Guide on How to Reduce Company Tax in Singapore
Making a profit is the number one thing on every investor’s mind when they start a company. The second is how to reduce company tax.
Taxes in Singapore
Singapore has one of the lowest corporate tax rates on chargeable income in the world. This has undoubtedly been the reason that has attracted business owners from all over the world to set up or expand their operations there.
How to Reduce Company Tax
Singapore has several schemes available to reduce company tax. They include:
The Business and IPC Partnership Scheme (BIPS)
The BIPs provide businesses with a Singapore corporate tax deduction of up to 250 percent. This deduction is applicable for qualifying expenses incurred when employees volunteer, provide professional services or provide services (secondments included) to recognised Institutions of Public Character (IPCs).
The Regional Headquarters Award (RHA)
This award is administered by the Singapore Economic Development Board (EDB). Companies that receive the RHA have the benefit of paying a much lower corporate tax rate. The rate in Singapore for corporate tax is 15%. This means that for all qualifying activities in a period of three to five years, companies only have to pay 15% taxes on the incremental income. This is, of course, subject to them satisfying and keeping up with all prescribed conditions. The conditions must be met throughout the award period. The EDB administers the RHA to encourage global companies to base their regional operations in Singapore. In doing so, the scheme is advancing Singapore’s status as a regional business hub.
The Singapore government established the Start-up Tax Exemption Scheme (SUTE)
To encourage entrepreneurship and the growth of local businesses. SUTE was the latest scheme in Singapore’s 2018 Budget, exempting the first S$100,000 of a start-up’s chargeable income from 75% tax. A start-up company will also be exempt from50% of the next S$100,000 in normal chargeable income.
Development & Expansion Incentive (DEI) and Pioneer Certificates Incentive (PC)
The DEI and PC schemes aim to encourage Singapore businesses to engage in new business activities and expand their production capabilities. If you have been toying with the option of starting a new business, this is definitely good news. You could definitely benefit from our Singapore company incorporation services to help you expand your production capabilities. The PC scheme applies to companies that have established long-term economic operations in Singapore, bringing significant benefits to the country’s economy.
Double Tax Deduction Scheme for Internationalisation (DTDi)
Enterprise Singapore administers the DTDi scheme. The scheme provides a double Singapore corporate tax deduction for qualifying expenses incurred on international market expansion and development activities from 1 April 2012 to 31 March 2020 (subject to certain expenditure caps). This scheme aims to encourage Singaporean businesses to expand internationally.
You can get tax breaks by donating to any charity that is registered as an IPC (Institute of a Public Character) in Singapore. 250 percent tax deductions are available for eligible candidates based on the amount donated. The tax deduction for qualifying donations will be extended for another two years until December 31, 2023.
Be part of Asia’s most thriving business hub and see your business reach its full potential and more. Take advantage of our Tax Services and let our experts guide you toward some of the best business decisions that you will have no regrets about making.