Learn About the Tax Reliefs in Singapore Available to both New and Established Businesses
It is refreshing to know that there are several tax reliefs in Singapore which both new and established businesses can always take advantage of. In addition to generally low corporate tax rates, this is one of the huge attractions which make Singapore such a prime destination for entrepreneurs interested in starting new businesses or established businesses wishing to expand in the Asian markets. With these tax reliefs, businesses have opportunities to lighten their tax burdens and have more money available as profits or just for financing further the operations of the business. Here is a look at some of those tax reliefs-:
Full tax exemptions for the first three years of operations
If you are a new startup or a new business being incorporated in Singapore, the first relief you will be eligible for is the Startup Tax Exemption Scheme administered by the Inland Revenue Authority of Singapore. The scheme is designed to help small businesses to get off the ground as soon as possible by entirely exempting them from paying taxes on the first SGD 100,000 of their taxable income. It means that if you operate and make less than SGD 100,000 of taxable income, you will not be expected to pay any taxes.
Corporate tax rate of 8.5% if you make up to SGD 300,000
The regular corporate tax in Singapore is 17% of a company’s taxable income. However, for companies that make up to SGD 300,000, there is a partial tax exemption where they will be required to pay just 8.5% of their taxable income. However, when they make more than SGD 300,000, the standard corporate tax rates will be applicable.
Tax reliefs for companies in certain industries
Tax reliefs in Singapore are also available for businesses operating in certain specific companies. The Economic Development Board is responsible for overseeing and granting the benefits under this scheme.
For the qualifying companies, they won’t have to pay any taxes on their taxable income, or they may pay taxes at rates lower than the usual 17% corporate tax. Some of the industries that may enjoy these tax benefits include-:
- Property developers
- Car rental companies
- Car tuition companies
- Shipping companies
- Investment holding companies
The other sectors that may also enjoy tax benefits under this scheme include fund management and insurance industries, legal firms, e-commerce firms, event organizers, tourism industry, banking and shipping, and maritime industry.
Relief for businesses producing advanced tech products
Singapore is very keen in promoting research and development, and your business can benefit from some of the tax reliefs in Singapore if at all you are dealing with advanced technological products or you are providing very high-value services. If you are involved in one of the qualifying activities, all you have to do is apply for a tax exemption. Under this plan, your business can be exempted from taxes for a period of up to 15 years, and once this period has elapsed, you will be started on very low tax rates of at least 5% for up to ten years, though this may be extended to up to 40 years depending on the exact nature of your activities.
Tax exemption on profits from spending on certain qualifying activities
Tax reliefs in Singapore are also available on the profits made from spending on certain qualifying activities. When a business incurs expenses and generates profits from projects or activities such as shipping specialized equipment overseas, they may get exemptions of up to 100%. Such reliefs are also available to companies planning on making huge investments in automation.
The special tax rate for companies commercializing intellectual property
Singapore has the Intellectual Property Development Incentive as one of the approaches the country uses to encourage research and development activities. The tax rates on incomes realized from businesses using intellectual property will always be set at concessionary rates.
Reliefs for companies looking to expand overseas
If you are operating a big company, with its major operations based in Singapore, and you want to venture abroad, you can enjoy concessionary tax rates for a period of up to five years if you are involved in one or more of the qualifying activities.
Reliefs for companies involved in mergers or acquisitions
Tax reliefs in Singapore are also available for companies involved in mergers and acquisitions. Such companies, however, must have been incorporated and operated as tax residents in Singapore. Such companies are entitled to a write-off of up to 25% of the value of the acquisition or merger for a period of five years.
Tax incentives for foreign traders
Singapore has the Global Trader Program, where international traders have a chance to enjoy concessionary tax rates of between 5% and 10% on their trading incomes. These include brokering physical trades as well as well as trade activities carried out within Singapore.