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Tax Planning in Singapore

Tax Planning in Singapore

Tax planning refers to an analysis of the financial situation of a company or any other type of business and ensuring an efficient cutting of taxes. This is also possible in Singapore for most companies. One of the advantages of choosing to do business here is that the Singapore government also offers plenty of incentives, grants, and various subsidies which enable for an even more efficient tax minimization.

Below, our accountants in Singapore explain the main tax optimization solutions one can use in the city-state. We can also provide various services that can help you reduce the amounts of money paid on taxes in accordance with the laws.

The main taxes to be paid by private persons and companies in Singapore

Individuals and companies living, respectively doing business in Singapore must pay the due levies in accordance with the taxation system imposed by the authorities here. For this purpose, they must submit tax returns based on which the amounts they need to pay will be computed.

Both types of taxpayers can use various tax planning solutions to obtain various deductions and exemptions with the authorities in Singapore.

Individuals and enterprises are subject to the income tax applied on personal income, respectively business profits in accordance with the residency status of the payers. There are also other important taxes that need to be paid in the city-state, among which the property tax is quite important.

 Quick Facts  
  Services

Business planning, tax optimization solutions, support in filing for tax incentives and benefit schemes

Personal income tax rate

Progressive rates ranging from 0 to 22%

Corporate tax rate

 Standard flat rate of 17%
Income tax return filing deadlines

Natural persons: April 15th for paper filings, April 18th for e-filing.
Companies: November 30th

Tax incentives for natural persons availability (YES/NO) No
Tax optimization methods

Access to tax credits and industry-related incentives for companies, tax deductions for donations.

Tax benefits for expats (YES/NO)

YES, personal income tax of 15% for non-residents, tax deductions under Singapore double tax treaties.

Tax incentives for companies availability (YES/NO) YES, investment allowances, incentives for international expansion, foreign tax credits, access to double tax treaties.
Access to industry-specific incentives (YES/NO) Yes, incentives for manufacturing activities, for research and development operations, for the maritime sector
 Audit services (YES/NO)  Yes

Tax planning in Singapore implies finding a suitable way of reducing tax liability in a legal manner. Luckily, the Inland Revenue Authority in Singapore (IRAS) provides various tax exemptions that can be used as efficient tax optimization tools and thus obtain numerous benefits. To these, there is also the fact that Singapore is deemed as one of the most important financial hubs in Southeast Asia and offers increased confidence to all investors coming here.

Our accounting firm in Singapore is at the service of foreign and local investors with numerous services, including assistance in obtaining tax benefits in the city-state.

Tax planning services provided by our accountants in Singapore

Our specialists are at your service with the following tax planning solutions in Singapore:

  1. tailored support in drafting and filing income tax returns with the IRAS;
  2. providing assistance in finding the suitable tax deductions and exemptions you can obtain;
  3. optimization of the tax benefits you or your business is entitled to;
  4. obtaining various tax incentives for companies in accordance with the industries they operate in;
  5. other services based on the needs of private and corporate clients.

You should also know that as a foreigner in Singapore you are entitled to benefit from the city-state’s double tax treaty provisions, which is a matter where our accountants can help.

Tax planning for foreign citizens in Singapore

Natural persons who move to Singapore can obtain various tax benefits here. These are granted if they become residents of the city-state and one of the most important advantages is that they can obtain personal tax exemptions based on the earning they make here.

The personal income tax in Singapore is levied at progressive rates, the lowest being 0%, while the highest is 22%, which is still low compared to other jurisdictions. To this, a double tax treaty can lead to more effective tax planning, such as no dividend tax.

Filing income taxes in due time

One of the simplest ways to ensure an effective tax planning in Singapore as a business owner or natural person is to make sure you pay your taxes on time. Filing income statements in due time is the first step to avoiding penalties and that can also lead to obtaining various deductions.

If you are not sure when taxes must be filed, working with an accounting firm in Singapore can be a great solution. Apart from being updated on all accounting requirements and all changes in the law, it is also a great support for those who have just started a business. Non-residents can also benefit from the assistance of an accountant who will notify them on the due dates of filing their tax returns.

Tax planning does not cover tax minimization only, especially in a state like Singapore where the government offers so many incentives to both natural persons and companies.

Identifying opportunities

With such a great number of incentives, identifying the most suitable ones is very important and can contribute to an efficient tax planning strategy. Here are the main aspects to consider from this point of view:

  • some incentives are available for non-residents, while others for residents only;
  • some taxpayers must choose between applying for one incentive and another, so making the right choice is very important;
  • making sure one meets all the criteria imposed by the government or agency providing the tax benefit is also of key importance.

In order to not get caught in bureaucracy, working with a Singapore accountant can be substantially beneficial, as he or she will prepare everything you need to obtain the benefits you are entitled to.

In a dynamic business environment as that of Singapore, being up to date with all the changes and opportunities from the financial point of view can also lead to excellent tax planning.

Donations as a tax planning strategy in Singapore

One of the simplest strategies to use for tax planning is donations. The main advantage of donations is that these must not reported in the tax return, however, there are certain conditions to be met.

For example, the donation must be made to a Qualifying Grant-making Philanthropic Organization and for SGD 1 donated, you will be entitled to an SGD 2.5 exemption on your income tax. This way, Singapore companies can benefit from important financial benefits.

If you are considering donations for tax planning in Singapore, our accountants will explain all the conditions to meet in order to obtain a tax exemption.

Government grants based on industry operations

If you have a company operating in a specific industry, one of the best tax planning methods in Singapore is to take advantage of the support granted by the government. Research and development (R&D) and new technology are two of the industries that benefit from industry-specific incentives.

Startups are also encouraged by the government and one of the most important benefits in this sense is that all companies can qualify for this scheme for a period of 3 years during which corporate tax exemptions are available.

Singapore offers plenty of tax advantages to domestic and foreign investors, and our accountants can help you identify and apply for those you qualify for.

Companies tax planning in Singapore

When discussing tax optimization, companies are the entities to obtain most of the benefits as the authorities in Singapore offer various incentives to enterprises operating here. However, to qualify for them, certain requirements must be met. These are quite stringent which is where the assistance of a specialist or team of accountants enter and can lead to efficient tax planning in Singapore.

Our accounting firm in Singapore is at the service of local and foreign investors who want to maximize their profits by taking advantage of the legal pathways opened by the IRAS. For this, we can complete a thorough analysis of your financial accounts, as well as other aspects that can impact the benefits you can obtain.

Here are the main schemes the Singapore authorities have created for companies and that can be used as tax planning solutions:

  • the Start-up Tax Exemption which was created newly registered enterprises, and which offers a full tax exemption on the first 100,000 SGD for the first 3 years of activities;
  • the Partial Tax Exemption which provides for a 30% corporate tax exemption, but no more than 20,000 SGD per financial year and which is granted to certain businesses;
  • the Productivity and Innovation Credit which grants tax deductions or allowances of up to 400% for up to 400,000 SGD spent on various investments for the company.

Some of these tax benefits are granted by the IRAS, other by specific agencies, such as the Economic Development Board which forwards the necessary documents to the IRAS.

For personalized tax planning in Singapore, feel free to contact our accountants who can provide case-on-case support.