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Expat Briefing Editorial Team
13 October, 2015
Recently rated as the best place in the world for expat living overall, the thriving city-state of Singapore is the subject of this special feature.
Located in South East Asia, Singapore is a highly developed and successful free market economy which enjoys an open and corruption-free environment, stable prices, a low tax regime and a per capita GDP equal to that of most parts of Western Europe.
Historical And Economic Overview
Although most probably think of Singapore the city, the Republic of Singapore is actually a 700 square kilometre island sandwiched between Indonesia and the tip of the Malay peninsula. The city was founded as a British trading colony in 1819 and formed an important strategic trading and naval post within the British Empire in the 19th and early 20th centuries.
After the Second World War, decolonisation meant that Singapore gravitated towards the Malaysian Federation, which it joined in 1963. However, this was a short-lived phase of the country's history, and, two years later, Singapore became an independent republic. Subsequently, it has become one of the world's most prosperous countries with strong international trading links and one of the busiest international ports.
Since independence, Singapore has been a parliamentary republic with a directly elected unicameral parliament. As a legacy of its association with the former British Empire, Singapore's legal system is based on English common law. Also, English is one of the four official languages spoken on the island, alongside Chinese, Malay and Tamil.
Approximately three-quarters of Singapore's population of 5.3m are of Chinese origin but there are significant minorities of Malaysians and Indians, while the presence of the major global multinationals in the city also ensures a sizeable army of expats from Europe, North America and elsewhere around the globe. Singapore's currency is the Singapore dollar, which was worth USD0.71 at the time of writing.
Singapore enjoys a remarkably open economy and corruption-free environment, stable prices, and a per capita GDP higher than that of most developed countries. The economy depends heavily on exports, particularly in consumer electronics, information technology products, pharmaceuticals, and on a growing financial services sector. Following a shallow recession in 2009, the economy surged in 2010 with growth of 14 percent. Since then the pace of economic growth has been much more sedate, averaging about 3.5 percent from 2012 to 2014. However, Singapore has attracted major investments in pharmaceuticals and medical technology production and will continue efforts to establish itself as Southeast Asia's financial and high-tech hub.
The Business and Financial Centre
In just over four decades, Singapore has established a thriving financial centre of international repute, serving not only its domestic economy, but also the wider Asia Pacific region and in some instances, the world. Singapore's financial centre offers a broad range of financial services including banking, insurance, investment banking and treasury services.
A key aspect of Singapore's financial centre is its deep and liquid capital market. With one of the more well-established capital markets in Asia-Pacific, the Singapore Exchange (SGX) is the preferred listing location of close to 800 global companies. Today, Singapore has grown to be the largest Real Estate Investment Trust (REITs) market in Asia ex-Japan and also provides an extensive offering of investments in business trusts of shipping, aviation and infrastructure assets.
Singapore's bond market has also grown significantly. With an extensive range of both Singapore government securities and foreign corporate bonds available, Singapore offers fixed income investors a wide range of investment opportunities.
As one of the top four most active foreign exchange trading centres in the world, Singapore is also the second largest over-the-counter derivatives trading centre in Asia, and a leading commodities derivatives trading hub.
With its key import and export links in Asia, and tax incentives for international and regional headquarters, Singapore has also become a good location for multinationals to locate their marketing, trading and distribution activities.
Furthermore, Singapore is an ideal place in which to locate an investment holding company with its extensive network of double tax avoidance treaties that reduce the rate of withholding tax on dividends remitted by foreign subsidiaries to Singaporean investment holding companies.
For resident individuals, Singapore's tax regime is fairly benign. Capital gains taxes are only levied in very limited circumstances, there are no gift taxes and estate duty was abolished in 2008. Personal income tax rates in Singapore are also relatively light: resident individuals are taxed at progressive rates up to 20 percent on income accruing in or derived from Singapore. However, as a result of measures announced in the 2015/16 Budget, there will be additional bands with higher tax rates on incomes above SGD160,000 from 2017, including a 22 percent top rate for incomes above SGD320,000
From January 1, 2004, foreign income received or deemed received by a resident individual in Singapore is no longer subject to Singapore income tax, except if received through a partnership in Singapore.
A non-resident employee present in Singapore for more than 60 days but less than 183 days in a calendar year faces a 15 percent tax on gross employment income, or is taxed as a resident on that employment income, whichever is higher. For non-resident individuals withholding taxes are levied on Singapore-source income at varying rates; foreign-source income is untaxed whether remitted or not.
Non-resident individuals employed in Singapore for 60 days, or less, are exempt from tax on employment income. Other income derived in Singapore by non-residents is taxed at the corporate tax rate, with the exception of interest income derived from approved financial institutions in Singapore, which is tax-exempt.
Singapore currently has comprehensive tax treaties with around 75 countries. Notable among these are treaties with Australia, Belgium, Canada, China, France, Germany, India, Italy, Japan, the Russian Federation, South Africa and the United Kingdom.
Singapore: The Best Place To Live And Work
In HSBC's 2015 Expat Explorer survey, Singapore emerged as the best place overall for expats to enjoy an excellent quality of life, financial wellbeing and improved career prospects. Expats highlight its safe environment, confidence in the local economy and the quality of life for their children as some of the best reasons to live there.
If you want to earn more money and advance your career, then Singapore is one of the best places in the world to achieve these goals. Although the cost of living is generally higher than most popular expat destinations, expats earnings are also high: an average annual expat salary of USD159,000 puts the country well above the global average of USD104,000. As a result, nearly 65 percent of respondents said they enjoy a greater level of disposable income in Singapore than at home, while 60 percent are able to save more.
Besides financial gains, Singapore seems able to offer most expats a higher overall quality of life, with two-thirds (67 percent) reporting that their quality of life has risen since moving to the city-state. A major reason for this is that Singapore offers more opportunities for leisure activities, with more than half of the respondents (55 percent) saying they have become more physically active.
Importantly, Singapore rates highly in terms of its family-friendliness, and just under two-thirds (65 percent) of expats said their children's health and wellbeing has improved since moving (compared with the global average of 48 percent). Singapore is also one of the safest cities in the world, with the vast majority (87 percent) of expats praising its level of safety.
Unsurprisingly, Singapore is quite selective about who it lets into the country to live and work there, and only skilled expats are likely to stand a chance of being granted the appropriate work permit. What's more, with so much to offer in terms of financial rewards and quality of life, competition for jobs is fierce, and obtaining a work permit is now even harder since the Government tightened restrictions on job-seeking expats, especially for less skilled positions, in 2014. Better go and sharpen up that CV!
The Singapore Country Section of Expat Briefing contains more information about living and working in Singapore, including financial considerations, taxation, healthcare, education, employment and business, accommodation, recreation, society and culture, and much more.
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