As a new company in Singapore, it’s essential to understand the tax implications of your business operations. Singapore has a unique tax system that offers various exemptions and incentives to encourage entrepreneurship and innovation. In this article, we’ll provide a step-by-step guide on how to unlock tax savings by qualifying for Singapore corporate tax exemptions.
Singapore operates a territorial tax system, which means that only profits derived from Singapore-sourced income are subject to taxation. This provides a competitive advantage for companies operating in Singapore, as they only pay taxes on profits generated within the country. To further incentivize businesses, the Singapore government offers various tax exemptions and incentives for new companies.
Step 1: Meet the Eligibility Criteria
To qualify for tax exemptions, your company must meet the eligibility criteria set by the Inland Revenue Authority of Singapore (IRAS). The criteria include:
- Your company must be incorporated in Singapore.
- Your company must be a new startup with a minimum paid-up capital of SGD 200,000.
- Your company must have a minimum of 10 employees.
If your company meets these criteria, you can proceed to the next step.
Step 2: Obtain a Unique Entity Number (UEN)
Every company in Singapore is required to obtain a UEN from the Accounting and Corporate Regulatory Authority (ACRA). The UEN is a unique identifier for your company and is necessary for tax purposes. You can apply for a UEN online through the ACRA website.
Step 3: Register for Tax
Once you have obtained your UEN, you must register for tax with the IRAS. You can do this online through the myTax Portal or by submitting a paper application. You will need to provide the following information:
- Your company’s UEN.
- Your company’s name and address.
- Your company’s tax filing status (e.g. sole proprietorship, partnership, etc.).
Step 4: Claim Tax Exemptions
After registering for tax, you can claim tax exemptions by submitting a tax return with the IRAS. The tax return must include the following information:
- Your company’s income statement.
- Your company’s balance sheet.
- Your company’s tax computations.
You can claim tax exemptions by deducting eligible expenses from your taxable income. Eligible expenses include:
- Rent and utilities.
- Employee salaries and benefits.
- Business expenses (e.g. travel, marketing, etc.).
Step 5: Comply with Tax Filing Requirements
As a tax-exempt company, you are still required to file tax returns with the IRAS. The tax filing requirements include:
- Submitting a tax return by the due date (usually within 3 months from the end of your company’s financial year).
- Paying any taxes owed or claiming any refunds due.
Conclusion
Unlocking tax savings is a crucial step for new companies in Singapore. By following the steps outlined above, you can qualify for tax exemptions and reduce your company’s tax liability. Remember to meet the eligibility criteria, obtain a UEN, register for tax, claim tax exemptions, and comply with tax filing requirements. With the right guidance and support, your company can thrive in the competitive Singapore market.
FAQs
- Q: What is the minimum paid-up capital required to qualify for tax exemptions?
A: The minimum paid-up capital required is SGD 200,000.
- Q: How do I obtain a UEN for my company?
A: You can apply for a UEN online through the ACRA website.
- Q: What expenses are eligible for tax deduction?
A: Eligible expenses include rent and utilities, employee salaries and benefits, and business expenses such as travel and marketing.
- Q: When is the deadline for submitting a tax return?
A: The deadline for submitting a tax return is usually within 3 months from the end of your company’s financial year.
