Singapore is a country that has gained immense popularity among investors and business owners for its tax system. Its tax system has given a boost to the economy, and progression in tax reduction and several tax exemptions have benefitted businesses a lot. The corporate tax incentives, effective tax rates, and GST filing Singapore attract international and global investment and make Singapore a business-friendly country.
A company offering corporate tax services Singapore can fill you in the benefits of corporate tax and goods and services tax in Singapore. Here are a few of the orders in which Singapore taxation help businesses.
Advantages Of Corporate Tax
The Singapore government offers various tax exemption schemes and tax incentives to new start-up companies, small business, and tax resident companies. The effective tax rate reduces significantly for these companies. For instance, new business is eligible for total tax exemption or partial tax exemption in their initial years on specific income per annum.
Headline Corporate Tax Rate
Singapore has provided several opportunities and benefits to start-up companies. One of the advantages is the headline corporate tax rate, which is up 17 %. It has been going since 1997 and makes Singapore a lucrative investment spot.
However, the headline rate does not give an accurate picture of the applicable effective tax rate. The effective tax rate goes even lower than the flat 17 %. With different tax exemptions and tax incentives offered by the government of Singapore, the effective rates are less than the headline rate.
Single Tier Tax System
Singapore employs a territorial and single-tier tax system. This system avoids double taxation for stakeholders, and the company only has to pay tax on profits. All the dividends that a company pays to its shareholders are exempted from taxation. Moreover, corporate tax in Singapore does not apply to capitalgains, such as fixed assets or gain on foreign exchange.
Tax Resident Company In Singapore
Companies and businesses registered in Singapore are categorised as a resident or non-resident. A company where the control and management of the business are carried out in Singapore is said to be a tax resident in Singapore. The location of the meetings of the company’s Board of Directors and making decisions on different strategic matters determine where the company management of the company is based. Even if any one of the directors is taking strategic decisions in Singapore and playing a vital role in company management, the company is declared as a tax resident.
A company where the Board of Directors hold meetings outside Singapore and manage business matters from anywhere else, then the company is considered a non-resident in Singapore. Even if the company’s daily functions are operated in Singapore, it is still categorised as a non-resident. Moreover,a branch of an international company is also treated as a non-resident as the control of the business is with the parent company.
- The tax resident companies in Singapore get particular benefits, which the non-resident companies cannot get their hands on. These advantages include:
- A tax resident company in Singapore can have tax exemption on foreign-sourced service or branch profit under certain conditions.
- A Singapore tax resident new start-up company is eligible for a tax exemption scheme.
- With profits up to S$100,000, start-up companies in Singapore can avail of complete tax exemption for almost three years.
- These companies are not liable to pay tax on fixed assets.
A firm providing corporate tax services Singapore can help you understand tax procedures and update you regarding the rules and regulations applicable for corporate tax.
What Is GST?
Goods and Services Tax (GST), also known as Value Added Tax (VAT), is a consumption tax that is applied on the import and export of goods and services in Singapore. GST registered business companies have to pay 7 % on the selling price of the goods and services as the indirect tax. Since the end consumers pay the GST on the purchase of each item, it does not cost the companies. A company just collect the GST from the buyers and deliver it to the tax authorities.
Benefits Of GST Filing Singapore
GST filing Singapore benefits both the businesses and the government. Following are the advantages of GST to a company:
- GST registration portrays your business as a large and established business, as GST is applicable for companies of a specific size.
- It lowers the overall cost of the business, and business owners can collect the GST they paid to the suppliers.
- GST is applied only on the selling of goods, not on savings.
Benefits of GST to the government:
- It supports the government in stabilising the economy.
- It helps the government in the reduction of corporate tax and personal income taxes.
Looking For Reliable Corporate Tax Services Singapore
If you are looking ahead to initiate your own start-up company and flourish your business, consulting a firm that offers corporate tax services Singapore is your best option. TN Corporate Management Pte Ltd is your helping businesses with corporate tax services, payroll services, and GST filing Singapore. Contact now to understand the taxation process in Singapore and maximise your profits!