Status Singapore
Although Singapore still maintains a gold standard in terms of stability and reputation in the globalised world, there is a paradigm shift in the minds of the global companies which are interested in long-term cost optimisation, access to deep talent and strategic entry into the most dynamic economic world.
To these companies, GIFT City IFSC, within the jurisdiction of the IFSCA, is not only a complementary centre- it is now proving to be a financially and operationally better first-line base.
The following is a narrow interpretation as to why a global corporation would be more benefited in choosing GiftCityAdvisor and GIFT City IFSC as compared to Singapore:
1. Superiority in Fiscal surpassing unmatched: Tax Arbitrage Advantage.
The corporate tax rate in Singapore is competitive at 17 percent, whereas in GIFT City IFSC business, the corporate tax is almost zero, which makes global business highly tax arbitrage.
| Feature | GIFT City IFSCA Base | Singapore Base | Advantage of GIFT City IFSC |
|---|---|---|---|
| Corporate Tax Holiday | Exemption of 10 out of 15 years of IFSC-generated income is 100 percent tax-free. | Corporate taxes rate stands at 17% (including standard deductions). | Maximum Profit Retention: income tax is removed and it lasts 10 years, which is translated immediately to a significantly superior profitability and ROI during the phase of establishment. |
| Capital Gains Tax | Zero Capital Gains Tax on transfer of certain assets (e.g. derivatives, debt securities listed on IFSC exchanges) to non-residents. | In most cases zero, but can be complex because of the structure of the investment and how long an investment is held. | Clear, Explicit Exemption: Taxation is eliminated on trading and fund manager activities. |
| Transaction Tax | Zero GST, Stamp Duty, STT/CTT on transactions of IFSC. | Most of the services are subject to GST (at 9%), Stamp duties on property/shares. | Zero Friction Cost: Makes large-scale financial services (such as fund administration, trade settlement) much cheaper to operate. |
| Withholding Tax (WHT) | No interest paid to non-residents, the interest paid to business units of the IFSC zero WHT. | WHT is imposed on interest payments, except Double Taxation Avoidance Agreements (DTAs). | Optimized Treasury: Establishes the most cost efficient international platform in intra group financing and corporate treasury functions. |
2. The Talent and Cost Imperative: Size and Economy.
Singapore is experiencing rising costs of operation and stiff competition for its small range of financial talent. GIFT City takes advantage of the large demographic dividend in India so as to provide scale and low cost unavailable in any other mature hub.
- Operating Expenses (OPEX): GIFT City has a cost base of around 30-50 per cent lower than a similar unit in Singapore because of much lower cost of commercial real estate and utility costs.
It is by far the biggest gap that affects the long-term financial sustainability of such large-scale operations as Global In-House Centres (GICs) and BPO/KPO.
- Availability of Talent: GIFT City has access to the huge English-speaking talent of more than 5 million finance, IT and compliance professionals in India. The talent market in Singapore is skilled, albeit small, very competitive, and very expensive.
GIFT City offers the size and cost-effectiveness required in back-office, compliance and technology-oriented operations.
- Time Zone Advantage: The location of GIFT City is ideal to serve the time zone of the major global markets to bridge the gap between major Asian markets and European hubs with a seamless follow-the-sun model.
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3. Direct Access to India Growth Story.
Whereas Singapore is a global capital centre, GIFT City is a purpose-built ramp to the fastest-growing major economy globally.
- Gateway to India:
An offshore-like establishment in Indian soil can only be conducted through the Gateway to India: A GIFT IFSC unit.This enables international companies to contribute towards the development of India (to the local market/diaspora) without the complicated, restrictive local Indian laws (such as FEMA) on their overseas operations taking a toll on them.
- India Diaspora Capital:
GIFT City has been exclusively developed to help lure the money and investment of the 30 million-strong Indian diaspora in the world, and put the foundation to intercept the extensive capital flows channelled back to the country.
4. Regulatory Simplicity and Flexibility (Unified Regulator)
Although MAS in Singapore offers a global level of regulation, IFSCA offers a special integrated regulatory system that facilitates the establishment of multi-sectoral companies.
- Single-Window Clearance: IFSCA is the first consolidated regulator in India to bring together RBI, SEBI, IRDAI and PFRDA. In the case of a multinational organisation establishing a bank, a fund, and an insurance brokerage, it implies the presence of only one regulator in GIFT City, which is far better to comply with and save a lot of time to market than the multinational company experiencing a number of regulators in various countries, working independently.
- Flexible Corporate Compliance: The IFSCA has issued several relaxations to IFSC companies under the Indian Companies Act, 2013, such as waiver of the resident director requirement in certain cases, loose compliance on loans and guarantees, which makes the companies easier to do business with than those familiar with lax international corporate laws.
The Strategic Choice
To global firms where the low-cost, high-scale operation base is paramount, with tax efficiency unmatched anywhere in the world, to deal with cross-border financial services (as in Global Corporate Treasury, Fund Administration, and BPO/KPO), GIFT City IFSC provides an overwhelming financial advantage over Singapore.
As Singapore is better placed to lead in the region and make foundation decision-making, because of the proven international image, GIFT City IFSC is the option that is better to be executed in terms of scale and long-term fiscal optimisation.
It is the next-generation global base, which transforms the operating costs into the bottom-line profits.