Singapore is a popular destination for businesses due to its business-friendly environment, low tax rates, and numerous incentives. The country’s corporate tax system is designed to encourage companies to set up and operate in Singapore, and the government offers various tax incentives to attract foreign investments. In this article, we will discuss the corporate tax incentives offered by the Singapore government to new companies, including the maximum exemptions available.
Overview of Corporate Tax in Singapore
Singapore operates a territorial tax system, which means that only income derived from or received in Singapore is taxable. The country has a corporate tax rate of 8.5% for financial years 2020 to 2022, and 8.5% for financial years 2023 and beyond.
Tax Incentives for New Companies
The Singapore government offers various tax incentives to new companies to encourage them to set up and operate in the country. These incentives include:
Startup SG Entrepreneur Scheme
The Startup SG Entrepreneur Scheme is a tax incentive designed for first-time entrepreneurs who are at least 18 years old and have never started a business before. The scheme offers a tax exemption of up to 75% of the first S$200,000 of taxable income for the first three consecutive years of operation.
Startup SG Equity Scheme
The Startup SG Equity Scheme is a tax incentive designed for startup companies that are at least 30% owned by a qualifying shareholder, such as a venture capital fund or an angel investor. The scheme offers a tax exemption of up to 75% of the first S$200,000 of taxable income for the first three consecutive years of operation.
Startup SG Facilities Scheme
The Startup SG Facilities Scheme is a tax incentive designed for startup companies that set up at a qualifying facility, such as a startup accelerator or incubator. The scheme offers a tax exemption of up to 75% of the first S$200,000 of taxable income for the first three consecutive years of operation.
Business and Service-Oriented Sectors (BOSS) Scheme
The BOSS Scheme is a tax incentive designed for companies in the business and service-oriented sectors, such as consulting, accounting, and engineering services. The scheme offers a tax exemption of up to 50% of the first S$300,000 of taxable income for the first three consecutive years of operation.
Maximum Exemptions for New Companies
The maximum exemptions available to new companies under these schemes are as follows:
* Startup SG Entrepreneur Scheme: S$150,000 (75% of S$200,000) for the first three consecutive years of operation
* Startup SG Equity Scheme: S$150,000 (75% of S$200,000) for the first three consecutive years of operation
* Startup SG Facilities Scheme: S$150,000 (75% of S$200,000) for the first three consecutive years of operation
* BOSS Scheme: S$150,000 (50% of S$300,000) for the first three consecutive years of operation
Eligibility Criteria
To be eligible for these tax incentives, companies must meet certain criteria, including:
* Being a new company incorporated in Singapore
* Not being a tax resident of Singapore
* Not being a company that is already exempt from tax
* Not being a company that is already receiving other tax incentives
* Meeting specific sector or industry requirements
Conclusion
Singapore offers a range of corporate tax incentives to new companies, including the Startup SG Entrepreneur Scheme, Startup SG Equity Scheme, Startup SG Facilities Scheme, and BOSS Scheme. These incentives offer maximum exemptions of up to S$150,000 for the first three consecutive years of operation. To be eligible for these incentives, companies must meet certain criteria, including being a new company incorporated in Singapore, not being a tax resident of Singapore, and not being a company that is already exempt from tax.
FAQs
- What is the corporate tax rate in Singapore? The corporate tax rate in Singapore is 8.5% for financial years 2020 to 2022, and 8.5% for financial years 2023 and beyond.
- What is the Startup SG Entrepreneur Scheme? The Startup SG Entrepreneur Scheme is a tax incentive designed for first-time entrepreneurs who are at least 18 years old and have never started a business before. It offers a tax exemption of up to 75% of the first S$200,000 of taxable income for the first three consecutive years of operation.
- What is the eligibility criteria for the tax incentives? To be eligible for the tax incentives, companies must be a new company incorporated in Singapore, not be a tax resident of Singapore, not be a company that is already exempt from tax, and not be a company that is already receiving other tax incentives.
- How do I apply for the tax incentives? You can apply for the tax incentives by submitting an application to the Inland Revenue Authority of Singapore (IRAS) and providing the required documentation, including proof of incorporation, proof of business registration, and proof of qualifying income.
- What is the deadline for submitting the application? The deadline for submitting the application is typically 12 months from the end of the financial year in which the company began operating.
Note: The information provided in this article is accurate as of the date of publication and may be subject to change. It is recommended that companies consult with a tax professional or the Inland Revenue Authority of Singapore (IRAS) for the most up-to-date information and to determine their eligibility for the tax incentives.
