A Deep Dive into the Singapore Startup Tax

Understanding Tax Requirements for Startups in Singapore

Singapore is renowned for its competitive and pro-business environment, making it an attractive location for both local and foreign entrepreneurs alike to establish their startups. As you embark on your exciting journey of starting and operating a business in Singapore, it’s essential to familiarise yourself with the tax requirements that apply to your start-up to ensure full compliance and avoid potential penalties.

This blog post will provide a comprehensive overview of the tax requirements for startups in Singapore. We’ll discuss all the essential information, including the tax filing process, exemptions, incentives and schemes available to support new entrepreneurs.

 

Understanding Singapore’s Corporate Tax System

Singapore adopts a territorial basis for taxation. In other words, companies are taxed on income derived from the city-state, as well as earnings received from abroad and subsequently remitted to Singapore. Startups must be aware of the various tax requirements and file all necessary paperwork on time to remain compliant with the Inland Revenue Authority of Singapore (IRAS).

 

Tax Requirements for Startups: Registration, Compliance, and Incentives

Here’s a step-by-step guide discussing the most important tax requirements for new businesses, including registration, compliance, exemptions, and incentives.

Step 1: Register for the Goods and Services Tax (GST)

The Goods and Services Tax (GST) is a consumption tax levied on the supply of goods and services in Singapore. If your company’s annual taxable revenue exceeds SGD 1 million, it is mandatory to register for GST. Companies with a lower annual turnover have the option to register for GST voluntarily.

Step 2: File Your Company’s Estimated Chargeable Income (ECI)

Within three months from the end of your company’s financial year, you must submit its Estimated Chargeable Income (ECI) to the Inland Revenue Authority of Singapore (IRAS). ECI is an estimate of the taxable income your company will generate for a financial year.

Step 3: Submit Your Company’s Income Tax Return

All Singapore companies must file an annual income tax return, Form C or Form C-S. This form must be submitted electronically to IRAS, along with the Financial Statements, Tax Computation, and supporting documents. The deadline for submitting the Form C or Form C-S is 30th November.

 

Understanding Tax Exemptions and Incentives for Startups

Singapore’s tax authorities have introduced several incentives and schemes to support startups and encourage entrepreneurship. Below are some exemptions and incentives that may benefit your start-up company.

Start-up Tax Exemption (SUTE) Scheme

The SUTE Scheme offers partial tax exemptions for qualifying new companies on chargeable income during their first three consecutive years of operation. Under the scheme, eligible startups can enjoy:

• 75% exemption on the first SGD 100,000 of normal chargeable income
• 50% exemption on the next SGD 100,000 of normal chargeable income

Partial Tax Exemption for Companies

After the SUTE Scheme period, companies can continue to benefit from the Partial Tax Exemption for Companies. This scheme provides:

• 75% exemption on the first SGD 10,000 of normal chargeable income
• 50% exemption on the next SGD 190,000 of normal chargeable income

Tax Exemption on Foreign-Sourced Income

Companies in Singapore can enjoy tax exemptions on specified foreign-sourced income – namely, dividends, branch profits, and service income – if certain conditions are met. 3E Accounting Pte Ltd – Singapore can help you determine if your company qualifies for this exemption and guide you through the necessary procedures.

Productivity and Innovation Credit (PIC) Scheme

The PIC Scheme offers tax deductions and allowances on qualifying investments in innovation and productivity improvements. Eligible expenditures include employee training, research, technology development, and intellectual property registration. While the scheme has expired, qualifying expenditures incurred before the 2018 Year of Assessment can still be claimed.

 

Conclusion

Navigating the complex tax environment in Singapore is a critical aspect of establishing and growing your start-up business. With the professional services, expert advice, and ongoing support of 3E Accounting Pte Ltd, you can ensure your start-up remains tax-compliant and is equipped to take full advantage of the exemptions and incentives available.

Let 3E Accounting Singapore manage your start-up’s tax compliance, so you can concentrate on transforming your innovative ideas into a thriving business. Contact our tax specialists today for guidance and assistance tailored to your company’s unique needs.