What benefits does the Singapore Government give to a newly set up Company?

To encourage local entrepreneurship, Singapore Government has declared a full tax exemption for newly incorporated companies.

NEW START UP COMPANIES

Full tax exemption is granted on the first $100,000 of Chargeable Income for qualifying new companies for the first three years of assessment consecutively (%)
First S$100,000 chargeable profit Nil
S$100,001 to S$300,000 8.5
Thereafter a Flat Rate of 17

Are there any conditions to qualify to these exemptions?

Note: *A qualifying new company must fulfill the following conditions:

  • a) It is incorporated in Singapore;
  • b) It is a tax resident of Singapore for that Year of Assessment;
  • c) It has no more than 20 shareholders throughout the basis period relating to that Year of Assessment;
  • d) All its shareholders are individuals throughout the basis period relating to that Year of Assessment OR start-up companies with corporate shareholders can qualify for the existing Start-Up Tax Exemption Scheme, provided that there is at least one individual shareholder of minimum 10% shareholding.

*A company is resident in Singapore if the control and management of its business is exercised in Singapore.

Are there any Tax Incentives for foreign companies to set up in Singapore?

To encourage foreign capital inflow into Singapore, there are tax incentives provided to various industries namely in the form of reduced corporate tax rates.
Finance & Treasury Centre Co. 10%
Fund Manager 10%/exempt
Headquarters Co. 10%
International Commodity Trader 10%
Offshore Leasing 10%
Oil Trader 10%
Securities Company 10%/exempt
Trustee Company 10%
Arts & Antique Dealers 10%
Asian Currency Unit 10%/exempt
Insurance & Re-insurance Co. 10%/exempt
Members of Commodity Futures Exchange 10%
Pioneer/Incentive Co. exempt/various
Financial Sector Incentive Co. 5%/10%
Cyber Trader 10%
Commodity Derivatives Trader (New) 5%

What are the Common mistakes made by Corporate Taxpayers?

Understatement of income

Businesses should properly account for all the earnings and invoices issued for goods sold or services rendered. Omission of particular receipts or invoices issued amounts to an understatement of income, which is an offence.

Taxpayers should issue serially numbered invoices in respect of goods sold or services rendered. These receipts supported by proper invoicing should be properly accounted when preparing accounts.

Claiming Deductions for Non-deductible Expenses

Expenses not incurred for the business such as directors’ private expenses on entertainment, vacation and personal purposes. Businesses should segregate private expenses and exclude them from their claims.

Claims of motor vehicle expenses in respect of private-plate cars (i.e. non-Q plate cars) and business service passenger vehicles (Q-plate cars) e.g. petrol, insurance, repair & maintenance, parking fees, ERP charges, hire purchase interest, etc. Such expenses are not deductible even if they are incurred in the course of business.