Singapore’s Corporate Tax Exemption Rules And Regulations

Time and again, IRAS (Inland Revenue Authority Of Singapore) has adopted taxation policies to suit the digital environment of businesses. No wonder the lion city is applauded for its flexible corporate tax rules for corporate investors worldwide despite operating on a small domestic market. Apart from applying a flat 17% tax rate on corporate income, many practical measures are implemented according to the IRA tax exemption rules for benefitting investors.

Let us understand how these legislations have helped Singapore increase investment and innovation. From the investor’s perspective, we can know in the following pointers the various tax exemption rules to benefit business owners and investors.

  1. Start-up tax exemption (SUITE): To encourage investors to start a business in Singapore, this fact is enough that 75% of their annual income will be exempted from the corporate tax slab for the first three years of operation. Although certain conditions should be met to qualify for this privilege, and they are:
  • The organization should have an establishment in Singapore.
  • The start-up owner must be a tax resident of that year.
  • There should be a maximum of twenty shareholders holding the company’s shares where. All of them should be individual, or at least one should possess 10% of the issued shares.
  1. Partial Tax exemption: Companies that could not qualify for the SUITE still have the chance to avail of benefits from the exemption of 75% on the first $10k of chargeable income. They will also get an additional exemption of 50% on the next $190 K, and the companies already qualified for SUITE are also eligible for this tax relief. 
  1. Corporate income tax rebate: A tax rebate of $15k is granted to the companies qualifying for this exemption. The condition is simply that the firm’s incorporation should be in Singapore. No matter if the entity belongs to the group of non-tax residents, registered business trusts, or any company already availing the tax exemption.
  1. Foreign sourced income exemption scheme: The income sourced from foreign countries is taxable in Singapore, but its implementation has decreased its severity to certain degrees. To let the entities avail of this exemption, the income must be taxed from the source country at a corporate tax of at least 15%, and they are applicable for the following revenue streams: 
  • If the resident taxpayer generated revenue by providing its services to any foreign country.
  • A company incorporated in Singapore is generating revenue, but it is registered as a branch of a company that operates in a foreign country.
  • If a foreign company pays a dividend, it is stored in the custodian foreign account before being sent to Singapore.
  1. Pioneer certificate incentive: If a company manages to earn itself the title of the pioneer in any field, displaying sheer expertise which didn’t exist before. It receives a concessionary tax rate of 5% for up to five years.
  1. Development and expansion incentive: The companies which promise to contribute primarily to increasing the nation’s economic growth will be awarded a reduced tax rate of 5% for the next ten years. 

So, these were some of the exemption criteria maintained by IRAS, and many others cannot be covered in a single article. This brief overview is for a quick understanding of investors who want to glimpse the taxable infrastructure of Singapore’s revenue


Leave a Reply

Your email address will not be published. Required fields are marked *