Understanding corporate taxation in Singapore

Singapore has become a global business hub. It offers numerous opportunities to business owners across the globe. A lot of investors as well as entrepreneurs head to Singapore to expand their business. It offers the perfect economic environment and has an appealing taxation system. Before any business owner decides to expand the business into a different country, it is essential for them to understand the corporate tax applicable to the businesses there.

Singapore follows a one tier taxation system. This means that the income tax payable by the business owners on the income of their company is considered as the final and ultimate tax. The shareholders of the company will not be taxed on any income they earn in the form of dividend. Further, there is no tax on dividends and there is no tax imposed on capital gains. The absence of capital gain tax is attractive for business owners and investors.

Singapore tax rates

Entrepreneurs and investors need to understand the prevailing tax rates in the country. There is zero taxation on newly incorporated companies on the first $1,00,000 profit for the first three years. This means any profit generated over and above $1,00,000 will be taxed. All the newly incorporated companies enjoy a 9% corporate tax rate for profits up to $3,00,000. The overall tax rate for a company is 17%.

If you intend to start a new business in Singapore, you will be qualified for a three year exemption from taxes if your net profit is below $1,00,000. In order to be qualified for the same, your company should be incorporated in Singapore and it should have less than 20 shareholders. The company should be a tax resident for the particular year and it should have atlas 10% of the shareholders as individuals. If a company does not meet the qualification, it will be eligible for partial corporate tax exemption. In that case, their first $10,000 will be charged at 4.5%, the following $2,90,000 will be charged at 9% and any amount exceeding $3,00,000 will be charged at the rate of 17%.

It is important for business owners to understand that the tax benefits are only applicable to those companies which are registered in Singapore and have their central operations and management in the country. If a business operates in Singapore but is not registered there and does not have the central management and operations in Singapore, it will be considered as a non resident company and will not be able to enjoy the benefits of double tax treaties. However, these companies will not be liable for taxation in Singapore and their income will not be taxed here.

These are only some of the reasons Singapore has become a preferred destination for business expansion. Professional consultants like e-sandhurst.com offer excellent services for the registration and incorporation of a company. They also help in bookkeeping and provide taxation advice to the business owners who strive to operate their business in Singapore

 

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