There are many reasons why you might want to incorporate your business in Singapore, including:
- The country’s position as a top-tier financial hub with access to low-cost funding
- The country’s reputation for reliability in the area of intellectual property law
- The reputation and position of a country as one of the world’s leading emerging markets
- Country’s excellent connectivity
Consequently, the ease of doing business and opportunities of registering business in Singapore.
However, the state’s enticing tax framework is the most significant perk from a business perspective. Compared to other countries, Singapore’s corporate income tax rate (a flat 17% of a company’s chargeable revenue) is already among the lowest and most competitive in the world. There are still opportunities to minimize the impact on your company’s bottom line.
How corporate tax services Singapore assess your taxable income?
Your actual income is your assessable income; in most cases, our pay is the primary source of taxable income. Earnings from consulting, renting out one’s home, or other rental means of income are also included in taxable income.
Not all sources of income in Singapore are subject to taxation. Profits from equities and real estate investments are not included in taxable income. However, for business registration you are required to pay tax on the income earned minus the business expenses.
How to minimize your corporate tax in Singapore?
Professional Corporate tax services Singapore may help you find various tax-saving ways. Corporate tax implications are often a deciding factor when determining whether or not to launch a new company. They could, for instance, raise consumer costs or hinder a company’s capacity to compete in global markets.
Corporations may need to work on their efforts to expand through new hires and capital expenditures if they must pay higher tax rates. Here are some of the strategies for lowering Singapore’s corporate tax rate:
Get PCI and DEI
Pioneer certification incentives also known as PCI and the Development and Expansion Incentive or DEI are initiatives that make it easier for corporations to expand their operations into Singapore. Both PC and DEI lower the corporation tax rate by 5 and 10 percentage points, respectively. It is helpful for businesses looking to set up regional or global headquarters in Singapore.
The company should either significantly contribute to Singapore’s economy or have current global norms capabilities to be granted PC and DEI.
The PC and the DEI only last for five years, and any subsequent extensions are conditional on the company’s expansion plans. Firms record both the qualifying and non-qualifying actions in detail. Companies in Singapore should hire reputable accounting firms to take advantage of the country’s high standard of accounting expertise. You can use them to keep track of your non-qualifying activities, which is a requirement for both DEI and PC applications, and in several other ways.
Claim R&D tax relief
If your company is eligible for innovation tax credits offered by the federal government, you may save $25,000 in corporate taxes for every $100,000 you invest in innovation. Similar is the case for a dedicated group of techies who work to fix any issues that arise with technology.
Tax breaks could be provided for R&D allowances (RDAs). You can claim R&D tax relief if you are developing a novel product or method, or upgrading an existing one. The reductions are quite generous.
Investing in Machinery or a Production Line
In taxation world, “Annual Investment Allowance” or more commonly called as AIA lets corporations apply for a tax relief on a purchase of certain company assets and up to an upper capital limit. With this provision, a company can turn a handsome amount of investment into company profits rather than handing it over as tax.
Capital Allowances on Properties
Capital allowances are tax write-offs for the depreciation of fixed assets utilized in a business or trade. The fixed assets—which the IRAS prefer to refer to as “plant and machinery”—include items like:
- Office Supplies
- Furniture
- Carpets
- Electronics
- Computers and other similar items
To claim capital allowances, businesses must first examine their spending. Claiming the fact is acceptable. Past allowances can be claimed, sometimes reaching back to the time of purchase.
Create a Separate Business to Handle New Ventures
New Start Ups can use the “Tax Exemption Scheme for New Start-up Companies.” Consider opening two if you want to create a firm, especially one with different services and staff. Splitting your business operations into many corporations can lower your tax bill. A flexible shareholding structure may benefit investors; if one company fails, its liabilities won’t be passed to the other.
Apply for the Start Up Tax Exemption Scheme
Taking advantage of tax exemption programs is a sure-fire method for businesses to lower their tax burden. In Singapore, residents can choose from many different programs. One such program is the Start-up Tax Exemption Scheme, which you should be familiar with (SUTE).
The government of Singapore implemented this program in YA 2005 to foster an environment conducive to economic expansion. In order to qualify for the Partial Tax Exemption (PTE) program, a start-up must be in operation for at least three years after incorporation.
The PTE will bring about the following:
- Your new business can deduct $7,500 from its taxable income in its first year.
- There is a 50% tax break on the following $190,000 in taxable income for your start up.
There is no need to calculate the amount of tax exemption your start-up will receive before filing your ECI. Automatic SUTE or PTE application is aided by the Inland Revenue Authority of Singapore (IRAS). To take advantage of the tax breaks available to new businesses, you must enter the File ECI site quickly.
Conclusion
Singapore offers one of the most favourable tax environments to do business in Asia. It has a streamlined system for reporting tax information, which makes Singapore an attractive option for business registration Singapore.
Companies are finding out the hard way that taxes significantly affect their business. All Singaporean corporations must send IRAS an annual tax return that includes all critical schedules. To aid businesses in fulfilling their tax compliance responsibilities, they do things like:
- Assist customers in making sure their tax returns are filed on time.
- Successfully met all filing and payment due dates for taxes.
- Locate and take full advantage of all government-granted tax breaks available to small and medium-sized businesses just starting.