The government of Singapore takes much pride in the fact that Singapore is consistently ranked as one of the world’s best locations in which one might choose to start a business and conduct business activities. Therefore, the government has created policies which facilitate the creation of businesses in order to strengthen the level of entrepreneurship which exists in Singapore today. Some of the ways in which it has done so are through certain tax incentives which it has introduced for the benefit of the small and medium enterprises (SMEs) in Singapore.
Tax Incentives Which May Be Claimed by Singapore SMEs
The Inland Revenue Authority of Singapore (IRAS) introduced the Start-up Tax Exemption Scheme (SUTE) in 2004. This tax exemption scheme was created in order to improve the economic well-being of Singapore’s SMEs as well as encourages people who live in Singapore to start SMEs of their own. The benefits of this scheme can be claimed by any Singapore-based SME which is in the midst of one of its first three years of assessment (YAs). In the first YA, 75% of the first S$100,000 of the SME’s normal chargeable income is exempt from taxation. The next S$100,000 of any normal chargeable income which has been earned will receive a further 50% tax exemption. It should, however, be noted that companies which are primarily involved in investment holding or the development of properties for sale, investment, or both are ineligible for the benefits afforded by this scheme.
Another tax exemption scheme in Singapore is the Partial Tax Exemption Scheme which was introduced in 2008. All SMEs, regardless of their date of incorporation, which have fulfilled the eligibility criteria for this scheme are permitted to claim its benefits. When a company claims the benefits of the Partial Tax Exemption Scheme, it receives a 75% tax exemption on
the first S$10,000 of normal chargeable income which it has earned. The company’s next S$190,000 of normal chargeable income is eligible to receive a 50% tax exemption.
Tax exemptions are just one area of the multi-faceted and complex entity which is the tax system of Singapore. Due to the complexity of Singapore’s tax system, some might have trouble with understanding their tax obligations as well as fully comprehending the intricate details of the system. Fortunately for such people, we at Paul Hype Page & Co will provide solutions to such problems. Should you be facing any difficulties related to taxation in Singapore, our tax team will be able to assist you. We will also enable you to reduce your tax burden through methods which are both effective and legal.