With its pro-business tax regime and attractive corporate incentives, Singapore has always been an appealing country for investors to set up their business ventures. However, despite Singapore’s relatively uncomplicated tax laws, there have been various corporate tax myths circulating that have negatively impacted entrepreneurs looking to do business in our nation.
There is nothing more detrimental than listening to an armchair “financial expert”, especially for a crucial subject like taxation. Therefore, allow us to dispel the five common corporate tax myths businesses have encountered so you can have peace of mind knowing your business is complying with Singapore’s stringent corporate tax laws.
Myth #1: Double taxation when incorporating a business in Singapore
When entrepreneurs are looking for new markets to invest in, double taxation is always a concern. Having to pay taxes on both a corporate and personal level is a huge deterrent for any businessman, so this is an active consideration for them whenever they are looking for a new business opportunity.
Recognising this concern, the government has set up limited Avoidance of Double Tax Agreements (DTAs) so that companies need not pay twice the amount of tax when conducting their businesses here in Singapore.
Myth #2: Compulsory filing of audited accounts
It is a common misconception among entrepreneurs that their company accounts have to be audited and filed with The Accounting and Corporate Regulatory Authority of Singapore (ACRA). However, this notion does not hold true for specific businesses. For example, dormant Private Exempt Companies (PECs) do not have to file their audited accounts regardless of the company’s solvency situation.
Myth #3: Capital gains are taxable
Capital gains are typically taxable in most countries, but this is not the case in Singapore. Any earnings from the sales of fixed assets or foreign exchange that involve capital transactions are counted towards your company’s capital gains and are exempted from tax. This decision is part of a move by the government to build on the country’s reputation as a business-friendly nation.
Myth #4: Singapore does not offer tax exemptions
Given Singapore’s relatively low corporate tax rates, entrepreneurs may be forgiven for thinking the country does not offer further tax exemptions for their businesses. However, this misconception could not be further from the truth. The government offers three types of tax exemptions to all companies in Singapore – full tax exemptions for new business startups, a partial tax exemption scheme, and an exemption for any overseas-sourced income.
Myth #5: Contesting a Notice of Assessment is a complicated process
The Notice of Assessment (NOA) is a tax bill issued by the Inland Revenue Authority of Singapore (IRAS) that details the amount of tax and chargeable income a company has to pay for the given financial year. However, should the company disagree with the NOA, it can contest the bill through three different channels.
If you wish to contest the NOA, your company must submit a Notice of Objection within thirty days from the document date. You can choose to submit a Notice of Objection by completing an online form, sending an email to the relevant authorities, or through the IRAS’s myTax Portal.
Conclusion
Singapore’s progressive corporate tax laws remain an attractive proposition for local and foreign businesses alike. Therefore, it is crucial for companies to separate these corporate tax myths from facts so they can file their taxes accurately and avoid incurring additional penalties.
At Ackenting Group, we provide a suite of tax and accounting services to help you plan your company’s taxes so that you can rest easy when reporting season arrives. Our team of accountants have experience handling the reports of major clients, and they can provide you with sound advice on your tax incentives to ensure you earn greater savings for your business. We also offer a wide range of corporate services to meet your business needs, including incorporation services for entrepreneurs looking to start a business venture in Singapore.
If you require any assistance on accounting services, feel free to drop us an email at johnwoo@ag-singapore.com or contact us at +65-66358767. At Ackenting Group, we offer a complimentary 30 minutes online consultation for us to better understand your business requirements.
