Singapore is renowned for its enticing corporate taxes. We look at how its corporate tax works briefly.
TAX RESIDENCY
The tax system in Singapore benefits companies that are tax residents. This requires that the company’s control and management should be performed in Singapore such as making strategic decisions and conducting of the board of director’s meetings.
SAFEGUARD FROM DOUBLE TAXATION THROUGH AGREEMENTS
Singapore has entered into DTAs with about a hundred countries worldwide, as such; you are guaranteed to be safe from double taxation for specific cross-border incomes.
TAX EXEMPTION INCENTIVES FOR SMES
All Singapore companies are eligible for these tax exemptions. However, there is an exception for companies that comprise of only corporate shareholders, over 20 shareholders, property development, and investment holding businesses.
COMPLETELY NEW COMPANY: START-UP TAX EXEMPTION (SUTE)
SUTE tax incentive targets recently incorporated companies, and your business can enjoy this incentive
during the initial 3 years of commencing operation. The effective SUTE tax rates are:
- The first S$100,000 of normal taxable income is charged at 4.25%
- The next S$100,000 is charged at 8.5%
COMPANY OPERATED FOR OVER 3 YEARS: PARTIAL TAX EXEMPTIONS (PTE)
After a company has been in operation in Singapore for over 3 years, it can now benefit from this tax relief. The effective PTE tax rates are:
- The first S$10,000 of normal taxable income is charged at 4.25%
- The next S$190,000 is charged at 8.5%
- Other Tax Incentives
ELIGIBILITY TO FOREIGN TAX CREDIT (FTC)
Once you have been taxed abroad on a foreign-source income that is taxable in Singapore, you are eligible to claim a tax credit for it in Singapore. The tax credit claimable is restricted to the lower of the total tax paid abroad and the tax payable in Singapore.
ELIGIBILITY TO DOUBLE TAX DEDUCTIONS FOR INTERNATIONALIZATION (DTDI)
You are eligible to claim a double tax deduction up to a maximum of S$150,000 of qualified expenses incurred up to 31st March of next year for eligible market development and investment growth endeavors such as market surveys, business trips, or taking part galas overseas.
ELIGIBILITY TO PIONEER CERTIFICATE INCENTIVE (PC)
This tax exemption incentive targets pioneering activities and can be enjoyed for 15 years once a company is officially categorized as a pioneer’ in its industry. This is restricted to companies whose operations are related to IT, R&D, or a lagging sector/industry.
ELIGIBILITY TO DEVELOPMENT AND EXPANSION INCENTIVE (DEI)
This tax incentive guarantees a reduced tax rate of 5% or 10% for additional eligible income to businesses engaging in scalable and high-value goods or activities or that lead to general economic benefits for Singapore.
