Setting Up Shop in Singapore: Corporate Tax Exemptions for New Companies with Foreign Shareholders
Singapore is a popular destination for businesses, offering a favorable business environment, low tax rates, and a highly developed infrastructure. The country’s government has implemented various initiatives to attract foreign investment, making it an attractive option for entrepreneurs and companies looking to set up shop in the region. One of the key benefits of setting up a company in Singapore is the availability of corporate tax exemptions for new companies with foreign shareholders.
In this article, we will explore the benefits of corporate tax exemptions for new companies with foreign shareholders, the requirements for eligibility, and the application process. We will also provide an overview of the tax system in Singapore and the different types of corporate tax exemptions available.
Tax System in Singapore
Singapore operates a territorial tax system, which means that only income earned within the country is taxable. The country has a single-tier tax system, with a corporate tax rate of 8.5%. This rate is one of the lowest in the world, making Singapore an attractive destination for businesses.
However, the country also offers various tax exemptions and incentives to encourage businesses to set up and operate in Singapore. These exemptions can help reduce the tax liability of companies, making it more attractive for foreign investors to invest in the country.
Corporate Tax Exemptions for New Companies with Foreign Shareholders
New companies with foreign shareholders can enjoy a range of corporate tax exemptions in Singapore. These exemptions are designed to encourage foreign investment and promote economic growth in the country.
One of the most significant exemptions is the 8.5% corporate tax rate, which applies to all companies, including those with foreign shareholders. This rate is one of the lowest in the world, making Singapore an attractive destination for businesses.
Additionally, new companies with foreign shareholders are eligible for the following tax exemptions:
- Exemption from tax on foreign-sourced income: Foreign-sourced income, such as dividends, interest, and royalties, is exempt from tax in Singapore.
- Exemption from tax on capital gains: Capital gains on the sale of shares, properties, and other assets are exempt from tax in Singapore.
- Exemption from tax on foreign-sourced income of non-resident shareholders: Non-resident shareholders of a Singapore company are exempt from tax on their share of the company’s foreign-sourced income.
Requirements for Eligibility
To be eligible for the above-mentioned tax exemptions, new companies with foreign shareholders must meet the following requirements:
- The company must be a new company, incorporated in Singapore, and must not have been previously taxed in Singapore.
- The company must have at least one foreign shareholder who is a non-Singapore resident.
- The company must not have any prior tax liabilities in Singapore.
Application Process
To apply for the above-mentioned tax exemptions, new companies with foreign shareholders must submit the following documents to the Inland Revenue Authority of Singapore (IRAS):
- Application form (IR8A)
- Business registration certificate
- Certificate of Incorporation
- Shareholding structure
- Proof of foreign shareholders’ identity and residence
Conclusion
Singapore offers a range of corporate tax exemptions for new companies with foreign shareholders, making it an attractive destination for businesses. These exemptions can help reduce the tax liability of companies, making it more attractive for foreign investors to invest in the country. By understanding the requirements for eligibility and the application process, new companies with foreign shareholders can take advantage of these exemptions and set up shop in Singapore.
FAQs
Q: What is the corporate tax rate in Singapore?
A: The corporate tax rate in Singapore is 8.5%.
Q: What types of companies are eligible for corporate tax exemptions in Singapore?
A: New companies with foreign shareholders are eligible for corporate tax exemptions in Singapore.
Q: What are some of the key tax exemptions available to new companies with foreign shareholders?
A: Some of the key tax exemptions available to new companies with foreign shareholders include exemption from tax on foreign-sourced income, exemption from tax on capital gains, and exemption from tax on foreign-sourced income of non-resident shareholders.
Q: What are the requirements for eligibility for corporate tax exemptions in Singapore?
A: To be eligible for corporate tax exemptions, new companies with foreign shareholders must be new companies, incorporated in Singapore, and must not have been previously taxed in Singapore. The company must also have at least one foreign shareholder who is a non-Singapore resident and must not have any prior tax liabilities in Singapore.
Q: How do I apply for corporate tax exemptions in Singapore?
A: To apply for corporate tax exemptions, new companies with foreign shareholders must submit an application form (IR8A), business registration certificate, certificate of Incorporation, shareholding structure, and proof of foreign shareholders’ identity and residence to the Inland Revenue Authority of Singapore (IRAS).
