It is estimated that approximately 3000 trading companies are operating from Singapore currently. This figure includes both foreign-owned and local businesses. One of the main reasons why international companies flock to Singapore to operate from its shores is the attractive corporate tax structure. The maximum corporate tax rate levied on profits is 17%. As such, shareholders’ dividends are distributed without any additional tax charged on it. This means that company directors’ and shareholders are able to enjoy higher profits. Singapore also currently holds double taxation treaties with 69 other countries which basically eliminate the same amount being charged twice by two different tax systems. This greatly assists in ensuring that corporations do not get the raw end of the deal where their profits are concerned. Companies incorporated in Singapore should also take note that as long as profits are derived offshore; they get to enjoy tax exemption status.
It is also worth mentioning that the Singapore government has put in place various tax schemes, grants, programmes and incentives that help big and small companies in the city state. The tax rebates for start-ups means that organisations do not need to pay corporate tax on the first $100,000 profits which the company has made. The company will also receive a tax rebate of 50% on the next $300,000 profits. This incentive has provided much needed relief to new companies which would enable corporate managers to utilise the tax savings and channel them back to the company. This is an effective way of providing aid to new companies and small and medium sized organisations especially have profited from the generosity of the Singapore government. In 2013, the Singapore government also announced more incentives for new start-ups which go beyond the initial 3 years of incorporation. Eligible trading companies can also apply for the Global Trader Scheme which enables them to be eligible for concessionary tax rates of 5% to 10% depending on qualifying trading activities.
Another scheme which remains highly popular since its introduction in 2010 is the Productivity and Innovation Credit (PIC) Scheme. Eligible companies which are involved in innovative research and development activities, among others, stand to receive up to 400% of rebate or allowances on tax. Any company which has an approved qualifying activity as stated under the scheme can stand to benefit as much as $400,000 of tax rebates on expenses undertaken as part of the overall programme. A popular research activity on developing energy programmes and technology advancement in automation would thus be able to receive optimum tax rebates under this programme. The Singapore government is also highly supportive of those who utilise partnerships with student research institutes and universities for these activities and thus, organisations are more likely to receive funds for these particular activities. Governance of these tax disbursements is streamlined so as to ensure that only deserving corporations enjoy these funds.
All this can get a bit confusing for those who do not already possess information about the tax incentives. Foreign business owners interested in registering trading companies in Singapore might also be slightly confused as things would be different from that in their home country. This is the reason why professional consultancy services are the best bet to get as much information as possible. Their services encompass providing information and financial capabilities to clients. They are also able to provide secretarial services as well as accounting and tax assessment assistance. These professional consultants would be able to support new and upcoming trading start-ups in Singapore just by the wealth of information that is within their grasp. In order to find out more about the next step in operating a trading business in Singapore, contact these consultants today.
At Paul Hype Page, we ensure that time is taken to develop a thorough understanding of your business, your personal circumstances and your plans for the future before using our independently acclaimed technical skills to provide the best solution to minimize your tax liabilities.