Tax Benefits Of Singapore Businesses

Tax Planning is an integral part of any successful business operation. Taxes, however, should not impede business growth and profitability. With proper planning and execution, taxes can be minimized and possibly avoided. The government of Singapore encourages the incorporation of new businesses by offering tax incentives to new companies. Beyond this incentive, there are other tax benefits that you may receive simply from being a Singapore Businesses owner or investor in a company registered in Singapore:

 

Minimum Corporate Tax Rate For New Companies 1-Year Of Incorporation 5 Years Of Incorporation 15 Years Of Incorporation 25 Years Of Incorporation Standard 17% 10% 7% 1%) 2%) Offshore Company Entity 8%) 8%) 8%) n/a n/a Offshore Branch Office Of An Existing Overseas Company 12%) 8%) 7%) n/a n/a

Companies or entrepreneurs who register a corporation in Singapore or purchase shares of an existing company may claim tax benefits. Taxation rules for business entities are constantly changing and obtaining advice from a knowledgeable tax attorney is advisable to ensure all advantages are realized.

Tax Benefits For Employees In Singapore

Tax deferral plans, such as 401Ks, do not exist in Singapore. The government does however allow workers to setup personal retirement accounts which employers must match the equivalent of 20% of the employees base salary. Any amount exceeding this percentage will be subject to taxes at the prevailing rate at time of withdrawal from the account Contributions made by both employer and employee are tax deductible. Gains are not taxable until the time of withdrawal from the plan.

Tax Benefits For Business Expenses

Business expenses are another way to reduce your tax burden. All legitimate business expenses are deductible for income tax purposes except those which are considered Capital Expenditures under Singapore's Income Tax Act, such as the purchase or improvement of land or buildings. Interest expense is also non-deductible since interest income earned on investments is already taxed at prevailing rates in Singapore. Travel and entertainment expenses may be deducted but they must be reasonable and directly related to earning business revenue. Deductions for gifts and donations will only apply if you receive something in return such as a contract with another party or a that will be useful for future sales.

Tax Deductions For Company Property And Vehicles

When you buy or manufacture company equipment such as stationery or furniture, this is classified as a Capital Expenditure and not deductible for income tax. However, business vehicles and other mobile assets may be considered as part of your operating expenses. If the vehicle is used primarily for business purposes and it's value exceeds S$20,000 (Singapore Dollars), the first $17,000 of its value will be claimable as an expense by the company. This deduction applies to both new and branded second-hand vehicles purchased within one year from the end of the financial year in which they were registered.

If you need help with Singapore Businesses, Singapore Company Formation or other related issues please feel free to contact a qualified specialist.