SINGAPORE
Singapore is a small territory with few natural resources. It enjoys a strategic geographical location in Asia and a world-leading, technically competent and productive workforce. Singapore ranks as one of the world’s most open economies and well-run states. Over the past decade, the focus of Singapore’s economic policy has shifted to maintaining its competitiveness in attracting trade and investment flows by building a more technology-driven, innovation-based growth model.
Singapore’s real GDP growth has been more volatile since the early 2000s. It already slowed from 3.5% in 2018 to 1.3% in 2019 as Singapore is vulnerable to the impact of the US-China trade conflict and global trade weakening given its very high degree of trade and financial openness (exports represented more than 200% of GDP in 2019 and trade-related sectors account for more than 50% of GDP). The city-state was very hard hit by the COVID-19 shock, with an economic contraction of 5.4% in 2020. However, Singapore’s strong macroeconomic fundamentals, with solid external and fiscal accounts, and sound policy management represent comfortable cushions against shocks. Economic growth is projected to exceed 6% in 2022 and average 2.5% per year in the medium term.
Summary
BNP Paribas has had a presence in Singapore since 1968, with 850 employees and a full banking license. In addition, Singapore is BNP Paribas' regional hub for south-east Asia, enabling customers to access comprehensive payments, collections, cash and liquidity management and international trade finance solutions across the region. This is particularly important for regional treasury centres of multinational corporations that are seeking to implement cohesive regional and global solutions.
Currency
- Singapore dollar (SGD).
2016 | 2017 | 2018 | 2019 | 2020 | |
Exchange rate: SGD per USD | 1.3815 | 1.3810 | 1.349 | 1.364 | 1.38 |
Source: IMF, International Financial Statistics, June 2021.
- The Singapore central bank is the Monetary Authority of Singapore (MAS -www.mas.gov.sg).
Bank supervision
- Singapore banks are supervised by the MAS.
Bank accounts
- A company is considered resident in Singapore if it has a permanent or registered address in Singapore and maintains its place of effective management in Singapore.
Within SINGAPORE | Outside SINGAPORE | |
Local Currency | Permitted without restriction, fully convertible |
Permitted although subject to the restrictions of that particular currency, fully convertible |
Foreign Currency | Permitted without restriction, fully convertible |
Permitted without restriction, fully convertible |
Within SINGAPORE | Outside SINGAPORE | |
Local Currency | Permitted without restriction, fully convertible |
Permitted without restriction, fully convertible |
Foreign Currency | Permitted without restriction, fully convertible |
Not applicable |
- Lifting fees, most typically per item-based charges and/or subscription fees, are applied on payments between resident and non-resident bank accounts.
BNP Paribas Cash Management Capabilities
Cash collections | |
Cheque collections | |
Direct debit collections | |
Domestic incoming transfers | |
Virtual IBAN | |
Virtual accounts | |
International incoming transfers | |
Card acquiring |
Cash withdrawals | |
Cheque payments | |
Direct debit payments | |
Domestic outgoing transfers | |
Commercial cards | |
Virtual cards | |
International outgoing transfers | |
SWIFT gpi | |
Real-time international payments through BNP Paribas’ network | |
Card issuing |
Local e-Banking | |
Global e-Banking - Connexis | |
SWIFT/ host to host |
Payments & collections
On 28 January 2020, the Payment Services Act came into force. The new Act is indicative of the central bank and government’s active support of Singapore’s transition towards a cashless economy. Certainly, the use of cash is in decline. It is estimated that 39% of all payment transactions were made in cash in 2020, compared with 59% in 2010. Cash payments have been replaced by card-based e-money, which is the most popular non-cash payment instruments in volume terms in Singapore.
Electronic banking services are available from all banks. There is no national electronic banking standard in Singapore, so companies use banks’ proprietary services.
Online and mobile banking services are provided by all of the country’s banks. Adoption of digital services rose significantly through 2020: the DBS Bank mobile app saw a 216% increase in registrations between June and August 2020, compared to the same period 2019, for example. To encourage the use of digital banking services, the Monetary Authority of Singapore has granted four digital banking licenses. Payments via internet and mobile banking with a value of up to SGD 200,000 can be processed in near real time via FAST.
PayNow Corporate, an electronic fund transfer service for businesses and corporates, enables businesses and the Singapore Government to pay and receive SGD funds instantly with the linking of the Unique Entity Number (UEN) to their Singapore bank account.
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- Credit transfers are used by companies to pay salaries and suppliers, and for treasury payments.
- Credit transfers are available as both paper-based and electronic payment instruments.
- High-value and urgent domestic SGD-denominated credit transfers can be settled in real time via MEPS+.
- Low-value, non-urgent and high-volume credit transfers can be settled via the IBG on a same day basis or up to three business days.
- Low-value credit transfers can also be settled via FAST (SGD 200,000 or less). FAST can be used 24 hours a day, seven days a week. Twenty-three banks and five non-bank financial institutions participate in FAST.
- Low-value credit transfers can also be made via PayNow (SGD 200,000 or less) on a near real-time basis. Payments are settled via FAST. PayNow has adopted the Singapore Quick Response Code (SGQR) specifications, enabling businesses to collect payments via the service through QR codes. There are nine bank participants in in PayNow, and three non-bank financial institutions. At the end of 2020, there were 1.6 million individual registrations for PayNow.
- PayNow Corporate enables businesses and the Singapore Government to pay and receive SGD funds instantly with the linking of the Unique Entity Number (UEN) to their Singapore bank account. Nine banks participate in the service. PayNow corporate registrations totalled 240,000 in 2020.
- As of February 2021, eligible non-bank financial institutions have had direct access to FAST and PayNow, enabling users of e-wallets to make real-time transfers between bank accounts and e-wallets as well as across different e-wallets.
- Cross-border transfers can be made via SWIFT and settled through correspondent banks abroad.
- In 2020, the volume and value of credit transfers increased 24.4% and 10.8% respectively, to 255 million transactions, with a value of SGD 664.3 billion.
- Direct debits are used for regular payments, such as utility bills.
- Direct debits are settled via the IBG on a same day basis or up to three business days.
- The cheque is a popular cashless payment instrument, used by both consumers and companies.
- Cheques are truncated into electronic items before being settled on a next-day basis.
- Singapore has two cheque truncation systems: one for SGD-denominated cheques (SGDCTS), the other for USD-denominated cheques (USDCTS).
- Final settlement of SGD and USD-denominated cheques takes place via MEPS+.
- In 2020, 31.5 million SGD cheques with a value of SGD 429.8 billion were processed. This represents a fall of 31.2% in volume and 24.6% in value from 2019.
- Card payments are increasingly popular, especially for retail transactions. There were 6.6 million credit cards in circulation at the end of December 2020.
- Contactless payment cards are issued and their use increasing.
- Visa-branded payment cards are the most widely issued, although MasterCard, American Express and Diners Club credit cards are also available.
- All card payments are processed via NETS on a same-day basis.
- All cards issued have EMV chips.
- In 2020, the volume of card payments increased 3.7% on 2019 figures, to 1,213. Value fell 10.6% to SGD 91.6 billion.
- There are three main ATM networks in Singapore: the proprietary DBS-POSB network, the atm5 network, which is used by six foreign banks, and the NETS network, which is operated by MasterCard and used by the United Overseas Bank and the Overseas-Chinese Banking Corp. The networks are not interoperable.
- All payments are processed via NETS on a same-day basis.
- All ATMs and POS terminals are EMV-compliant.
- The MEPS operated Shared ATM Network switch connects all ATMs in Singapore.
- The dominant electronic wallet schemes are the NETS operated CashCard and FlashPay schemes, as well as an independent EZ-Link card.
- Single and multi-purpose stored-value cards are both available.
- Card-based e-money transactions fell 33.8% and 36.7% in volume and value terms respectively in 2020, on 2019 figures.
- Mobile wallets are widely accepted throughout Singapore due to the SGQR code. Popular e-payment methods include GrabPay, AliPay Nets and PayLah.
- E-money payments are settled on a next-day basis via NETS.
Short term investments
Interest payable on credit balances
- Interest-bearing current accounts are permitted, although not widely available.
Demand deposits
- Demand deposits denominated in SGD or major foreign currencies are available with terms ranging from overnight to over one year.
Time deposits
- Time deposits are available in SGD or major foreign currencies for terms ranging from one week to over one year.
Certificates of deposit
- Domestic banks issue SGD-denominated certificates of deposit with terms ranging from three months to five years. The minimum investment is
SGD 100,000. - Some banks issue foreign currency denominated certificates of deposit with terms ranging from one month to five years. The minimum investment is USD 100,000.
- Certificates of deposit can be issued paying fixed or variable interest.
Treasury (government) bills
- MAS auctions three-month treasury bills on a weekly basis and one-year treasury bills twice a year. Six-month treasury bills are also sometimes issued. The minimum investment amount is SGD 1,000.
- Singapore’s most reputable companies do issue commercial paper, but it is not widely available.
Money market funds
- Money market funds are popular short-term investment instruments.
Repurchase agreements
- Repurchase agreements are commonly available in Singapore.
Banker's acceptances
- Banker’s acceptances are rarely used in Singapore.
BNP Paribas Trade Finance Capabilities
Documentary credits | |
Documentary collections |
Bank guarantees | |
Standby letters of credit |
Receivables | |
Payables | |
Inventory |
Connexis Trade | |
Connexis Supply Chain | |
SWIFTNet Trade for Corporates | |
Connexis Connect |
- BNP Paribas' Global Trade Solutions (GTS) team in Singapore is made up of 10 trade professionals who provide both local and regional support across Asia Pacific. GTS in Singapore provides a wide range of product offerings from traditional trade products to supply chain management solutions complemented by excellent service delivery by ISO-certified middle and back offices. With strong product expertise and in-depth knowledge of local market requirements, BNP Paribas has become a leading trade finance bank in the region.
International trade
- As a member of the Association of Southeast Asian Nations (ASEAN), Singapore has entered into the ASEAN Trade in Goods Agreement (ATIGA) between member states (Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam). Singapore is also a member of the ASEAN Free Trade Area (AFTA) and is committed to reducing and eliminating tariffs between members.
- As a member of the Asia-Pacific Economic Cooperation (APEC) forum, Singapore has agreed to liberalise trade and investment rules between members.
- Singapore has 25 regional and bilateral free trade agreements in place with more than 30 trading partners, including USA, China, Australia, the GCC, the TPSEP, EFTA and Japan.
- Singapore is a signatory of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The CPTPP came into force in December 2018.
- Singapore is a signatory of the Regional Comprehensive Economic Partnership (RECP). The country ratified the agreement in April 2021.
- ASEAN has signed free trade agreements (FTAs) with Australia, China, Japan, Hong Kong, India, New Zealand and South Korea.
Imports | Integrated circuits | Gold | Refined petroleum products | Gas turbines | Crude petroleum | |
Primary Import sources | China (16.0%) | Malaysia (11.0%) | USA (9.0%) | Taiwan (7.0%) | Japan (5.0%) | Indonesia (5.0%) |
Exports | Integrated circuits | Gold | Refined petroleum products | Gas turbines | Packaged medicines | |
Export markets | China (15.0%) | Hong Kong (13.0%) | Malaysia (9.0%) | USA (8.0%) | Indonesia (7.0%) | India (5.0%) |
2016 | 2017 | 2018 | 2019 | 2020 | ||
Exports | - goods USD m | 371,402 | 413,883 | 458,950 | 441,350 | 411,634 |
- services USD m | 155,160 | 169,686 | 206,748 | 217,187 | 187,564 | |
Imports | - goods USD m | 284,256 | 316,496 | 357,370 | 344,508 | 317,991 |
- services USD m | 157,599 | 180,247 | 200,122 | 208,198 | 172,689 | |
Current account as % GDP | 18.0 | 18.2 | 17.1 | 16.9 | NA |
Source: IMF, International Financial Statistics, June 2021.
Trade finance - Imports
The following documentation is required in order to import goods into Singapore:
- commercial invoice
- customs declaration
- packing list
- import permit.
- Licences are required for reasons of national security, environmental protection and on health and safety grounds.
- Tariffs are generally not set on imports.
- Only samsoo, beer and stout products currently attract import tariffs.
- There are eight free trade zones in Singapore.
- None
- None
- Prohibited imports are published on a negative list.
Trade finance - Exports
The following documentation is required in order to export goods from Singapore:
- commercial invoice
- export permit
- customs declaration
- packing list.
- Licences are required when exporting ozone depleting substances and rubber.
- Licences with quotas are required when exporting certain pine and mahogany wood products.
- None
- None
- Export credit insurance is available from the privately owned ECICS.
- Prohibited exports are published on a negative list.
Regulatory requirements
- Singapore does not apply reporting requirements for companies.
- Singapore does not apply exchange controls.
- There are some restrictions on the use of SGD for non-domestic transactions.
Taxation
- A company is resident in Singapore if the control and management of its business is exercised in Singapore. In general terms, control and management of a company’s business is vested in its board of directors, so the place of residence of the company is where the directors meet.
Tax authority
- Inland Revenue Authority of Singapore (IRAS).
Tax year/filing
- The tax year generally is the calendar year, although a company is required to file its tax return based on the results of its financial year.
- Each tax year is referred as the “year of assessment.” Income is subject to tax in Singapore on a preceding year basis (e.g. income earned in the financial year ended in 2020 will be taxed in the 2021 assessment year).
- Companies must submit an estimated chargeable income to the IRAS within three months from the end of their financial year end. From tax year 2021, tax returns are required to be electronically filed by November 30 of the assessment year for income earned in the preceding accounting year. The notice of assessment will be issued by the IRAS after the tax return is filed. The tax generally is due and payable within one month after the date of issue of the notice of assessment.
- Consolidated returns are not permitted; each company is required to file a separate return. However, a loss transfer system of group relief allows current year unutilised losses, unutilised capital allowances and unutilised donations from one qualifying company to be offset against the taxable profits of another qualifying company within the same group. To qualify, companies must be incorporated in Singapore and be at least 75% owned by another company in the group that is incorporated in Singapore, and must have the same accounting year end.
- For accounting purposes, the adoption of Financial Reporting Standard (FRS) 39 requires companies to reflect their financial assets and liabilities at market values in their financial statements.
- The income tax treatment of financial instruments on the revenue account follows the accounting treatment under FRS 39. This has the following implications:
- Financial instruments classified as fair value through the profit and loss account: realised and unrealised gains or losses recognised in the profit and loss account are taxable or deductible.
- Financial instruments classified as available-for-sale: gains or losses which are recognised in the balance sheet are not taxable or deductible. At the time of de-recognition (e.g. when the assets are disposed of), the cumulative gains or losses recognised in the balance sheet that are transferred to the profit and loss account are taxable or deductible. Accordingly, impairment losses, reversal of impairment losses, and foreign exchange gains or losses that are recognised in the profit and loss account are also taxable or deductible.
- Financial instruments classified as held-to-maturity and loans: the ‘interest income’ that is shown in the accounts and calculated using the effective interest method is taxable.
- Gains or losses reflected in the profit and loss account for financial instruments held on capital account are not taxable or deductible.
- For Singapore income tax purposes, companies can deduct interest expenses to the extent the related financing is used for income-producing purposes. An asset is considered as income producing if it is used to generate income, which is assessable to Singapore income tax.
- N/A
- A taxpayer can request an advance ruling from the IRAS on the tax consequences of a particular transaction or arrangement.
- Capital gains are exempt from tax.
Payments to: | Interest | Dividends | Royalties | Other income |
Resident entities | None | None | None | |
Non-resident entities | 15%** | None | 10%** |
* Excluding certain literary and artistic copyright royalties, approved invention or innovation royalties.
** The withholding tax at 15% (or 10% for royalties) on the gross payment is a final tax. It applies provided that the income is not derived by the non-resident through its operations carried out in or from Singapore. Operations carried out in or from Singapore will continue to be taxed at the prevailing corporate tax rate on their chargeable income.
- There is no withholding tax on dividends paid by companies resident in Singapore.
- Interest paid to a non-resident generally is subject to a 15% withholding tax, unless the rate is reduced under a tax treaty or an exemption applies under certain domestic concessions (broadly applicable to interest received on deposits held with approved banks or licensed finance companies in Singapore, and interest from debt securities not derived from a partnership in Singapore, nor from carrying on a trade in debt securities). The 15% withholding tax is a final tax and applies to interest (i) derived by the non-resident from a business carried on outside Singapore, or (ii) not effectively connected to a permanent establishment (PE) in Singapore. Any other interest paid to a non-resident company that does not qualify for the final rate or an exemption (including interest derived from a business in Singapore or effectively paid to non-resident individuals that does not qualify for the 15% final rate or a domestic concession) is taxed at 22%, Interest paid to a Singapore resident is not subject to withholding tax.
- Royalties paid to a non-resident are subject to a 10% withholding tax, unless the rate is reduced under a tax treaty. The 10% withholding tax is a final tax and applies to royalties (i) derived by a non-resident from a business carried on outside Singapore, or (ii) not effectively connected to a PE in Singapore. Any other royalties paid to non-resident companies that do not qualify for the final rate are taxed at the prevailing corporate tax rate (17% for 2021). Payments to non-resident individuals are subject to withholding tax of the lower of 22% on net income or 10% on the gross royalties. Royalties paid to a Singapore resident are not subject to withholding tax.
- Payments to non-residents (other than individuals) for technical services rendered in Singapore are subject to a 17% withholding tax, unless the rate is reduced under a tax treaty. This includes fees for the rendering of assistance or services in connection with the application or use of scientific, technical, industrial, or commercial knowledge or information; or for management or assistance in the management of a trade, business, or profession, unless the services are rendered entirely outside Singapore, and not performed through a business carried on in Singapore or a PE in Singapore. For non-resident individuals, withholding tax applies at 15% on the gross income, unless the individual opts to be taxed at 22% on the net income. Fees for technical services paid to a Singapore resident are not subject to withholding tax.
- Singapore has concluded over 80 comprehensive tax treaties.
- The OECD MLI entered into force in Singapore on 1 April 2019.
- The deductibility of interest expense generally depends on the specific purpose of the loan. Interest is deductible where the loan is obtained for revenue purposes (i.e. to finance the purchase of inventory). Interest incurred on a loan to finance the purchase of a capital asset is deductible to the extent that the capital asset is used to generate income that is subject to Singapore income tax. The interest may be apportioned where loans are obtained for both income-producing and non-income producing purposes.
- Mandatory transfer pricing documentation for companies is imposed as from 2019 year of assessment, subject to safe harbor provisions.
- Penalties may be imposed for noncompliance.
- Transfer pricing adjustments made by the IRAS may be subject to an additional surcharge of 5%.
- Transfer pricing guidelines cover the application of the arm’s length principle, documentation requirements, advance pricing agreements and requests to invoke the mutual agreement procedure under Singapore’s tax treaties.
- The IRAS also has issued transfer pricing guidelines for related party loans and services.
- Singapore has introduced country-by-country (CbC) reporting requirements.
- Stamp duty applies only to financial instruments (written or electronic form) relating to stock and shares and immovable property. These include the sale of a mortgage of immovable property and shares and a lease of immovable property. An ad valorem stamp duty is chargeable on a lease or agreement for a lease of any immovable property with annual rent exceeding SGD 1,000. Leases with annual rent not exceeding SGD 1,000 are exempt.
- Buyer’s stamp duty (BSD) of up to 4% is payable on acquisitions of residential properties, and up to 3% is payable on acquisitions of non-residential properties. Additional buyers stamp duty (ABSD) is payable by certain groups that purchase or acquire residential property (including residential land). The additional buyers stamp duty is 5% to 30%, depending on the category of the buyer and is computed on the higher of the purchase price or market value of the property.
- Seller’s stamp duty (SSD) of up to 15% and 12% applies to industrial and residential property depending on the holding period and date of acquisition.
- The buyer’s stamp duty on the acquisition of stock and shares is 0.2% of the market value or value of consideration, whichever is higher. The acquisition of equity interests in a company that primarily owns (directly or indirectly) residential property in Singapore may attract additional conveyance duties (BSD and ABSD for buyers and SSD for sellers).
- The transfer of scripless shares listed on the Singapore stock exchange, however, is not subject to stamp duty. Stamp duty relief is available in a number of cases, subject to conditions.
- Singapore has no specific tax rules that apply to cash pooling arrangements.
- Singapore does not have specific taxes applying to financial transactions and banking services, including loans, money transfers, letters of credit, and foreign exchange.
All tax information supplied by Deloitte Touche Tohmatsu and Deloitte Highlight 2021 (www.deloitte.com).