Singapore boasts one of the lowest corporate tax rates worldwide – presently at 17%. Because of its low tax rate, Singapore is an extremely popular destination among foreign investors. Numerous global organisations have stretched their operations to Singapore, with many others also looking to do the same. Apart from its fantastic corporate tax rates, Singapore also has a number of tax incentives that will bring you even more savings on corporate taxes.
Read more to find out 4 Singapore tax incentives that can bring you even greater savings on your corporate tax in Singapore.
1. Start-up Exemption Tax
If you’re running a new startup and looking to establish your base in the market, the Inland Revenue Authority of Singapore (IRAS) offers tax exemption to help you find your footing in the business market. This type of tax applies to the first three assessment years. As of Jan 2021, the incentive is as follows for YA 2020 onwards:
- 75% on your startup’s first taxable $100,000
- 50% on your startup’s next taxable $100,000
To take advantage of this scheme, your business must meet the following criteria:
- It must be in the ACRA registry and a Singapore tax resident.
- It should have less than 20 shareholders – any more than that won’t be regarded as a small company.
- It should not be in the property development or investment holding industry.
2. Business and IPC Partnership Scheme (BIPS)
The Business and IPC Partnership Scheme (BIPS) provides an opportunity to receive up to 250% worth of tax deduction. When you spend on your employees’ voluntary services to charities categorised under the Institution of Public Character (IPC), you’ll be eligible to claim tax deductions for those donations. All you need to do before you make a move is to verify if the charity you are donating to has IPC status.
Additionally, you can engage the assistance of an accounting firm that can help to maintain thorough records for your company and conduct accounting services that are useful in being eligible for Singapore tax incentives. At Ackenting Group, we provide an extensive range of accounting services and corporate advisory solutions to help you maximise your business opportunities. As an award-winning accounting firm, we’re trusted by many organisations big and small, as we’re equipped with the relevant industry expertise to help your business achieve its goals.
Under the BIPS criteria, owners, partners, sole proprietors, and stakeholders are not eligible for the scheme. Employees of investment holding companies are also not eligible for the scheme.
3. Pioneer Certificates Incentive (PC) and Development & Expansion Incentive (DEI)
Both the Pioneer Certificates Incentive (PC) and Development & Expansion Incentive (DEI) aim to assist companies in expanding their operations. Companies that wish to establish a headquarters in Singapore can benefit from the PC or DEI, as they provide a lower rate for corporate tax on eligible activities – at 5% or 10% respectively.
To qualify for both schemes, your company needs to make a substantial contribution to Singapore’s economy, or hold innovative capabilities that meet global standards. Your company must also utilise innovative technology and hold the relevant skills and expertise to provide reliable and efficient services.
4. Research & Development (R&D) Expenditure
Singapore’s Research and Development (R&D) Expenditure tax incentive is significantly sought-after among startups, as it’s an opportunity for companies to receive tax reductions for their R&D activities. Most startups who benefit from this scheme are in the R&D industry.
To qualify for this incentive, your company will need to carry out certain activities such as gaining new knowledge and skills, creating effective processes or products, implementing technical understanding in production spaces, collecting data, as well as improving existing products or processes. This thorough scheme covers almost all aspects of R&D. Your company may even be able to claim a full 100% tax reduction on in-house R&D projects.
Conclusion
There are many tax-saving incentives and opportunities in Singapore, but it can be difficult to know which ones that best fits your business. As the best audit firm in Singapore, Ackenting Group has the expertise to advise you on tax incentives you can benefit from. With our accounting and bookkeeping services, you’ll also be able to maintain thorough records to meet the requirements of Singapore’s tax incentives.
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.
