It is mandatory for every business entity in Singapore to file corporate tax, at a 17% flat rate on the chargeable income. To lower tax payable, IRAS has three tax schemes available.
Firstly, all newly registered company enjoy full tax exemption on its first SGD100,000 in the first three years of operations. However, property and investment holdings companies are not eligible for this start-up tax exemption (SUTE) scheme.
Secondly, companies that do not qualify for SUTE scheme are eligible for partial tax exemption. Companies that qualify are eligible for 75% tax exemption on its first $10,000 chargeable income, and a further 50% tax exemption on the next $290,000 chargeable income.
Thirdly, from the Year of Assessment of 2013 to 2017, all companies are eligible for 30% corporate income tax rebate, with a varying cap on the rebate based on the year of application.
Tax handling is important as tax laws may change over few years. At JPS Consultancy, we take full care of your needs and provide our clients advices on the best possible tax structure for your company to maximise opportunities and improve cash flow.
1. What are the qualifying conditions for start-up tax exemptions?
The company must be registered in Singapore, have no more than 20 individual shareholders where at least one shareholder has minimally 10% of the issued shares.
2. What is the period and year of assessment for income tax?
Tax payable is based on the income earned in the preceding financial year of a 12-month period.
Therefore, if your financial year ends on 31 December 2014, the relevant financial year (FY) is 1 January 2014 to 31 December 2014 and the year of assessment (YA) will be 2015.
3. When Singapore resident companies can issue dividends, do the shareholders have to be taxed on such dividend income?
No.