Singapore, known as a business haven, gets this reputation for its advanced infrastructure, stable economic and political conditions, and honest bureaucratic systems that allow businesses to flourish. The entire country is tirelessly devising new and improved strategies to encourage more start-ups to be formed, more foreign investment in the form of business ventures, and better incentives to corporates which enables them to expand operations within the country and abroad. Taxation has been one of the most significant factors determining how companies function globally. Singapore, being a business haven, has extremely attractive tax policies to encourage business operations.
In Singapore, not only are the tax rates low, but there are also various methods by which companies can further lower their tax implications in Singapore. Let’s look at some Singapore Company tax policies from which corporates can benefit:
- SUTE: The SUTE or Start-up Tax Exemption Scheme is the foremost Singapore company tax benefit scheme through which new businesses or start-ups can lower their tax implications. Under this scheme, start-ups are exempt from tax payments for 3 consecutive assessment years in the following manner:
75% of the first USD 100,000 of the chargeable income of the start-up is exempted from tax 50% of the next USD 100,000 of the chargeable income of the start-up is exempted from tax. In order to benefit from this scheme, certain criteria need to be met by the companies. If those criteria are not met, then the company would not qualify to benefit from this particular scheme but can qualify for other similar schemes like the PTE.
- PTE: Partial Tax Exemption or PTE is a Singapore corporate tax scheme through which businesses that have been functional for over three years or have over 20 stakeholders, or do not fulfill any other criteria mentioned in SUTE, can claim partial tax exemption to the tune of 75% for the first S$10,000 and 50% for the next S$190,000.
- BIPS: The Business and IPCs Partnership Scheme or BIPS is yet another Singapore corporate tax rebate scheme under which companies, upon fulfilling certain criteria, can claim tax rebates. As per this policy, if expenses are incurred by companies while professionally helping out or volunteering to help Institutions of Public Character (IPCs), corporates would be entitled to a 250% corporate tax deduction on qualifying expenses.
- Corporate Income Tax Rebate: All corporates can claim tax rebates for each Year of Assessment. Every year, the percentage and upper cap for this amount are changed. In the YA 2018, this limit was capped at 40% and S$15,000; in YA 2019, the limit was 20% capped at S$10,000; in YA 2020, the range was set at 25% capped at S$15,000.
Beyond these, there are many more schemes that come with specific qualifying criteria. There is a lot of scope for companies to continually lower the amount of taxes to be paid in addition to the already lowered flat rate of 17%. Singapore continually comes up with policies that can be leveraged by corporates, and they are acting in favor of the country.
