5 Ways a Singapore Company Can Save On Tax

Companies who take measures to move up the value chain and generate better jobs for locals will be rewarded with generous incentives and tax breaks.

Companies wishing to do business in Singapore should be aware that the government is focused on minimising potential problems as well as maintaining relevance in the face of increased competition. The Singapore government will continue to offer a variety of incentives to assist businesses align themselves with this wider aim and influence the country’s future workforce and economy. Companies that choose to incorporate in Singapore will benefit from a number of advantages.

Singapore Corporate Income Tax Rebates

A special corporate income tax credit will be given to help businesses cope with rising business expenditures during the virus season.

This refund will benefit all tax-paying firms for the year of assessment 2020, with a rate of 25% of tax payable and a limit of S$15,000 per company.

Several tax treatments within the corporate tax system will also be enhanced for the assessment year 2021 to put more money in the hands of businesses.

Find out more about the Corporate Income Tax Rebates here.

Start-up Tax Exemption Scheme (SUTE) and Partial Tax Exemption (PTE)

From YA 2020 forward, all new firms will get 75 percent exemption on the first $100,000 of ordinary chargeable income*; and another 50% exemption on the second $100,000 of ordinary chargeable income.

To be eligible for the SUTE (Start-up Tax Exemption), you must:

  • Have no more than 20 individual shareholders in the firm.
  • A single individual must own at least 10% of the issued shares in a corporation.
  • Companies that possess real estate or invest in real estate are not eligible.

In Budget 2018, it was stated that the tax exemption under the Partial Tax Exemption plan will be changed, as additional support for firms building skills is being reinforced. For all eligible firms that claim the tax exemption under the programme, the modifications will take effect in YA 2020.

Qualifying businesses are eligible for the following tax breaks from the year 2020 onwards;

  • On the first $10,000 of regular chargeable income, there is a 75% exemption; and
  • A further 50% exemption on the next $190,000 in ordinary chargeable income is available.

You can find more information regarding the SUTE and PTE here.

Business and IPC Partnership Scheme (BIPS)

To encourage corporate volunteerism, businesses can claim a 250 percent tax deduction on qualified expenses incurred from July 1, 2016 to December 31, 2021 when they send their personnel to volunteer and give services to Institutions of a Public Character, including secondments (IPCs).

To be eligible for the BIPS, businesses need to;

  • When their employees* volunteer and perform services at IPCs, any firms carrying on a trade or business in Singapore are eligible for BIPS.
  • This excludes business owners who are also directors of the firm, such as sole proprietors, partners, and shareholders.

You can find more information regarding the BIPS here.

iSPRINT Scheme

The iSPRINT grant (Increase SME Productivity with Infocomm Adoption & Transformation) is a grant programme of the IDA (Infocomm Development Authority) that intends to meet the various IT adoption needs of SMEs and make it easier for them to seek help for their computerisation initiatives.

Singapore gives incentives under the iSPRINT scheme to encourage businesses to embrace information technology to improve their operations. An SME can claim up to 70% of the cost of a packaged solution (up to S$2,000 per item) or a more customised solution (up to S$20,000) under this scheme.

You can find more information regarding the iSPRINT Scheme here.

Double Tax Deduction Scheme for Internationalisation (DTDi)

Companies planning to expand internationally can take advantage of the DTDi, which provides a 200 percent tax deduction on eligible expenses for international market expansion and investment development activities.

The Double Tax Deduction for Internationalization programme, which was slated to expire on March 31, 2020, has been extended until December 31, 2025. This scheme allows enterprises to claim a 200 percent tax credit on qualified market expansion and investment development expenses, subject to Enterprise Singapore or the Singapore Tourism Board’s approval.

You may visit the Enterprise Singapore website here for more information regarding DTDi.

Need help filing your corporate tax? Consult us and our taxation specialists will work closely with you to reduce your tax liabilities.