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What Is The Correct Way To Implement Tax Return Planning While Doing Business In Singapore?

What is the correct way to implement tax return planning while doing business in Singapore?

Singapore is a haven for businesses. Its well regulated tax return system allows companies to strive and make a name for them. Even though Singapore has one of the lowest tax rates and a transparent tax system, entrepreneurs need to do tax planning in order to lessen the tax burden to a bare minimum. Tax is an obligation which no one wants to fulfil and that makes it essential to understand the system and find out ways to legally reduce tax liability. There are ways wherein you can do financial analysis and pay less tax.

In Singapore, the infrastructure is developed to facilitate in business growth. Here you’ll find legal and political stability along with well developed communication system. The workforce is cheap yet highly skilled. If you have the potential then you can flourish because sky is the limit. Here you do not have to worry about frequent strikes, fluctuating economy and uneven tax rates. The taxation in Singapore is governed and regulated by Inland Revenue Authority of Singapore (IRAS). They are strict with the compliances and ask corporate and individuals to file their tax return on time.

No need to evade tax

  • In Singapore the tax rates are not horrific. The rate at which companies have to pay tax is flat 17%. Very few countries have a competitive rate as this. For instance, India has a corporate tax rate close to 33% which is almost the double of what Singapore is charging.
  • The individual tax rate lies between 0 to 22% which too is quite low. The tax rate is so low that frankly there is no need to evade it. Your business remains relieved of excessive tax. Secondly, the corruption is also low which means that tax will be utilized in developing infrastructure and strengthening the country’s economy.

tax return

Transparent tax system

  • A transparent tax system is one which prevents cascading or double taxation and is similar for all. The Singapore tax system is single point and progressive in nature. The tax is levied at one point only which avoid undue levy of extra burden.
  • For instance, the dividend paid by companies is taxed in the hands of the companies itself and not in its shareholders’. Once the tax is levied there, shareholders do not have to pay a single penny of tax on this income. Your financial analysis will prove it to you that the tax is nothing as compared to the benefits you’ll receive in return.

Singapore is also one of those few countries which have constantly tried to remove double taxation. It has also initiated treaties with countries round the world to curb double taxation. For example, Singapore citizens working outside the country do not have to pay tax in Singapore on the income they earn in foreign land while working there.

Tax exemptions

  • Singapore encourages and welcomes new startups to set-up shop in the country. The economic policies and tax reliefs prove that. The IRAS extends a variety of benefits to new startups. In the initial year they are provided certain exemptions. For the first $100,000 they earn they do not have to pay any tax on it and for the next $200,000 they are only required to pay tax on 50% of the amount. That means if your income is $300,000 then you only need to pay tax on $100,000. Therefore, tax is to be paid only on one-third of your total income.

There is also a partial exemption scheme for companies who are still growing. For them, 75% is exempted from tax on their first $100,000 and 50% is exempted on their next 290,000 they earn. So if the normal chargeable income is $390,000 then tax is levied on $170,000 only. Additionally, there are also rebates provided by IRAS to reduce tax burdens.

Visit tax consultant

Tax planning requires the expertise of a professional tax consultant who understands the INs and OUTs of the tax system. Get in touch with an experienced tax consultant and file an adequate tax return.

Singapore is a land of opportunities where you can get unlimited growth. Here the policies are moderate and transparent which will give you the edge you need. Plan your tax and remit in on time to avoid strict action.


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