The Handy Entrepreneur’s Guide To Taxation In Singapore

The Handy Entrepreneur’s Guide To Taxation In Singapore

With over $1 trillion in foreign direct investments, Singapore is a titan when it comes to attracting investors. The Lion City is a prime spot for investors and entrepreneurs who seek to establish their operations for various reasons.

One of the most significant investor-pull factors is having quick access to firms providing incorporation services, making it quick and hassle-free to set up a new business in Singapore. Another major pull factor is the attractive taxation regime. Singapore’s tax regime has been hailed as one of the most business-friendly in the world.

However, what exactly makes Singapore’s taxation regime attractive for entrepreneurs? This guide will give you an overview of the tax system in the country, the type of taxes, and the reasons why Singapore’s tax regime one of the best in the world.

Singapore’s Tax System

The tax governing authority is the Inland Revenue Authority of Singapore (IRAS). It was established in 1960 under the Income Tax Act of Singapore. IRAS is the main tax collecting and administration body, providing policy formulation support, and proactively manages the tax system to ensure that it is efficient and that it encourages the growth of enterprises.

One of the earliest activities that your incorporation services provider will help you to undertake is to register for Goods and Services Tax (GST) with the IRAS. Some businesses are exempted from GST registration, but if you require advice, you should seek a reputable firm offering tax accounting services in Singapore, like Ackenting Group.

At Ackenting Group, we can provide you with all of the essential financial services you require, from financial reporting to accounting bookkeeping services – which are crucial when it comes to running a business in Singapore. With our experienced audit-trained accounting professionals, you can expect the best financial records and ensure that they are in accordance with the IRAS.

Types of taxes in Singapore

There are different types of taxes levied on businesses in Singapore. Here’s a brief overview of a few standard taxes that are likely to impact entrepreneurs:

  • Income Tax – it is charged as a ratio of the income earned by individuals and companies
  • Property Tax – is levied on property owners based on the projected value of rent on the properties
  • Customs and Excise Duties – few commodities attract these duties. Commodities such as tobacco products, liquor, and petroleum products are subject to these taxes
  • Goods & Services Tax (GST) – the most common tax in Singapore, similar to Value Added Tax (VAT) in many other jurisdictions
  • Stamp Duty – is levied on legal and commercial documents relating to assets such as shares and immobile property

It is important to note that some of these taxes may not apply to you or your business. It may be tricky to understand all of the different taxes, so work with an experienced firm to advise you on taxation.

Facts about Singapore’s tax system

Singapore’s tax system has been hailed as one of the best in the world, making the country an investor magnet. Here are some facts you should know about Singapore’s tax system:

  • For corporate taxation, Singapore follows a territorial basis. Taxes are levied mainly on Singapore sourced income
  • The corporate tax rate is capped at 17%, and you are not double-taxed. Once a company has paid taxes on its profits, the shareholders will not bear the burden of another tax (i.e. dividends are tax-free). There is also no capital gains tax. However, capital expenditure is not a deductible expense
  • Singapore has completed several bilateral agreements (more than 50) to ease trade and reduce the burden of double taxation to investors
  • You are free to determine your company’s Financial Year End which informs when your corporate filings and taxes are due. However, there is a deadline to adhere to for filing the income tax return

Taxation in Singapore is attractive to investors and entrepreneurs. However, it is crucial to work with an experienced firm that can help you navigate this area and ensure you fulfil your obligations and enjoy the benefits without making costly errors.

At Ackenting Group, we are ready to aid you with affordable financial solutions, tax accounting, and company incorporation services to guide you towards setting up your first business in Singapore. Through a straightforward, hassle-free, and quick process, we ensure that you can get your business started straight away.

If you require any assistance on accounting services, feel free to drop us an email at johnwoo@ag-singapore.com or contact us at +65-66358767. At Ackenting Group, we offer a complimentary 30 minutes online consultation for us to better understand your business requirements.

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