Tax Saving For Setup Company | Private Limited Companies
All sole proprietorships and partnership in Singapore are taxed based on the personal income tax rate of their owners under the Income Tax Act. Owners or individual partners will be subjected to a tax based on their share of profits from their trade under Section 10 (1) (A) of the Income Tax Act. The current progressive tax rate is as listed below:
By registering your business as a private limited company (PLC) and setting up a private limited company in Singapore, the company is entitled to:
- Full Tax Exemption: Newly established Singapore incorporated companies are entitled to full tax exemption in their first three years of assessments. Effective YA2009, the first S$100,000 is exempted at 100 percent; the next S$200,000 exempted at 50 percent.
- Partial Tax Exemption: All existing Singapore incorporated companies may claim partial tax exemption on their profits yearly. Effective YA 2008, the first S$10,000 at 75 percent exemption; the balance of S$290,000 at 50 percent exemption.
Comparison of the tax advantages of a private limited company over a sole proprietor and partnership:
3E Accounting Pte Ltd can help to incorporate your new business as a private limited company and thus claim a tax exemption on your trade profits. We can provide tax advice on commencement of business activities and describe how to maximize the year of assessment during the first three years where full tax exemptions are available to newly incorporated companies through effective tax planning.