Singapore Company Incorporation with Paul Hype Page
Company Registration at Paul Hype Page Singapore

Many tax incentives may be claimed by any company based in Singapore. Among the most significant are the Pioneer Tax Incentive, Development and Expansion Incentive, Corporate Income Tax Rebate, and Wage Credit Scheme. Each of these incentives has done much to reduce the tax burden of many a Singapore company owner.

Overview of Singapore Tax Incentives

A tax incentive is a government measure that is intended to help its citizens to increase the amount which they may spend or save by reducing the amount of tax that they must pay. The Singaporean government ensures its citizens and especially its entrepreneurs pay a low amount of tax to increase the viability of all business activities which are conducted within Singapore through the Inland Revenue Authority of Singapore (IRAS), the nation’s tax collection authority. These tax incentives work in tandem with the tax system of Singapore which has already placed the corporate tax rate of Singapore as one of the lowest globally. Although there are certain differences between Singapore and other countries which may also be classified as tax havens, they are nonetheless similar because the country strives to make the taxation rate low for tax assessment through tax incentives. Singapore’s government reduces the tax rate imposed on businesses in the country through various means including tax incentives, grants, schemes, and programs. Depending on the industry, almost every business located in Singapore will in some way benefit from one or more of the government’s programs.

Tax Incentives Which Exist in Singapore

Pioneer Tax Incentive

This incentive may be claimed by companies that are part of the manufacturing industry. The companies which are manufacturing approved products or provide approved services may claim the incentive. Such companies can apply for the tax incentive for a duration lasting anywhere between five and 15 years for each qualifying project under this tax incentive. The corporations which benefit from this tax incentive may also apply for post-pioneer profits to be

taxed at a lower rate through the Development and Expansion Incentive. To qualify for this tax incentive, applicants must be creating employment opportunities for Singaporeans, by creating or introducing new skills and expertise in the country, can expand business operations and create economic benefits, and commit to developing all manner of infrastructure during any manufacturing projects.

Development and Expansion Incentive

The Development and Expansion Incentive is only available to companies whose eligibility for the Pioneer Tax Incentive has expired. This tax incentive is intended to be used by businesses involved in business activities that add a high degree of value such as involvement in manufacturing projects. The tax incentive reduces the amount of tax to be paid by an amount of between 5% and 10%. The period over which a business may claim this tax lasts for 40 years.

Corporate Income Tax Rebate

The Corporate Income Tax (CIT) rebate was started in Singapore in 2013. The details of this rebate will differ from year to year and will be mentioned in the Singaporean government’s budget for each particular year. The rebate can be enjoyed by individual taxpayers as well as companies. The primary reasonthe government introduced this rebate is to increase the level of ease of doing business in Singapore to restructure the economy of Singapore to assist in economic growth as well as help in the restructuring effort. In 2020, the rate of the rebate has been set at 25% and the amount which may be claimed has been capped at S$15,000.

Tax Exemption for New Startups

The Singaporean tax authorities also provide a special tax exemption for new businesses and startups in the country within their first three assessment years. This is one of the ways the Singapore’s government increase the level of investment and entrepreneurship within the country. This scheme is available to companies in any industry except for those which are involved in the development of properties for sale. It provides a 75% exemption on the first S$100,000 of normal chargeable income that has been earned as well as a subsequent 50% exemption on the next S$190,000 of normal chargeable income earned. However, the startup must satisfy all of the following criteria before it may be deemed eligible for the tax exemption: it must be registered in Singapore, the company must be a tax resident for that assessment year, and the shareholders of the company must not number more than 20 during the relevant assessment year period. This exemption allows entrepreneurs who are interested in starting a company in Singapore to save a notable amount of tax money; this benefit has been provided to them by the country’s generous tax system and authorities which have done much to contribute towards entrepreneurship in Singapore.

Wage Credit Scheme

Employers and creditors alike benefit from the Wage Credit Scheme. Under the scheme, the government of Singapore will co-fund wages of employees who have received up to a 15% wage increase and earn up to a S$5,000 gross monthly salary. Eligible employees are those who have also received Central Provident Fund (CPF) contributions from a single employer for at least the calendar months during the preceding year, have been on the current employer’s payroll for at least three calendar months in the qualifying year, and must not also be the business owner of the entity in question.

Conclusion

The Singaporean government through its tax collection authority IRAS is constantly reviewing the country’s taxation policies including incentives and rebates. Singapore not only offers its taxpayers some of the world’s lowest tax rates; it also provides various exemptions, rebates, and incentives of which any investor or entrepreneur based in Singapore may make use. Thus, it is only to be expected that Singapore has become one of the world’s leading destinations for the establishment of a company. The advantages of operating a Singapore company are truly numerous, and among the most important of these advantages are the associated tax benefits.

Should you require any feedback or assistance with any matter related to taxation in Singapore, do not hesitate to contact us at Paul Hype Page & Co. Our tax experts understand a great deal about taxation in Singapore and will therefore be able to inform you about the latest developments regarding the taxation of companies in Singapore. We will also provide you with information about how you might be able to reduce your tax burden as the owner of a Singapore company.

A Summary of Several Notable Singapore Tax Incentives FAQs

Is there any tax incentive for the maritime industry?2021-02-09T11:56:41+08:00

Yes, Maritime Sector Incentive – Approved International Shipping Enterprise (MSI-AIS) Award is available for the qualified industry players in the maritime industry.

What is the purpose of tax incentives?2021-02-09T11:56:26+08:00

The tax incentive is an initiative launched by a country to attract investment and to encourage economic activity. Normally, with the tax incentive, the government will reduce the company’s tax payments

What is an example of a tax incentive in Singapore?2021-02-09T11:55:55+08:00

One of the examples of tax incentives in Singapore is the Productivity and Innovation Credit (PIC) Scheme.

What is the corporate tax rate in Singapore?2021-02-09T11:46:16+08:00

The corporate tax rate in Singapore is 17%.

2021-06-02T18:24:12+08:00December 16, 2013|0 Comments