Discover the Various Tax Schemes To Help You Save On the Singapore Corporate Tax
The corporate tax regime in Singapore is among the lowest in the world, and this is one of the main reasons why Singapore is such an attractive destination for all kinds of entrepreneurs from around the globe. Singapore corporate tax is set at 17%, and there are reliefs and rebates businesses can always take advantage of to ensure that they pay less for the corporate taxes.
Here is a brief look at some of the schemes and grants offered by the Singapore government, and which every business should consider utilizing to further lower the amounts of taxes they pay-:
Start-up Tax Exemption Scheme and Partial Tax Exemption
The government of Singapore came up with the Start-up Tax Exemption Scheme as a way of encouraging entrepreneurship and growth of the local businesses. This scheme currently exempts-:
- A total of 75% on the first $100,000 of the normal chargeable income for all start-ups.
- A total of 50% on the next$100,000 of the normal chargeable income for all startups.
The above exemptions are applicable to the initial 3 consecutive Years of Assessments, and they will become effective from YA2020. Under this scheme, a startup refers to a business in Singapore that is no more than three years old. For a business to be eligible for the Start-up Tax Exemption Scheme, the following requirements have to be fulfilled-:
- The business has to be incorporated in Singapore
- It has to be a tax resident of Singapore for all the Years of Assessment applicable
- They should not have more than 20 individual shareholders during the period of the applicable YAs.
- The industry may be in any industry, except for property development and investment holding.
Companies or businesses that were not incorporated in Singapore, have more than 20 shareholders or they operate as property development or investment holdings may be eligible for the Partial Tax Exemption scheme as follows-:
- 75% on the first $10,000 for the normal chargeable income
- 50% for the next $190,000 of the normal chargeable income
Business and IPC Partnership Scheme
This scheme gives a 250% Singapore corporate tax relief on all the qualifying expenses realized during the period when the company’s employees volunteered or provided professional services to recognized Institutions of Public Characters. Institutions of Public Characters, also known as IPCs, refer to registered charities in Singapore with the ability to produce tax-deductible receipts for all the donations they receive.
These institutions are normally held to very high regulatory compliance and governance compared to the rest of the charities. For an employee of a business in Singapore to qualify for this scheme -:
- They must not be the owners, partners, or shareholders with directorial positions in the business.
- They must not be employed in an investment holding company
- The expenses must have been incurred voluntarily during the normal working hours and within the premises of the Institutions of Public Character. They must also not be paid by the institutions.
Pioneer Certificate Incentive and Development and Expansion Incentives
The Pioneer Certificate Incentive and Development and Expansion Incentives are schemes put in place by the government to encourage the existing businesses and companies in Singapore to explore new business opportunities so that they can expand their production capabilities.
The Pioneer Incentive Certificate scheme is applicable to any company with deep roots in the economic activities in Singapore, and whose economic activities have brought significant benefits to the country. Approved companies under this scheme may be eligible for a 5% Singapore corporate tax relief on the income realized from qualifying activities within a period of five years.
The Development and Expansion Incentive, on the other hand, is for companies to upgrade their technology, equipment, and operations so that they may have the abilities to compete on the global stage. Approved companies under this scheme may get up to 10% of corporate tax relief on all the income generated from all the qualifying activities for a duration of 5 years.
The qualification criteria for companies under this scheme include-:
- All the jobs created in the company, including seniority, expertise, and skills
- Expenditure benefiting the government of Singapore
- Growth in facilities, assets, capacity, and skills that is better and more advanced than what you would normally find in Singapore.
- Active plan to continue growing and sustaining business activities within Singapore
Double Tax Deduction Scheme for Internationalization
This scheme is under the administration of Enterprise Singapore, and it is designed to encourage businesses in Singapore to expand their operations internationally. With this scheme, businesses are allowed double Singapore corporate tax deductions for all the expenses the business might have incurred between 1st April 2012 and 31st March 2020, when expanding internationally or when operating in the international markets.
There are several tax deductions under this scheme, and most of them are deducted automatically without any need for further approval or application. They include-:
- Business development trips and missions abroad
- Investment study trips and missions abroad
- Trade fairs and exhibitions attended outside Singapore
- Local trade fairs and exhibitions approved by the Singapore Tourism Board or Enterprise Singapore
For a business to qualify for this scheme, they have to meet the following requirements-:
- The business must be based in Singapore, and for certain qualifying activities, it is imperative for the global headquarters of the business to be located in Singapore.
- The primary aim of the business should be to promote the trade of goods or provision of services.
- They must have a very clear intention to expand globally.
International Headquarters Award and Regional Headquarters Award
Regional Headquarters Award is a scheme administered by Singapore Economic Development Board and its aim is to encourage international companies to have their regional operations based in Singapore. The ultimate goal with this is to establish Singapore as a regional business hub. Companies who qualify under this scheme get a 15% on the Singapore corporate tax for qualifying activities within three and five years of operations.
The International Headquarters Award is also administered by the Economic Development Board, and it is a scheme for companies with intentions of basing their international headquarters in Singapore. Companies who qualify for this scheme may get reliefs of between 5% and 10% on the corporate taxes.