17/11/2011

Singapore is becoming increasingly popular and lucrative as a jurisdiction in which to set up holding companies to own foreign-invested China businesses, according to a leading expert on business tax issues in the Far East.

Chris Devonshire-Ellis, from Dezan Shira & Associates, said that the island nation is making a march on business opportunities that had previously been dominated by Hong Kong. Devonshire-Ellis said that Singapore had a lot going for it as a transit point for Chinese business, in terms of geography, the quality of its business services and an attractive tax regime.

He explained, however, that Singapore's status as a sovereign nation in its own right was its key advantage over Hong Kong and put it in an excellent position.

"Where Hong Kong does unfortunately have a major flaw as an offshore financial centre is the fact that it is not a sovereign nation in its own right," Devonshire-Ellis pointed out, highlighting that it must follow protocol from Beijing and can by itself only sign double tax agreements with other countries, but not double tax treaties.

He added, "On the other hand, Singapore is a sovereign country and has tax treaties with 86 countries, and additional status as a member of the Association of Southeast Asian Nations, which neither Hong Kong nor China possess."