One of the lowest corporation tax rates in the world, Singapore’s chargeable income tax rate of 17 percent draws company owners from throughout the world to establish or grow their operations there.
In addition to the low company tax rates, the Singaporean government also offers subsidies and other programs that can further lower your business tax burden.
Here, we outline some primary schemes that you can use with the best tax filing services:
BIPS, or Business and IPC Partnership Scheme:
When their workers volunteer, render professional services, or render services (including secondments) to acknowledged Institutions of Public Character, they are eligible for a 250 percent Singapore corporate tax benefit under the Business and IPC Partnership Scheme (BIPS) (IPCs).
IPCs are exempt organizations or officially recognized charities in Singapore that are eligible to issue tax-deductible receipts for donations. They are subject to stricter governance and regulatory compliance requirements than typical nonprofits.
An employee of a company in Singapore must meet the following criteria to be eligible for the BIPS scheme:
- Not a director of the business who is also an owner, sole proprietor, partner, shareholder, or a single proprietor
- Not working for a holding company for investments
- incurring costs as a result of volunteer services rendered to IPCs during working hours and on IPC property, namely:
- Not covered by IPC funding
- Not a cost for the employee’s personal use
- Not a capital investment
Development & Expansion Incentive & Pioneer Certificates Incentive (DEI & PCI):
The PC and DEI programs were created to incentivize companies in Singapore to engage in new business ventures and increase their production capacity.
Companies that have rooted their economic activities in Singapore throughout time and contributed significantly to the nation’s economy are eligible for the PC program through the best SME accounting Singapore.
The DEI program, meanwhile, focuses on businesses that have made technological, equipment, and operational improvements that raise the capabilities of certain industries to internationally competitive levels.
For five years, approved enterprises under the PC program are eligible for a Singapore corporation tax rate of 5% on income from qualifying operations.
For five years, authorized enterprises under the DEI program are qualified for a Singapore corporation tax rate of 10% on income from qualifying operations.
Companies in the PC and DEI programs must meet the following criteria:
- Employment generated within the business, including seniority, skills, and knowledge
- Business spending benefits Singapore’s economy
- Capacity expansion in terms of technology, resources, and skill sets beyond what is generally accessible in Singapore
- Aims to expand or maintain commercial operations in Singapore
Internationalization Double Tax Deduction Scheme (DTDi):
The DTDi program, which is run by Enterprise Singapore, intends to support international business growth in Singapore. The program offers a twofold Singapore business tax credit for eligible costs associated with overseas market growth and development operations undertaken between 1 April 2012 and 31 March 2022.
Under the DTDi and with the best bookkeeping services Singapore, many tax deductions are automatically granted tax deductions without additional authorization.
These consist of:
- Business development missions and travels abroad
- Expeditions and study trips for international investment
- Foreign trade shows
- Local trade shows authorized by the Singapore Tourism Board or Enterprise Singapore
To be eligible for the DTDi, a Singaporean company must:
- Be a Singaporean. The company’s worldwide headquarters must be in Singapore for certain qualifying operations
- Have as their main objective encouraging the exchange of products or the rendering of services
- Have a clear plan in place to expand the firm internationally
Awarded are the International Headquarter Award (IHA) and Regional Headquarters Award (RHA):
The Regional Center Agreement (RHA), which is overseen by the Singapore Economic Development Board (EDB), is designed to entice multinational corporations to establish regional headquarters in Singapore, enhancing Singapore’s position as a regional commercial hub.
Subject to meeting and maintaining all requirements for the duration of the award, companies granted the RHA pay a lower Singapore corporation tax rate of 15% on any incremental revenue from qualifying operations for a period of three to five years.
The EDB oversees the International Headquarters Award in addition to the RHA (IHA).
Therefore, businesses seeking to establish their global headquarters in Singapore are eligible to apply for and receive the award, which entitles them to Singapore corporation tax rates between 5 and 10 percent.
Any business wishing to apply for the IHA must be locally formed or registered in Singapore and pledge to go above and above the RHA’s minimal standards.
The following are some of the requirements set down by the government for businesses to be allowed to locate their headquarters in Singapore:
- The business must have the widespread capability in terms of human resources, assets, money, and market share
- The business must be well-known within the industry or area of operation
- The organization’s headquarters should serve as the focal point for the senior management of its key activities and should have well-defined management and control processes
- The majority of the company’s headquarters operations ought to be transferred to the Singapore office
Additional Tax exemptions:
Singapore also provides tax breaks for companies in specific industries. These include reductions for eligible offshore money, international trading firms, and foreign banks.
Payments to non-residents made between April 1, 2011, and December 31, 2026, based on agreements that go into force between those dates, are eligible for a withholding tax exemption for banks.
Additionally, some types of income, such as dividends, gains, profits, and interest from conventional assets like deposits, bonds, shares, stocks, and securities, are tax-free for qualifying offshore funds.
If they meet the requirements for Singapore’s Global Trader Program, international trade enterprises are eligible for concessionary tax rates of 5 percent to 10 percent for three or five years. Companies with a proven track record in international trade are typically granted Global Trader status by Singapore.
Due diligence must be used by the city-banks state and financial institutions to assist stop money laundering and other forms of international crime.