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Tax Incentives in Singapore

Tax Incentives in Singapore

The tax system in the city-state is administered and regulated by the Inland Revenue Authority of Singapore (IRAS). Singapore is one of the countries which attract most foreign investors because it permanently reduces corporate income tax rates and offers different tax incentives, as well as numerous double tax agreements which provide for the avoidance of taxes being levied twice. In this article, our accountants in Singapore analyze briefly the current tax incentives for foreign investors in Singapore and the double tax treaties signed by the city-state.

Tax exemptions and inducements in Singapore

Singapore offers numerous investment incentives, such as:

  • accelerated depreciation structures
  • advantageous loan conditions
  • equity participation;
  • qualitative industrial estates.

These incentives are outlined in the Income Tax Act and the Economic Expansion Incentives (Relief from Income Tax) Act (EEIA) and are applied to a wide variety of activities. An accountant in Singapore can provide more details on what these activities consist of.

Below you can find the general tax exemptions or tax incentives in Singapore which are momentarily applied to resident businesses:

  • 0% taxation on S$ 100,000 taxable income: the corporate income tax rate is 0% on the first S$ 100,000 taxable profit for the first three financial years for a recently registered business which meets certain criteria;
  • 8.5% taxation on taxable profit up to S$ 300,000: all Singapore resident businesses can qualify for a partial tax exemption of 8.5% of the taxable profit up to S$ 300,000 yearly.

We are at your disposal for tailored payroll in Singapore.

We invite you to watch the following video for more information on available tax incentives:

Double tax treaties signed by Singapore

Singapore has signed numerous double tax treaties which serve to avoid double income taxation gained in one country by the resident of the other signing state.

When receiving foreign profit in Singapore, it could be taxed. If the double tax agreement provides for a reduction of the tax rate, and not a tax exemption, the business in Singapore will also be taxed in the foreign country.

A double tax agreement offers an exemption for this double taxation, by enabling the business in Singapore to claim a credit of the foreign taxation placed on its tax payable in Singapore on the same profit.

If you need to know more about the tax incentives in Singapore for foreign investors, we invite you to contact our accounting firm in Singapore.