Being titled the most accessible place to do business consecutively by the World Bank, Singapore is widening its economic horizon by leaps and bounds. After introducing significant changes in the financial system and governmental policies in 2009, the ruling government continuously brings up schemes and reforms to adapt to the global trends of businesses and changing market dimensions. One of the remarkable aspects of Singapore’s financial framework is its tax planning policy, depending on the corporate bodies’ type and structure.
Businesses in Singapore are assigned with TIN which stands for taxpayer identification number Singapore and it is used for all the tax related activities and is also referred to as Unique Entity Number (UEN). The purpose of assigning this unique ID is to sort out all the tax-related procedures, such as filing taxes returns. Businesses have to use their UEN in all their government transactions. For applying for import & export permits or updating their business profile on the government’s managed website known as Bizfile+.
The regulatory body of government administering the tax law is known as the Inland Revenue Authority of Singapore (IRAS). They have a flexible approach in assigning the tax liabilities and exemptions to different forms of corporation depending on their commercial objectives and the type of business activity they carry, instead of having an onerous and prescriptive approach. This is a great advantage for commercial entities in determining what kind of business vehicle they want to board.
The business organization in Singapore can be any one of the following types:
- An individual company
- A partnership
- A limited partnership
- A limited liability partnership
The standard tax deduction rate for all residential and non-residential companies of Singapore stands at 17% for now. Still, there are exemptions and tax rebates for various types of businesses. Let’s check out the kind of business entities eligible for those tax incentives.
SUTE (Start-up Tax Exemption): The entrepreneurs planning to establish a business in Singapore have great news, as the SUTE scheme applies to them. This means 75% of the first S$100,000 chargeable income is exempted from the tax deduction and 50% of the following amount of chargeable income. This exemption applies to all companies except those dealing with property investment and sales.
Foreign-sourced income: The income obtained from foreign sources is taxable once and if received or deemed to be received in Singapore. The following types of foreign-based income are not exempted from tax deductions:
- The income originated from outside the country but was remitted to or transferred into the country.
- The income is derived from outside the country but transferred to Singapore, intending to clear a debt incurred through trade or business investment.
- The income is generated outside the country but used to purchase any movable property brought into Singapore.
Other Tax Incentives: There are various other exemptions in the form of concessionary tax benefits provided to businesses operating in Singapore, such as concession of international shipping profits, for finance and treasury centers, etc. All this is done to attract foreign investments and promote the growth of some sectors.