Corporate Tax Incentives
Owners of Singapore tax resident companies may also take advantage of certain tax incentives. These incentives are intended to mitigate the costs incurred in operating a business. One such incentive is the Corporate Income Tax Rebate. This incentive allows eligible businesses to receive tax rebates of either up to 25% of taxable corporate income, capped at $15,000 for YA 2020. Another notable tax incentive is the Startup Tax Exemption Scheme. This scheme allows companies that have recently begun operations to claim a 75% tax exemption on the first S$100,000 of qualifying expenses for the first three YAs falls in 2020 onwards, 50% tax exemption on the next $100,000 of normal chargeable income for which they are to be taxed.
The Wage Credit Scheme benefits managers and employers. The scheme grants an exemption of 15% of wage increases which employers give to employees who earn at least S$5,000 worth of gross monthly salary. Employers who granted their employees wage increases in the relevant YAs qualify for this scheme.
For existing companies (from YA 2020), they will get 75% tax exemption on first $10,000 and 50% tax exemption on next $190,000. For startups (where any of the first 3 YAs falls in or after YA 2020), they are entitled for 75% tax exemption on first $10,000 and 50% tax exemption on next $100,000.
Any further income earned is taxed at the usual corporate tax rate of 17%. If the company is the Singapore branch of a foreign company, tax treaties may also be used to help it avoid double taxation. This also reduces the total effective tax payable.
Singapore’s corporate tax system has allowed companies based there to experience tremendous benefits. This tax system has proven to be very accommodating to businesses of all sizes and in all fields. If you would like your company to reap some of the advantages of being based in Singapore, we at Paul Hype Page & Co provide services related to starting a company there. We also provide accounting and tax planning services for companies.