Why Singapore?
Singapore is a strategic base to implement your growth strategies and to manage and integrate your operations for the region and beyond. Being one of the lowest income tax rate countries, Singapore has further announced a full and partial tax exemption for the newly incorporated company for the first 3 years consecutively.
Singapore is a strategic base to implement your
growth strategies and to manage and integrate your
operations for the region and beyond. Being one of the
lowest income tax rate countries, Singapore has
further announced a full and partial tax exemption for
the newly incorporated company for
the first 3 years consecutively.
1) One of the LOWEST TAX RATES in the world
With effect from 2010, Singapore corporate income tax rate has further reduced from 18% to 17%, being one of the lowest tax rates in the world.
Singapore Government has declared a new start-up tax exemption for newly incorporated and partial tax exemption for existing companies:
Tax Exemptions for Newly Start-up Companies in Singapore
4.25% tax on first S$100K chargeable income
For a newly incorporated company (1), the corporate income tax rate is 4.25% on the first S$100k of chargeable income for the first 3 years of
assessment consecutively.
8.50% tax on chargeable income of above S$100K up to S$200K
The newly incorporated companies are continued to enjoy for the partial tax exemption which effectively translates to about 8.50% tax rate on
chargeable income of above S$100,000 up to S$200,000 per annum. The chargeable income above S$200,000 will be charged at the normal
headline corporate tax rate of 17%.
Tax Exemptions for Existing Companies in Singapore
The 4th years of assessment and onwards, the companies pay only 4.25% tax on their first S$10,000 of chargeable Income and 8.50% for the next
S$190,000. The chargeable income above S$200,000 will be charged at the normal headline corporate tax rate of 17%.
2) Engage in TRIANGULAR or TETRAGONAL trade
The companies engaged in international transactions among two or more countries, for instance, the companies purchase goods from e.g. China,
and then sell them to e.g. America or trade domestically, Malaysia. This is when the companies need a lower tax trading company (2) to act as the intermediary to issue invoice and packing list in order to strengthen their competitive power in the international or local market.
3) Government Incentives
Overview of government incentives
Depending on your company’s business plans, you may consider various tax incentives and grants as follows:
Internationalisation
Incentives available
Benefits
International Headquarters (IHQ) Award
Concessionary corporate tax rates of 5% or 10% for companies that commit to
anchor substantive HQ activities in Singapore to manage, coordinate and control
regional business operations. The award is accompanied with the award of
Development and Expansion Incentive governed by Singapore Economic
Development Board (EDB).
Mergers & Acquisitions (M&A) Scheme
The acquiring company is entitled to the following benefits:
- 25% of M&A allowance (capped at S$10 million) of the total acquisition value capped at S$40 million per YA.
- Double Tax Deduction (DTD) on the transaction cost capped at S$100,000 incurred during the share acquisition process.
Double Tax Deduction (DTD) for
Internationalisation Scheme
Enjoy up to 200% tax deduction on qualifying expenditure incurred on market
expansion and investment development activities.
The qualifying expenditures include:
The qualifying expenditures include:
- Qualifying salary expenses incurred for employees posted overseas in an overseas entity
- Overseas business development trips and missions
- Overseas investment study trips and missions
- Overseas trade fairs
- Local trade fairs approved by Enterprise Singapore or STB
Market Readiness Assistance (MRA) grant
Funding support of 50% of eligible costs, capped at S$100,000 per company per new
market by Enterprise Singapore. The eligible costs for marketing activities including
overseas market set-up, business development and market promotion.
Trading
Incentives Available
Benefits
Global Trader Programme
A concessionary corporate tax rate of 5% or 10% for a renewable 3 or 5-year period
on qualifying trading income granted by Enterprise Singapore, which includes income
from physical trading, brokering of physical trades, derivative trading income, and
income from structured commodity financing activities, treasury activities and
advisory services in relation to mergers and acquisitions.
Manufacturing and Services
Incentives Available
Benefits
Pioneer Incentive
Tax exemption on income from qualifying activities for a period of not exceeding 15
years, administered by Economic and Development Board (EDB).
Development & Expansion Incentive (DEI)
Reduced tax rate of 5% or 10% on incremental income from qualifying activities,
limited to 5 years. The incentive is governed by Economic and Development Board
(EDB).
Investment Allowance (IA)
Allowance of up to 100% (on top of normal capital allowance) on approved fixed
capital expenditure. This incentive is administered by Economic and Development
Board (EDB).
Integrated Investment Allowance (IIA)
Additional allowance on fixed capital expenditure incurred on qualifying productive
equipment placed with an overseas company for an approved project. This scheme
is administered by Economic and Development Board (EDB).
Land Intensification Allowance (LIA)
Initial allowance of 25% and annual allowance of 5% on qualifying capital expenditure
incurred for the construction or renovation/extension of a qualifying building or
structure. Annual allowances of 5% are granted until total allowance amounts to 100%
of qualifying capital expenditure. Approvals for the incentive will be granted by the
Economic Development Board (EDB).
Automation Support Package(under Enterprise Singapore)
- Capability Development Grant (CDG)
- Investment Allowance (IA)
- Enhanced SME Equipment Loan
Grant support up to 70% of qualifying project costs such as equipment, training and
consultancy.
Qualifying projects may be eligible for an IA of 100% on the amount of approved capital expenditure, net of grants. The approved capital expenditure is capped at S$10 million per project.
Under Enterprise Financing Scheme (EFS), qualifying SMEs may receive up to 70% government’s risk-share with participating financial institutions for qualifying projects. SMEs can apply for fixed asset loans of up to S$30 million.
Qualifying projects may be eligible for an IA of 100% on the amount of approved capital expenditure, net of grants. The approved capital expenditure is capped at S$10 million per project.
Under Enterprise Financing Scheme (EFS), qualifying SMEs may receive up to 70% government’s risk-share with participating financial institutions for qualifying projects. SMEs can apply for fixed asset loans of up to S$30 million.
Financial and Treasury
Incentives Available
Benefits
Finance & Treasury Centre (FTC) Incentive
Enjoy concessionary corporate tax rate of 8% for five years on income derived from
qualifying services/ activities as well as withholding tax exemption on interest
payments on loans from banks and approved network companies for FTC activities.
This incentive is administered by Economic and Development Board (EDB).
Financial Sector Incentive (FSI)
Concessionary tax rate of 10% or 13.5% for licensed financial institutions, from large
universal banks, fund managers to capital market players. This incentive is governed
by Monetary Authority of Singapore (MAS).
Research and Development (R&D) and intellectual property (IP) management
Incentives Available
Benefits
Research Incentive Scheme for Companies (RISC)
Co-funding to encourage and assist businesses companies in Singapore to conduct
or expand their research and development (R&D) activities in science and technology.
This scheme is administered by Economic and Development Board (EDB).
Supportable project costs include expenditure in the following:
Supportable project costs include expenditure in the following:
- Manpower cost (up to 50% support)
- Equipment, materials, consumables and software (up to 30% support)
- Singapore-based professional services (up to 30% support)
- IPRs, e.g. licensing, royalties, technology acquisition (up to 30% support)
Intellectual Property Development Incentive (IDI)
Reduced tax rate of 5% or 10% on a percentage of qualifying IP income for an initial
period of not exceeding 10 years, and may be further extended for a period or
periods not exceeding ten years each. This incentive is administered by Economic
and Development Board (EDB).
Approved Foreign Loan Incentive (AFL)
Reduced or nil withholding tax rate on interest payments on loans with minimum
amount of S$20 million taken to purchase productive equipment. This incentive is
administered by Economic and Development Board (EDB).
Approved royalties incentive (ARI)
Reduced or nil withholding tax rate on approved royalties, fees or contributions to
research and development costs made to a non-tax resident.. This incentive is
administered by Economic and Development Board (EDB).
Writing-down allowances for IP acquisition (S19B)
Automatic 5/10/15-year writing-down allowances on capital expenditure incurred for
IPR acquisitions with legal and economic ownership. EDB’s approval is required if only
economic ownership of IP rights is acquired.
Maritime, shipping and logistics
Incentives Available
Benefits
Maritime Sector Incentive (MSI) – Singapore Registry of Ships (MSI-SRS) and Approved International Shipping (MSI-AIS)
Tax exemption on qualifying shipping income from operating Singapore and foreign-
flagged ships, provision of specified ship management services, and income from
foreign exchange and risk management activities which are carried out in connection
with or incidental to the operations of ships for either a 10-year renewable period; or
a 5-year non-renewable period, with the option of graduating to the 10-year renewable
award at the end of the 5-year period. This incentive is administered by Maritime and
Port Authority of Singapore (MPA).
MSI – Shipping Related Support Services (MSI-SSS) Award
Concessionary tax rate of 10% on the incremental income derived from carrying out approved shipping-related support services for a 5-year renewable period. This incentive is administered by Maritime and Port Authority of Singapore (MPA).
- Ship broking;
- Forward freight agreement (FFA) trading;
- Ship management;
- Ship agency;
- Freight forwarding and logistics services; and
- Corporate services rendered to qualifying approved related parties who are carrying on business of shipping – related activities.
MSI – Maritime Leasing (MSI-ML) Award
Concessionary tax rate of 10% for up to 5 years on qualifying leasing or management
income. This incentive is administered by Maritime and Port Authority of Singapore
(MPA). This incentive is administered by Maritime and Port Authority of Singapore
(MPA).
Maritime Innovation & Technology (MINT) Fund
To promotes and encourages upstream research, product and solution development
relevant to the maritime industry in Singapore. This incentive is administered by
Maritime and Port Authority of Singapore (MPA).
Grant of up to 70% of the total qualifying project costs (inclusive of input GST), comprising of manpower and equipment either engaged or acquired for the purposes of the project, and other operating expenditure incurred for the purposes of the project.
Grant of up to 70% of the total qualifying project costs (inclusive of input GST), comprising of manpower and equipment either engaged or acquired for the purposes of the project, and other operating expenditure incurred for the purposes of the project.
4) TAX EXEMPTION ON DIVIDEND DECLARED FROM SINGAPORE
Dividend declared out of the profit derived from Singapore Company and received in Malaysia is exempted from tax(3).
5) TAX TREATIES
Singapore has entered into Double Taxation Agreement (“DTA”) with 88 countries. Please refer to APPENDIX I.
6) AUDIT EXEMPTION of a Singapore Company
A company incorporated on or after 1 July 2015, if a private company that fulfils at least two of the following three quantitative criteria in each of
the immediate past two financial years is exempted from audit (4)
: (a) Total annual revenue of not more than SGD 10 million; (b) Total assets of
not more than SGD 10 million; (c) Number of employee of not more than 50.
1. a) It is incorporated in Singapore and a tax resident of Singapore for that Year of Assessment. b) It has no more than 20 shareholders throughout the basis period relating to that Year of Assessment and all its shareholders are individuals throughout the basis period relating to that Year of Assessment; or there is at least one individual shareholder with a minimum of 10% shareholding. c) Its principal activity is not related to (i) investment holding, or (ii) property developer for sales, investment, or both.
2. To consider a company as resident in Singapore, the control and management of the business must be exercised in Singapore. Though the term “control and management” is not clearly defined by authorities, a generally accepted consensus is that it refers to the policy level decision making at the level of Board of Directors and not the day-to-day decision making and operations.
3. Section 127 (1) – Exemptions from tax. Any income specified in Part 1 of Schedule 6 shall be exempt from tax. Part 1 Schedule 6, para 28 (1), Income of any person, other than a resident company carrying on the business of banking, insurance or sea or air transport, for the basis year of assessment derived from sources outside Malaysia and received in Malaysia Part 1 schedule 6, para 28(1), exempt income of any person derive from sources outside Malaysia and received in Malaysia (See also exception).
4. Existing safeguards will however be retained, such as requiring all companies to keep proper accounting records, and empowering shareholders with at least 5% voting rights to require a company to prepare audited accounts.
2. To consider a company as resident in Singapore, the control and management of the business must be exercised in Singapore. Though the term “control and management” is not clearly defined by authorities, a generally accepted consensus is that it refers to the policy level decision making at the level of Board of Directors and not the day-to-day decision making and operations.
3. Section 127 (1) – Exemptions from tax. Any income specified in Part 1 of Schedule 6 shall be exempt from tax. Part 1 Schedule 6, para 28 (1), Income of any person, other than a resident company carrying on the business of banking, insurance or sea or air transport, for the basis year of assessment derived from sources outside Malaysia and received in Malaysia Part 1 schedule 6, para 28(1), exempt income of any person derive from sources outside Malaysia and received in Malaysia (See also exception).
4. Existing safeguards will however be retained, such as requiring all companies to keep proper accounting records, and empowering shareholders with at least 5% voting rights to require a company to prepare audited accounts.
