New Company in Singapore? Take Advantage of the Three-Year Corporate Tax Exemption to Boost Your Profits
Establishing a new company in Singapore can be a thrilling venture, especially with the country’s business-friendly environment and attractive tax incentives. One of the most significant benefits of setting up a company in Singapore is the three-year corporate tax exemption, which can significantly boost your profits. In this article, we will explore the details of this exemption and how it can benefit your new company.
The Three-Year Corporate Tax Exemption
The three-year corporate tax exemption is a tax incentive introduced by the Singapore government to encourage foreign companies to set up operations in the country. Under this scheme, new companies that are incorporated in Singapore and meet certain conditions can enjoy a tax exemption of 75% on their taxable income for the first three years. This means that the company will only pay 25% tax on its taxable income for the first three years, after which the normal tax rate of 8.5% will apply.
To be eligible for this exemption, the company must meet the following conditions:
- The company must be a new entity that is not previously existing in Singapore.
- The company must be a tax resident in Singapore.
- The company must be engaged in a qualifying activity, such as a business, trade, or profession.
- The company must not be a speculative or investment company.
- The company must not be a trust or a collective investment scheme.
Benefits of the Three-Year Corporate Tax Exemption
The three-year corporate tax exemption can bring significant benefits to your new company in Singapore. Some of the benefits include:
- Reduced tax liability: By enjoying a 75% tax exemption, your company can significantly reduce its tax liability, which means more profits to reinvest in the business or distribute to shareholders.
- Increased competitiveness: With a lower tax burden, your company can be more competitive in the market, which can lead to increased revenue and growth.
- Incentivized innovation: The tax exemption can incentivize innovation, as companies are more likely to invest in research and development, product development, and other initiatives to stay ahead of the competition.
- Attracting talent: The tax exemption can also attract top talent, as employees are more likely to be attracted to a company that offers a more attractive tax package.
Conclusion
The three-year corporate tax exemption is an attractive incentive for new companies setting up in Singapore. With this exemption, companies can enjoy a reduced tax burden, which can lead to increased competitiveness, innovation, and talent attraction. To take advantage of this benefit, companies must meet the eligibility criteria and ensure that they are engaged in a qualifying activity. By doing so, companies can set themselves up for success and achieve their goals in the competitive business environment of Singapore.
FAQs
Q: What is the duration of the three-year corporate tax exemption?
A: The three-year corporate tax exemption is applicable for the first three years of operation, after which the normal tax rate of 8.5% will apply.
Q: What are the conditions for eligibility for the three-year corporate tax exemption?
A: To be eligible, a company must be a new entity, a tax resident in Singapore, engaged in a qualifying activity, not a speculative or investment company, and not a trust or collective investment scheme.
Q: Can a company enjoy the three-year corporate tax exemption if it is already existing in Singapore?
A: No, the three-year corporate tax exemption is only applicable to new entities that are not previously existing in Singapore.
Q: Can a company apply for the three-year corporate tax exemption if it is not a tax resident in Singapore?
A: No, the company must be a tax resident in Singapore to be eligible for the three-year corporate tax exemption.
Q: What happens if a company does not meet the conditions for the three-year corporate tax exemption?
A: If a company does not meet the conditions, it will not be eligible for the three-year corporate tax exemption, and will be subject to the normal tax rate of 8.5%.
Q: Can a company apply for the three-year corporate tax exemption if it is a trust or collective investment scheme?
A: No, the three-year corporate tax exemption is not applicable to trusts or collective investment schemes.
Q: What are the benefits of the three-year corporate tax exemption?
A: The three-year corporate tax exemption can bring significant benefits, including reduced tax liability, increased competitiveness, incentivized innovation, and attraction of top talent.
Q: How can a company apply for the three-year corporate tax exemption?
A: Companies can apply for the three-year corporate tax exemption by submitting an application to the Inland Revenue Authority of Singapore (IRAS) and providing the required documentation and information.
Q: What is the process for claiming the three-year corporate tax exemption?
A: Companies can claim the three-year corporate tax exemption by submitting a claim to the IRAS and providing the required documentation and information.
Q: What are the penalties for non-compliance with the three-year corporate tax exemption scheme?
A: Companies that are found to be non-compliant with the three-year corporate tax exemption scheme may be subject to penalties and fines.
Q: Is the three-year corporate tax exemption available to all types of companies?
A: No, the three-year corporate tax exemption is only available to companies that meet the eligibility criteria and are engaged in a qualifying activity.
Q: Can a company apply for the three-year corporate tax exemption if it is already operating in Singapore under a different name?
A: No, the three-year corporate tax exemption is not applicable to companies that are already operating in Singapore under a different name.
Q: What is the process for reviewing and verifying the eligibility of a company for the three-year corporate tax exemption?
A: The IRAS will review and verify the eligibility of a company for the three-year corporate tax exemption by reviewing the company’s application and documentation, and conducting an audit if necessary.
Q: What is the time frame for reviewing and verifying the eligibility of a company for the three-year corporate tax exemption?
A: The time frame for reviewing and verifying the eligibility of a company for the three-year corporate tax exemption varies, but typically takes several weeks to several months.
Q: What is the process for appealing a decision regarding the eligibility of a company for the three-year corporate tax exemption?
A: Companies that are not satisfied with the decision regarding their eligibility for the three-year corporate tax exemption can appeal the decision by submitting a written appeal to the IRAS.
Q: What is the process for claiming a refund of tax paid under the three-year corporate tax exemption?
A: Companies that are eligible for the three-year corporate tax exemption can claim a refund of tax paid by submitting a claim to the IRAS and providing the required documentation and information.
Q: What are the consequences of non-compliance with the three-year corporate tax exemption scheme?
A: Non-compliance with the three-year corporate tax exemption scheme can result in penalties, fines, and even criminal charges.
Q: Is the three-year corporate tax exemption scheme applicable to companies that are already operating in Singapore under a different name?
A: No, the three-year corporate tax exemption is not applicable to companies that are already operating in Singapore under a different name.
Q: Can a company apply for the three-year corporate tax exemption if it is a foreign company?
A: Yes, foreign companies can apply for the three-year corporate tax exemption if they meet the eligibility criteria and are engaged in a qualifying activity.
Q: What are the benefits of the three-year corporate tax exemption for foreign companies?
A: The three-year corporate tax exemption can bring significant benefits to foreign companies, including reduced tax liability, increased competitiveness, and attraction of top talent.
Q: How can foreign companies apply for the three-year corporate tax exemption?
A: Foreign companies can apply for the three-year corporate tax exemption by submitting an application to the IRAS and providing the required documentation and information.
Q: What is the process for reviewing and verifying the eligibility of a foreign company for the three-year corporate tax exemption?
A: The IRAS will review and verify the eligibility of a foreign company for the three-year corporate tax exemption by reviewing the company’s application and documentation, and conducting an audit if necessary.
Q: What is the time frame for reviewing and verifying the eligibility of a foreign company for the three-year corporate tax exemption?
A: The time frame for reviewing and verifying the eligibility of a foreign company for the three-year corporate tax exemption varies, but typically takes several weeks to several months.
Q: What is the process for appealing a decision regarding the eligibility of a foreign company for the three-year corporate tax exemption?
A: Foreign companies that are not satisfied with the decision regarding their eligibility for the three-year corporate tax exemption can appeal the decision by
