Tax Incentives In Singapore
Singapore Tax Incentives to Start your Business
If you want lots of opportunities for business growth and strong support from the government to succeed in your business, then come to Singapore!
The government of Singapore has designed programs and incentives to support those who want to incorporate businesses and its existing businesses in Singapore. And this is why the country is tagged as the investors’ dream place and has contributed much to boost Asian economy. The country provides assistance for those who are starting their business through financing, management development, innovation and technology, and market accessibility.
Benefits of Starting your Business in Singapore –
The main “attraction” for start-up and existing businesses and companies is the government’s lowest corporate tax rates in the entire world. Its present companies enjoy other benefits such as protection from double taxation, tax exemption for new and startup companies, and tax exemption on companies with foreign-sourced profit.
Tax Incentive Program in Singapore
The most valuable contribution the government of Singapore has given the startup businesses is its tax incentives and benefits. It provides tax incentives to entrepreneurs who are just starting their businesses to encourage them to build more companies and produce more jobs.
The following are tax incentives offered to startup and small business enterprise businesses in Singapore:
Tax Exemption for Startups
As long as startup business meet the requirements or qualifying criteria, it can avail a full tax exemption on particular amount of its taxable profit or income for every of their initial three succeeding years. New incorporated company in Singapore should meet the qualifying criteria, like
- Legal resident of Singapore
- Business is incorporated in Singapore company
- Has not more than twenty shareholders and one of these shareholders has at least 10% of the company shares.
When these requirements are met, the company will enjoy the following benefits:
- Startup Tax Exemption – Startup businesses that satisfy qualifying criteria set by the Singapore government can enjoy of full tax exemption on some amount of taxable income or profit for every of the initial three succeeding years. Once these startup businesses meet the qualifying conditions mentioned above, they will be taxed on the following terms:
- For every of its initial three succeeding tax years – they will enjoy a corporate tax rate of 0% on its first S$100,000 of taxable income and 8.5% tax rate, which is partial exemption, on the succeeding S$200,000 of taxable income. Those with taxable income of more than S$300,000 is charged at the standard headline corporate tax rate of 17%;
- From 4th tax year and beyond – an 8.5% tax rate on taxable income for up to S$300,000 annually. For beyond S$300,000, taxable income is charged at the standard headline corporate tax of 17%.
- Development & Expansion Incentive or DEI – motivates companies that are based in Singapore to progress into higher value business activities, increase their operations at around 5% to 10% on supplemental profit gained from qualifying business activities.
- Investment Allowance – Business entities can request for capital allowance on plant and equipment that are utilized with trade or business-related activities, which are subjected to some conditions. The Budget 2012 introduced the Integrated Investment Allowance program that offer additional allowance for fixed capital expenditure obtained for equipment placed outside Singapore for approved projects effective YA 2013.
- Pioneer Incentive Scheme – allows companies engaged in manufacturing or services that increase the general industry norms may qualify for full corporate tax exemption on qualifying income for up to fifteen years.
- Productivity & Innovation Credit or PIC Scheme refers to a particular tax benefit program which was launched in 2010. It aims at motivating companies to pursue innovative and productive activities. Under the PIC, companies may enjoy for up to 400% deduction or allowance for up to S$400,000 of expenditure gained for every qualifying innovative business activities. Qualifying activities are Research and Development, Intellectual Property Registration, Intellectual Party Acquisition, Design Activities, automation through software, and Employee Trainings. Companies may be permitted to combine the S$400,000 expenditure cap each year from YA 2013-YA 2015 into a mark of S$1,200,000 for more than three years. Low income companies may opt to convert for up to S$300,000 of their tax deductions and allowances given to them as cash payout with a 30% conversion rate. Cash payout increases between 30% and 60% and up to S$100,000 of qualifying expenditure between YA 2013 and YA 2015.
Lastly, Singapore is considered as the better country to do business for the last six years and even the World Bank has recognized this. Singapore tops as the most entrepreneurial economy and the best place for business startups. Startup is described as the company that has at least one worker and is less than five years old in the business. Startups have hired workers beyond 300,000 employees and producing more than S$160 billion in turnover. The government of Singapore acknowledges the big role these startups are playing for the economy, thus, the reason for being generous to them
“information in the website does not claim to be correct in all situations and professional help should be sought for the readers’ specific situation”