed on February 15, 2012, and it entered into force on December 27, 2012. Its provisions become operative in April 2013 (UK) and January 2013 respectively (Singapore).
Any person who resides in one or both of the Contracting States is subject to the DTA’s rules, including individuals, businesses, and other groups of people, but not partnerships.
The taxes covered are:
Due to the person’s domicile, residency, place of management, place of incorporation, or any other similar factor, the person must be a tax resident of either Singapore or the UK in order to benefit from the DTA.
Singapore-UK DTA
The table below provides an overview of the main components of the Singapore-UK DTA.
| Topic | Treaty Provisions |
| Scope of DTA | Tax residents of Singapore and tax residents of The United Kingdom of Great Britain and Northern Ireland |
| Taxes Covered by the DTA | Singapore’s income tax, the UK’s income tax, corporation tax, and capital gains tax |
| Immovable Property Income | liable for taxes in the nation where the property is located |
| Company Profits | Taxed in the country in which the enterprise is present, unless the enterprise carries on business in the other Contracting State through a permanent establishment (PE) |
| Air Transport/Shipping Profits | Taxed in the operator’s home country |
| Dividends | 5% of the dividends’ gross amount if the beneficial owner is a business that directly or indirectly holds 10% or more of the voting power in the dividend-paying corporation. Singapore tax exemption is offered for overseas dividends and dividends paid to non-residents. In all other circumstances, the dividend tax rate is 15% of the gross amount of the payouts. |
| Interest | Taxed in the nation where the interest income originates at a rate of 10% in all other circumstances and 15% of the gross amount if earned before December 31, 1999. (i.e. source country). taxed in the nation of the recipient as well. |
| Royalties | Taxed at a rate of 15% of the gross amount if accrued before 31st December 1999 and 10% in all other cases, in the country in which the interest income arises (i.e. source country). May also be taxed in recipient’s country. |
| Directors’ fees | Taxed in the nation where the business paying the fees has its headquarters. |
| Personal/Professional Services Income | Taxed in the nation where the beneficiary resides. In some cases, the other country may additionally tax you. |
| Employment Income | Taxed in the nation where the employment is performed. Certain conditions apply to tax exemptions. |
| Pensions | Taxed in the nation where the beneficiary resides. |
| Government Payments | Government officials who are paid are subject to taxation by the relevant government unless they are citizens or permanent residents of the nation where the services are rendered. |
| Payments made to Visiting Students or Trainees | The foreign country where a student or business apprentice is studying or receiving training is exempt from taxation on any overseas payments made for their maintenance or education. |
| Payments made to Visiting Teachers or Researchers | In the country they are visiting and providing their teaching services or conducting their research in, payments made to visiting teachers or researchers for those services are not subject to tax. |
| Method of Relieving Double Taxation | In UK: Tax credit relief In Singapore: Tax credit relief |
Important Requirements
Tax on Dividends
A corporation that is a resident of one Contracting State that pays dividends to a resident of another Contracting State may be subject to taxation in that other State.
However, such dividends may also be taxed under the laws of the Contracting State in which the paying firm resides if the recipient is the beneficial owner of the profits; in such case, the tax so imposed should not exceed:
The taxation of the corporation on the profits from which the dividends are paid shall not be impacted by the terms of this paragraph.
The aforementioned clauses are not applicable if the beneficial owner of the dividends, who is a resident of one Contracting State, conducts business through a fixed base or permanent establishment located in the other Contracting State where the dividend paying company is a resident, and the dividends paid are in fact connected to such fixed base or permanent establishment.
It should be emphasized that Singapore does not impose taxes on dividends received from foreign entities and does not collect withholding taxes on dividends given to non-residents. Additionally, under the single tier tax structure, shareholders are not required to pay taxes on any dividends received from a firm.
The dividend is subject to UK tax if it is not tax-exempt and the beneficiary owns a minimum of 10% of the Singapore dividend-paying company either directly or indirectly. Credits are allowed for the Singapore tax paid on the profits from whence such dividends were dispersed. The UK tax due on the dividends can be offset using the credits.
Tax on Interest
Interest that is generated in one Contracting State and given to a citizen of another Contracting State may be subject to taxation in that other State. When the payer resides in a Contracting State, interest is considered to have arisen in that State. However, subject to the following circumstances, such interest may also be taxed in the Contracting State in which it arises and in accordance with the laws of that State:
The aforementioned clauses shall not apply if the beneficial owner of the interest has a fixed base or permanent establishment in the contracting state where the payer resides and the interest paid is inextricably linked to such fixed base or permanent establishment.
If the interest paid exceeds the amount that would have otherwise been paid due to the special relationship between the payer and the recipient, the treaty’s provisions will only apply to that amount, and any additional interest paid will be subject to taxation under the laws of each Contracting State.
Interest income earned from operations outside of Singapore is subject to a 15% withholding tax in Singapore. If the beneficiary of the interest income is an individual, the withholding tax rate is 20%; otherwise, a non-individual person is subject to the corporation tax rate in effect at the time (currently 17%).
Tax on Royalties
The other Contracting State may tax royalties that are generated in one Contracting State and given to a resident of another Contracting State. When the payer resides in a Contracting State, royalties are considered to have arisen in that State.
Such royalties may, therefore, also be subject to taxation in the Contracting State from which they originate and in accordance with the laws of that State; provided, however, that if the recipient is the royalties’ beneficial owner, the tax so assessed shall not exceed:
Royalties include any payments made in exchange for the use of or the right to utilize a copyright patent, trade mark, design or model, plan, or other intellectual property.
If the amount of royalties paid exceeds what would have otherwise been paid due to the special relationship between the payer and the recipient, the treaty’s provisions will only apply to that amount, and any additional royalties will be subject to taxation under the laws of each Contracting State.
Singapore levies a 10% royalty withholding tax, while the UK levies a 20% general withholding tax. Thus, the DTA greatly lessens the recipients’ tax obligations.
Tax on Capital Gains
Gains that a resident of one Contracting State receives from the sale of real estate located in another Contracting State may be subject to taxation in that other State. In the following situations, gains made by a resident of a Contracting State may be subject to taxation in that other State.
Gains that a resident of one contracting state makes from the sale of movable property linked to a fixed base or a permanent establishment (PE) in another contracting state may be subject to taxation in that state. Gains from the sale of such a PE or the permanent basis itself may likewise be subject to taxation in the other state.
Gains made by a resident of a Contracting State from the alienation of movable property related to the operation of such ships or aircraft, or of ships or aircraft operated in international traffic by an enterprise of that Contracting State, are taxable only in that Contracting State.
Only the contracting state in which the alienator resides will be entitled to tax capital gains from the alienation of any other property. The ability of a Contracting State to tax gains from the sale of any property obtained by a person who is a national of that Contracting State, a resident of another Contracting State, and who was a resident of the first-mentioned Contracting State at any time during the five years immediately preceding the sale of the property, will be unaffected by this specific provision.
Capital gains are not taxed in Singapore. In the UK, depending on their total taxable income, individuals pay taxes of 18% or 28%, while corporate capital gains are subject to Corporation Tax at the standard rates with no yearly exemption.
Treatment of Immovable Property Income
The other Contracting State may tax a resident of a Contracting State who receives income through the direct use, letting, or use of immovable property there in any other way.
This clause shall also apply to the income from an enterprise’s movable property and the income from movable property used for the performance of independent personal services.
Properties as defined by the law of the contracting state in which the property is located shall be included as “immovable property.” Accessories, tools, cattle, mobile property rights and usufruct rights as well as rights to variable or fixed payments as compensation for the use of, or the right to use, mineral deposits, sources, and other natural resources are all included. However, mobile property does not include ships and airplanes.
Accounting for Business Profits
Unless the enterprise conducts business in the other Contracting State through a PE located there, in which case only that portion of the income that is attributable to the PE shall be subject to taxation in the other Contracting State, the profits of an enterprise of a Contracting State shall be taxable only in that State.
All expenses and deductions that could reasonably be attributable to the PE and allowable if the PE were an independent enterprise are allowed when calculating the PE’s profits, and the PE’s profits are calculated as if the PE were a distinct and separate enterprise carrying out the same or similar activities under the same or similar conditions and transacting completely independently with the enterprise of which it is a PE.
Treatment of Shipping and Air Transport
Profits earned by a business within a Contracting State through the use of ships or planes in international commerce are exclusively taxed there.
Profits from bareboat rentals as well as from the usage, upkeep, or leasing of containers (together with trailers and other ancillary equipment for the movement of containers) used for the transportation of goods or merchandise are included in profits.
Interest on funds related to operating ships or planes in international traffic will be considered revenue from those operations and will not be subject to the regulations relating to interest.
Individual Income Taxation
Independent Personal Service
Income from independent professional services or other activities performed by a person who resides in a Contracting State is exclusively subject to taxation there. Under the following circumstances, the income must be taxed in the other contracting state:
Dependable Individual Service
Unless the employment is performed in the other Contracting State, salaries, wages, and other comparable compensation received by residents of a State for employment are solely taxable in that State. If the employment is carried out in this manner, the pay may be subject to taxation in the other State.
Resident of a Contracting State who receives payment for employment performed in another Contracting State is only subject to taxation in that state if the following conditions are met:
Remuneration received in connection with work performed on a ship or aircraft operated in international commerce by a company of a Contracting State may be subject to tax in that State.
Directors’ Fees
A resident of a Contracting State who receives directors’ fees and other comparable payments while serving on the board of directors of a business that is based in another Contracting State may be subject to taxation in that other State.
Pensions
Pensions and other comparable payments made to a resident of a Contracting State in account of prior employment or self-employment are only subject to taxation in that State.
Other Incomes
If a Singaporean gets any payment from trustees or personal representatives who are UK residents, that payment will be viewed as coming from the same sources and in the same proportions as the trustees’ or personal representatives’ income from which it is being paid.
Any tax paid by the trustees or personal representatives in relation to the beneficiary’s income is handled as if the recipient had paid the tax.
A UK resident’s Supplementary Retirement Scheme account withdrawals are subject to Singaporean taxation.
Taxation of Government Service Remuneration
Salaries, earnings, and other similar remuneration from pensions—paid to an individual by a Contracting State, a political subdivision, a local authority, or a statutory body in exchange for services given to that State, subdivision, authority, or body are exclusively taxable there.
If the services are provided in the other Contracting State and the individual is a resident of that State, then such salaries, wages, and other similar payments shall only be taxed in that State.
Taxation of Teachers Remuneration
An individual who, immediately before traveling to the other Contracting State, was a resident of one of the Contracting States and who travels there at the government of that other Contracting State’s invitation, or at the invitation of a recognized university, college, school, or other similar recognized educational institution in the other Contracting State, solely with the intention of instructing at such educational institution for a period of not more than two years, shall be exempt from this requirement.
Avoidance of Double Taxation
In cases where income is subject to tax in both Contracting States, the DTA offers relief from double taxation.
For the UK, the Singapore tax owed on income obtained from Singapore will be recognized as a credit against the UK tax due on that income. The UK tax due on income received from the UK may be applied as a credit against the Singapore tax due on same income.
The credit thus granted must not be greater than the tax levied by the relevant nation as determined prior to the credit being granted.
Income generated from the UK by a Singapore resident shall be excluded from Singapore Tax, subject to the conditions for exemption of income received from outside Singapore set forth in the Singapore Income Tax Act.
Please visit the IRAS website for further information on the specific provisions covered under the tax treaty between Singapore and the UK.
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