With so many taxes and regulations that come with business ownership, it can be difficult to know what’s coming up next. To make sure you’re not caught off guard, you’ll want to keep abreast of these laws and regulations. Here are some ways to help you save on corporate taxes in Singapore. Alternatively, you can also check out this article regarding 5 ways to save on your corporate tax in Singapore.
What are the types of corporate tax in Singapore?
One of the most important factors when considering where to set up a business is the level of corporate tax. In Singapore, there are three types of corporate tax: company income tax, value-added tax (VAT), and goods and services tax (GST).
Singapore has one of the lowest company income taxes in the world at 15%. This means that companies operating in Singapore only have to pay income tax on their total profits, not just on their net profits. Plus, there is no limit to how much you can earn before you have to start paying income tax.
Another great feature of Singapore’s corporate taxation system is that it has a zero-rating for exports. This means that companies selling products outside of Singapore don’t have to pay any Vat or GST on their sales. This is a huge incentive for businesses to sell more overseas.
The final type of corporate taxation in Singapore is value-added tax (VAT). VAT applies to all goods and services sold by businesses in Singapore, including domestic and international sales. The rate of VAT in Singapore is 7%.
How to calculate profits in Singapore
When it comes to corporate taxes in Singapore, the aim is to reduce or even avoid paying any tax at all. In this article, we will outline how you can calculate your profits and hence minimise your tax liability.
As with most things in life, there are a few basic steps that need to be followed in order to correctly calculate corporate profits and taxes payable in Singapore. The first step is to identify your business’s assets, liabilities and expenses. This information will allow you to work out your net income or loss for the given period of time. From here, you can calculate your taxable income and assess any tax liabilities that may have arisen during the period under review.
In order to achieve the best possible results when calculating corporate profits, it is important to keep track of various factors including currency fluctuations, inflation rates and industry trends. By doing so, you can ensure that your taxation calculations are as accurate as possible. Furthermore, if you operate as a sole proprietor or partnership, make sure you keep accurate records of all income and expenses incurred throughout the year in order to accurately compute your taxable profit margins.
Tax deductions and credits that can save you money
In Singapore, there are many tax deductions and credits that can save you money. Here are some of the most common:
– The Employer’s Social Security Contribution (ESSC) scheme is a mandatory employer contribution to a social security fund that provides retirement benefits for employees. The government allows employers to deduct 50% of the ESSC paid from employee salaries. This can result in big savings on your corporate taxes.
– The Central Provident Fund (CPF) is a compulsory savings scheme that helps to provide retirement income for employees. Employers can deduct 60% of the contributions made by employees from their salaries, resulting in substantial tax savings.
– The Inland Revenue Authority of Singapore will allow you to claim tax deductions for certain business expenses such as advertising, rent, and office supplies. These deductions can reduce your taxable income significantly and save you money on your corporate taxes.
Corporate tax exemptions, concessions and incentives in Singapore
In Singapore, corporate tax is a very important part of the government’s revenue stream. As such, the government offers a wide range of tax exemptions, concessions and incentives to businesses in order to keep them competitive and ensure that they continue to invest in the country.
Some of the most common corporate tax exemptions in Singapore include:
– Investment company tax exemption: This exemption applies to companies that are classified as investment companies under the Corporations Act. These companies are allowed to exclude up to S$100 million (US$73 million) of their income from corporate taxes each year.
– Research and development (R&D) expenses: Companies can deduct all R&D expenses incurred in conducting business activities, whether within or outside of Singapore. This includes expenses for products, processes or research projects.
– Export incentive scheme: Under this scheme, companies that export more than S$200,000 worth of goods or services each year are eligible for a reduction of their corporate taxes payable by up to 50%. The threshold increases gradually over time, so that it reaches S$1 million by 2020.
– Employment incentive scheme: This scheme provides tax relief for companies that hire new employees during the course of the year. The amount of relief granted decreases as the number of employees rises above certain thresholds, but it remains at least 10% regardless of how many employees are hired.
Conclusion
As a business owner, you are undoubtedly aware of the importance of saving on corporate taxes. In this article, we discussed some tips on how to save on your Singapore corporate tax bill. By taking action now, you can reduce your overall tax burden and help your business grow in an environment that is supportive of entrepreneurs. I encourage you to read through the article and see what strategies might work best for you and your business. Also, if you are finding it hard to keep running the company profitably, avail premium company strike off @ $798 Nett.
