Every company & business operating in Singapore has only two concerns – profit making and reducing company tax to increase profit after tax for significant profits. When it comes to paying Corporate Taxes, Singapore tops the list and attracts vast companies & businesses worldwide to come, operate their business, and earn significant revenues.
Singapore has one of the world’s lowest corporate tax rates on chargeable income. For every small, medium, and large organization, Corporate Tax Filing & Income tax is one of the biggest concerns as it can create havoc for their operations and business functioning, especially for SME sectors.
Compliance with Tax & Corporate Tax Filing is challenging, especially with limited resources. In this blog, we will walk you through tips to manage Company Tax in Singapore.
Tips for Managing Company Tax
There are numerous schemes and tips to manage Company Tax in Singapore. The following are the proven-effective tips that you can implement:
1. The Regional Headquarters Award (RHA)
It is administered by Singapore’s Economic Development Board (EDB). Companies receiving RHA have the benefit of paying lower Corporate Tax Rates. Singapore’s Corporate Tax Rate is 15%.
It means that for all qualifying activities in a 3-5 years period, companies only have to pay 15% Corporate Tax on incremental income. And this amount is indeed subject to satisfying & in accordance with specified conditions, which must be met throughout the award period.
The EDB oversees the RHA to encourage global companies to make Singapore their regional headquarters (operations base). The primary objective of this scheme is to promote Singapore as the hottest Regional Business Hub in the world.
2. The Business & IPC Partnership Scheme (BIPS)
BIPS provides businesses with a massive Corporate Tax deduction of up to 250% in Singapore. It is applicable for qualifying expenses incurred when employees have volunteered or offered professional services to recognized Institutions of Public Character (IPCs) in Singapore.
3. Development & Expansion Incentive (DEI) & Pioneer Certificates (PC) Incentive
Both DEI & PC scheme’s primary objective is to foster Singapore’s development by engaging organizations in new business activities & expand their production potential. If you have been thinking of starting a new business in Singapore, this is one of the best schemes for you.
The PC scheme applies to companies established in Singapore and has economic operations for a long time to benefit Singapore’s economy massively.
At Bestar Services, we provide comprehensive company incorporation & registration services in Singapore. Our highly skilled Corporate Advisory Consultants will guide you with all steps and paperwork for smoothly setting up a business in Singapore and also assist you with expanding your production proficiency.
4. Start-up Tax Exemption Scheme (SUTE)
It is a scheme by Singapore Government to support entrepreneurs and local businesses growth. It was introduced in Singapore’s 2018 budget, exempting the first S$100,000 of start-up’s chargeable income tax from 75% Corporate Tax. Under this scheme, start-up companies will be exempt from 50% of their following S$100,000 chargeable income.
5. Charitable Donations
Charitable Donations are a primarily used and highly effective tip to manage Corporate Tax in Singapore. Businesses can get tax exemptions through charitable donations to any organization registered as an Institute of a Public Character (IPC) in Singapore. Qualifying companies can enjoy 250% tax deductions based on the donated amount.
Note: Tax Deductions for qualifying businesses will be extended for additional two years till 31st December 2023.
6. Double Tax Deduction Scheme for Internationalisation (DTDi)
Enterprise Singapore administers the DTDi scheme. Companies can benefit from the DTDi Tax Deduction scheme with a substantial 200% tax deduction on eligible expenses incurred on expanding their business in the International Market & Investment Development Activities.
The primary objective of this scheme is to encourage Singaporean companies to take their business to an International level. DTDi supports activities across salient stages of the business International growth journey primarily in four key categories: Market Preparation, Market Exploration, Market Promotion, and Market Presence.
Businesses can automatically claim a 200% tax deduction on their first S$150,000 qualifying expenses for nine activities every assessment year.
After reading the blog, you will have a clear comprehension of different schemes through which you can legally exempt from paying less Corporate Taxes in Singapore. The schemes will also foster your business growth in Singapore and internationally as well. However, if you have any questions regarding the tips or need more advice, feel free to contact us.
At Bestar Services, we provide comprehensive Tax Planning and Advisory Services in Singapore to ensure our clients get every required Tax Service in Singapore, from Singapore Compliance in Corporate Tax, Personal Income Tax Compliance, Singapore GST Compliance, and Singapore GST Registration.
We have a team of highly qualified & professional Tax Advisory Consultants in Singapore who are well-versed with the latest tax compliances in Singapore and clever with ways to manage Corporate Tax legally.
Partner with one of the best Tax Advisory Consultancy in Singapore and get assistance with Singapore Tax Compliance and Corporate Tax reduction tips.
Refer to our other blog, “Tax Planning While Being in Singapore” for your reference.