In Singapore, there are several tax incentives with benefits which could be claimed by SMEs. These include the Start-up Tax Exemption Scheme as well as the Partial Tax Exemption Scheme. SMEs which fulfill specific criteria may claim the benefits of either of these schemes

Why do some of Tax Incentives only apply to SMEs in Singapore

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.

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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.

 

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Why Tax Exemptions Exist for Singapore’s SMEs

The primary reason why some of Singapore’s tax exemptions only apply to its SMEs is because the government of Singapore understands that SMEs form the foundation of the economy of Singapore. The latest statistics have shown that the majority of Singapore’s economic output as well as its employment finds its source in SMEs. Therefore, owing to their crucial role within the country’s economy and business scene, it is of utmost importance that they receive as many financial incentives as possible.

The tax exemptions enjoyed by SMEs also serve to motivate prospective business owners in Singapore to act upon their intentions and start a business of their own. An increase in entrepreneurial activity in Singapore will lead to positive circumstances which would be experienced by the country’s economy. Therefore, the economic development and growth of Singapore is enhanced through tax exemptions which are claimed by the country’s SMEs.

Perhaps you are interested in starting an SME or any other company in Singapore yourself. Should such a fact be true, you can always contact us at Paul Hype Page & Co for feedback and assistance. We will take you through the complete process of company incorporation in Singapore in order to enable the setup of your Singapore-based company. We will also work with you to settle any compliance-related matters which must be addressed before your company can be incorporated.