Corporate tax have an obvious downside for businesses by eating up profits. This will not only affect company on the cost of operation, will also impact to end user if they includes taking taxes into consumer cost. Singapore government has taking initiative to introduce lowest corporate tax rate, and carry out single-tier territorial based flat-rate corporate income tax system. In the beginning year of 2010, all corporate income in Singapore is taxed at rate of 17%. In other words, Singapore has become Asia’s favourable financial hub for investors to start their business here. However, how does the business/corporate owners maximize the government tax scheme? How to reduce the corporate tax rate in further? Let’s find out more!
Corporate Tax Saving Schemes for Companies
Start-up Tax Exemption Scheme (SUTE) was introduced in 2004. This scheme help newly-incorporated qualified companies given exemption on their taxable profits in the first three years of operations.
| Taxable Profit | Exemption rate | Exempted Amount |
| For the first S$100,000 | 100% | S$100,000 |
| For the next S$200,000 | 50% | S$100,000 |
Other than that, Partial Tax Exemption Scheme in the year 2008 also applicable for Small and Medium-sized Enterprises (SME) in Singapore.
| Taxable Profit | Exemption rate | Exempted Amount |
| For the first S$10,000 | 75% | S$75,000 |
| For the next S$290,000 | 50% | S$145,000 |
Productivity and Innovation Credit Scheme (PIC)
(Productivity & Innovation Credit (PIC) is one of the popular ways to maximize your tax benefit too. This scheme has been implement by government to aid business cope with high operating such as rent of equipment, overhead cost and wages. Here the six categories of activities that qualify for business to claim the PIC cash Pay-out: Lease or acquire IT (Information Technology) equipment, License/acquire IP (intellectual Property) Rights, Training fees, Registering of designs, patents and trademarks, Design projects & Research and development activities.
Under this scheme, Singapore’s business entitiesenjoy 60% cash pay-outs or 400% tax deductions/allowances for investing in productivity and innovation improvements.
Corporate Income Tax Rebate (CIT)
This scheme was introduced in 2013, for Year Assessment YA 2013, 2014 and 2015, CIT rebate be granted as high as 30% Corporate Income Tax Rebate capped at $30,000 for each YA. For YA 2016 even go up to $20,000/50% and YA 2017 also 50% Corporate Income Tax Rebate but capped at $25,000. Similar with PIC this scheme help to assist business to set up Research and Development centres in Singapore in strategic areas of technology.
Pioneer & Development Incentive
The Pioneer Certificate Incentive (PC) and the Development and Expansion Incentive (DEI). This exemption scheme aim to encourage companies increase the capital expenditure in introducing leading edge technology and manufacturing skills. Other than that, DEI reduced corporate tax rate on incremental income from business activities that’s lead to significant economic benefit to the country.
Finance & Treasury Centre (FTC) Tax Incentive
FTC Is aim to helpcompanies to grow capital management and use benefit for conducting strategic finance activities. This incentive is to provide exemption on interest payment in the loan from financial institution, to reduce the corporate tax rate on fees, interest, dividends and gains from qualifying services and activities.
In concluded, government of Singapore have contemplating on adjusting corporate income tax rates from time to time. This move is to ensure tax structure sustainable and to maintain the rise of expenditures in the country. In the future of time, rate of the taxation will become a long run cost for your corporate. While the tax schemes and subsidies are such attractable especially for the qualifying business and SME, why don’t you maximize all the benefit to your business?
If you have any queries on how corporate tax applies to your company, talk to our professional tax analysts today.Or click the link below @ https://ag-singapore.com/. Subscribes our newsletter and gain more exciting information.
