Complete Guide to Singapore Taxes for Startups
Singapore is known for its low corporate tax rate and business-friendly environment, both of which have helped to make it a popular destination for businesses looking to incorporate and operate in Southeast Asia. Below we provide an overview of corporate taxes in Singapore and some additional tax incentives unique to Singapore.
Corporate tax rate in Singapore
Singapore has one of the lowest corporate tax rates in the world. The corporate tax rate starts at 17% for companies with an annual taxable income below SGD 300,000 (approximately USD 222,000). This rate increases to 18% for companies with an annual taxable income of more than SGD 300,000. These low rates make Singapore one of the most attractive locations for companies in Southeast Asia.
Filing and paying corporate taxes in Singapore
Businesses operating in Singapore are required to file corporate tax returns annually. The deadline for this is typically 30 November the year after assessment is made. Corporate tax payments are required quarterly and are usually due by the end of the month following the quarter’s end. It's important businesses file returns are make payments by their deadlines. Failing to do so has the potential to result in significant fines and penalties, which can be damaging to a business's reputation and financial health.
The Inland Revenue Authority of Singapore offers a kit specifically aimed at walking start-ups through their first round of filing corporate tax returns. This is a useful tool for businesses unfamiliar with the process, and can help new companies make a smooth transition as they begin operations in Singapore.
Corporate tax exemptions and incentives
In addition to its low corporate tax rate, Singapore also offers a number of tax exemptions and incentives to businesses operating in the country.
New start-ups in Singapore may be eligible for a partial corporate tax exemption for the first three years of operation. The amount exempted is based on the company's taxable income. This incentive can help new businesses get off the ground and establish a foothold in the market.
Singapore also offers tax incentives for businesses operating in specific industries or sectors. Manufacturing, research and development, and clean technology sectors have the potential to receive additional tax exemptions or incentives.
There are also a number of tax incentive programs available to businesses looking to relocate to Singapore or expand their operations in the country. The Global Investor Program (GIP) provides tax incentives to businesses that make a significant investment in Singapore by providing recipients with permanent residency status. The GIP requires a minimum investment of $2.5 million SGD and the GIP fund must be between $30 million SGD and $150 million SGD.
The tax incentives and corporate tax rates offered by Singapore make it a particularly attractive landscape to new businesses within Southeast Asia. In summary, these include:
- A corporate tax rate that starts at 17%, one of the lowest in the world
- Straightforward filing schedules
- Tax exemptions specific to eligible start-ups that last up to three years
- Targeted incentives for growing industries like manufacturing, R&D, and clean technology.
- Incentives for businesses that want to make significant investments in Singapore.
It’s important to note that Singapore’s corporate tax rate and tax incentives are not the only factors businesses should consider when deciding where to incorporate. The availability of skilled labor, access to markets, funding options, and the general business environment are all important considerations.
And if you do choose to incorporate in Singapore, here at Jenfi we have unique funding options that can help you get started or give you the boost you need to get your business to the next level.