Singapore has an attractive tax regime, characterized by low corporate and personal tax rates, absence of capital gains tax, tax relief measures and extensive double tax treaties.
In addition to favorable fiscal conditions, Singapore is characterized by an open economy and ease of doing business in the country. Free Trade Agreements (FTAs) are treaties which make trade and investment between two or more economies easier. Singapore has an open economy which is driven by trade in goods and services. Over the years, it has forged an extensive network of 26 implemented agreements.
With FTAs, Singapore-based exporters and investors stand to enjoy a myriad of benefits like tariff concessions, preferential access to certain sectors, faster entry into markets and Intellectual Property protection.
COMMERCIAL TRADE BETWEEN SINGAPORE AND UK
The UK is currently one of Singapore’s largest trading partner for goods and services: Singapore is the UK’s 21st largest trading partner, accounting for 1.2% of total UK trade. Total trade in goods and services between the UK and Singapore was £17.6 billion in 2019.
In 2019, UK exports to Singapore were £10.7 billion, making it the UK’s 16th largest export market (accounting for around 1.6% of all UK exports). UK imports from Singapore were £6.9 billion, making it the UK’s 23rd largest import source (accounting for around 1.0% of all UK imports).
UNITED KINGDOM-SINGAPORE FREE TRADE AGREEMENT (UKSFTA)
The UK-Singapore free trade agreement was signed in December 2020 and entered into force from 11 February 2021.
Through the FTA, UK businesses can better utilize Singapore’s capacity as a financial and trading hub to expand to the rest of ASEAN and a fast-growing region. Furthermore, the UKSFTA serves as a bridge for the UK to join the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP), where Singapore is a member.
The UKSFTA ensures trade continuity and provides companies with certainty in trading arrangements between the UK and Singapore. Under the UKSFTA, Singapore and UK companies enjoy the same benefits they received under the European Union-Singapore Free Trade Agreement.
This agreement will eliminate tariffs for 84% of all tariff lines for Singapore exports to the UK, and by November 2024 all remaining tariffs on products will be eliminated for selected goods.
The UKSFTA will continue to provide for liberal and flexible rules of origin (ROO) for the UK and Singapore’s key exports to each other’s markets, including automobiles, chemicals, clothing and textiles and electronics. At the same time, the UKSFTA will remove unnecessary technical barriers to trade (TBT) for Singapore and UK exporters. This will create a level playing field for UK and Singapore companies and will facilitate trade between the UK and Singapore.
The two countries also plan to launch the negotiations of a UK-Singapore digital economy agreement (DEA) in 2021. The Digital Economy Agreement will facilitate digital business and trade, promoting digital connectivity within the two countries.
Beyond the UKSFTA, the UK and Singapore have committed to commence and endeavor to conclude negotiations for a high standard investment protection agreement within two and four years respectively of the UKSFTA’s entry into force. This will ensure that the bilateral investments will be covered by robust and up-to-date treaty protections and provide our businesses and investors with the certainty of investment protection.
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