A comparison of the taxes burden faced by start-ups in six economies reveals significant variation with Singapore coming out as the most tax-friendly jurisdiction.

GuideMeSingapore.com released a report that compares the tax policies of six countries: UK, USA, India, Australia, Russia, and Singapore. Using the tax rates for the year 2009, the report performs a comparative analysis of the tax impact on a new firm incorporated in each of these countries.

Among the six countries considered, the report finds that the tax burden imposed on new firms is the smallest in Singapore while it is the highest in India. If maximisation of take-home profits were the main objective, for an entrepreneur who has the flexibility to incorporate his or her business in any of these jurisdictions, Singapore offers the most rational choice — the report concludes.

To illustrate its findings, the report considers the case of a hypothetical start-up firm that expects to make an annual income of US$300k. Such a firm will have a total tax bill of only US$34k in Singapore while it would face an approximate tax bill of US$60k in Russia, US$63k in UK, US$90k in Australia, US$100k in US, and US$102k in India.

The authors of the study caution that each country’s tax policies differ from those of the others in the exemptions, incentives, and depreciation allowances that they permit.  The major exemptions available to companies have been considered in this analysis but their esoteric nuances have been ignored.

Jacqueline Low, the Director of Corporate Services at Janus Corporate Solutions — a leading Singapore corporate services firm that runs the GuideMeSingapore.com site — further emphasised the long-term attractiveness of the Singapore tax policies by adding, “The historical trend of corporate tax rates in Singapore over the last 5 years shows consistent reduction. Per government’s stated policies, this trend is likely to continue in Singapore whereas in most other countries this trend is pointing upwards due to the rising budget deficits that these governments face.”

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