Tax Incentives And Schemes That Make Singapore A Startup Hub
Are you an entrepreneur looking to launch a startup in Singapore? In addition to the vast opportunities that come with setting up at the gates of the ASEAN region, Singaporean authorities make doing business here a pleasant experience. Whether you currently reside in Singapore, or a foreigner looking forward to taking advantage of the reliable infrastructure, policies and opportunities in Singapore, starting a new business comes with understanding the administration and legal requirements as well.
For example, you might need the services of a nominee director in Singapore if you do not have a local shareholder or employee to take up the position. If in doubt, engaging a company secretary can also help you out with all the administrative tasks you need to perform.
The good news is, tax requirements for startups in Singapore are one of the best you can find! The reason being that the government wishes to promote more innovation and economic growth as a hub for entrepreneurs in the region.
Below are some tax incentives that the government has put in place for startups in Singapore:
Startups in Singapore are tax exempt
Running a business without having to pay taxes? That’s possible in Singapore! Startups in Singapore are not taxed, at least for the first three years of operation. This is to help entrepreneurs in the early days of their business, till their operations and income stabilise.
But there are some rules to this. Here are some of the eligibility requirements:
- The company’s main activity cannot be that of investment holding, developing properties, or property investments.
- The company must be registered in Singapore and a tax resident for the respective year of assessment.
- The company should have not more than 20 shareholders in the year of assessment.
- The tax exemption applies to the first S$100,000 of normal chargeable income.
This incentive can result in a tremendous boost in your cash flow which is essential in your early years.
Productivity and Innovation Credit (PIC) Plan
Not only do the authorities give your first S$100,000 chargeable income a free pass from taxation, but they also help you to legally reduce your taxable income.
The Productivity and Innovation Credit (PIC) plan is a scheme whereby businesses are permitted to deduct investment expenditure from their taxable income. The only caveat is that the business investments must involve innovation.
There are several qualifying activities, and conditions you’ll need to fulfil. If you have engaged company secretary services or outsourced your tax filing, the hired expert should be able to assist you in checking your business’ eligibility for these various exemptions and schemes.
Charitable work deductions
A business is not all about making money – that’s the message the Business and IPC Partnership Scheme aims to bring across, by promoting charity work and making it tax deductible.
The scheme provides companies in Singapore an opportunity to enjoy a tax deduction of 250% on what they spend on salaries. All you have to do is to send your team to extend their services to Institutions of Public Character (IPC).
To be eligible, the company should be registered and operating in Singapore. Qualifying expenditure includes basic employee pay and expenses incurred while offering services at the IPC.
With such benefits, on top of the boost to your business’ reputation, the scheme is firm in its goal to encourage more works of philanthropy in the nation.
These tax incentives are but just the tip of the iceberg on what the tax authorities in Singapore do to help budding entrepreneurs set up and solidify their business. Communicate closely with your company secretary to keep track what your exemptions and benefits your company can enjoy. Also, make sure you have a reliable audit services provider to help you process all these tax procedures in a timely and accurate manner.