Singapore is a popular destination for businesses due to its favorable business environment, highly developed infrastructure, and low tax rates. One of the most attractive tax incentives for new companies in Singapore is the Corporate Tax Exemption Scheme, which provides a tax exemption for new companies in their first three years of operation. In this article, we will provide a comprehensive guide to this scheme, including its benefits, eligibility criteria, and application process.
Benefits of the Corporate Tax Exemption Scheme
The Corporate Tax Exemption Scheme is designed to encourage new companies to set up and operate in Singapore. The scheme provides a tax exemption on the first S$300,000 of chargeable income for each of the first three consecutive years of operation. This means that new companies can enjoy a tax-free period of up to S$900,000, depending on their chargeable income.
The scheme is available to all new companies that are registered in Singapore and have a minimum paid-up capital of S$50,000. The scheme is also available to companies that are involved in a variety of industries, including manufacturing, services, and international trade.
Eligibility Criteria
To be eligible for the Corporate Tax Exemption Scheme, companies must meet the following criteria:
- Be a new company that is registered in Singapore;
- Have a minimum paid-up capital of S$50,000;
- Have a minimum of 20% local shareholding;
- Be involved in a qualifying business activity, such as manufacturing, services, or international trade;
- Have a minimum of 10 employees;
- Not have been previously exempted from tax under the scheme.
Companies that are eligible for the scheme will be granted a tax exemption on their chargeable income for each of the first three consecutive years of operation. The tax exemption will be calculated based on the company’s chargeable income for each year, up to a maximum of S$300,000.
Application Process
To apply for the Corporate Tax Exemption Scheme, companies must submit an application to the Inland Revenue Authority of Singapore (IRAS) within three months of the end of the company’s financial year. The application must include the following documents:
- A completed application form;
- A copy of the company’s business registration certificate;
- A copy of the company’s financial statements;
- A declaration that the company meets the eligibility criteria.
The IRAS will review the application and verify the company’s eligibility for the scheme. If the application is approved, the company will be granted a tax exemption on its chargeable income for each of the first three consecutive years of operation.
Conclusion
The Corporate Tax Exemption Scheme is a valuable incentive for new companies in Singapore to set up and operate in the country. The scheme provides a tax exemption on the first S$300,000 of chargeable income for each of the first three consecutive years of operation, which can help companies to save on taxes and invest in their business. To be eligible for the scheme, companies must meet certain criteria, including being a new company, having a minimum paid-up capital of S$50,000, and being involved in a qualifying business activity. Companies that are eligible for the scheme can apply for it by submitting an application to the IRAS within three months of the end of their financial year.
FAQs
Q: What is the Corporate Tax Exemption Scheme?
A: The Corporate Tax Exemption Scheme is a tax incentive provided by the Singapore government to encourage new companies to set up and operate in the country. The scheme provides a tax exemption on the first S$300,000 of chargeable income for each of the first three consecutive years of operation.
Q: Who is eligible for the Corporate Tax Exemption Scheme?
A: Companies that are eligible for the scheme must be new companies that are registered in Singapore, have a minimum paid-up capital of S$50,000, and be involved in a qualifying business activity.
Q: How do I apply for the Corporate Tax Exemption Scheme?
A: To apply for the scheme, companies must submit an application to the IRAS within three months of the end of their financial year. The application must include the required documents, including a completed application form, a copy of the company’s business registration certificate, and a copy of the company’s financial statements.
Q: What is the duration of the Corporate Tax Exemption Scheme?
A: The scheme is available for the first three consecutive years of operation for new companies. Companies that are eligible for the scheme will be granted a tax exemption on their chargeable income for each of these years.
Q: Can I apply for the Corporate Tax Exemption Scheme if my company has been previously exempted from tax under the scheme?
A: No, companies that have been previously exempted from tax under the scheme are not eligible to apply for the scheme again.
Q: What is the benefit of the Corporate Tax Exemption Scheme?
A: The benefit of the scheme is that new companies can enjoy a tax-free period of up to S$900,000, depending on their chargeable income. This can help companies to save on taxes and invest in their business.
Q: Can I get more information about the Corporate Tax Exemption Scheme?
A: Yes, companies can get more information about the scheme by visiting the IRAS website or contacting the IRAS directly.
