In Singapore, depending on one’s case, there can be exemptions for paying taxes. I am going to take you through some of the most important categories that are entitled to tax exemptions. These include:
1. New Start-up Companies:
Singapore has extended tremendous tax incentives to encourage entrepreneurship. Under the Start-up Tax Exemption Scheme, qualifying new start-ups enjoy full tax exemption on the first SGD 100,000 of chargeable income for the first three consecutive years. The next SGD 200,000 of chargeable income is then taxed at a reduced rate of 50%. However, this scheme applies only to those private limited companies meeting the criteria conditions; for example the company has to be incorporated in Singapore and must not have more than 20 shareholders, at least one of whom is an individual holding at least 10% shares in the company.
2. Charitable and Non-Profit Organizations:
Exemptions are also afforded to registered charities and nonprofit organizations that meet the IPC criteria from income tax on donations and most forms of income. These organizations are very important for public welfare, and such an exemption puts them in a better position to allocate more to their core activities.
3. Foreign-Sourced Income Exemption:
Exemptions can be given to certain foreign sourced incomes such as dividends, branch profits and service income if it is received in Singapore by a resident company: If the foreign income is taxed in the country of origin and its highest corporate tax rate should be at least 15%.
4. Individual Tax Exemptions:
In addition to all these, special tax exemptions for individuals can be accorded, for instance, under the Not Ordinarily Resident Scheme, whereby qualified expatriates are given special tax concessions.
Singapore offers various tax exemptions tailored to different categories, such as new start-up companies, charitable organizations, certain foreign-sourced incomes, and individuals, promoting entrepreneurship, supporting non-profits, and attracting foreign investments. Navigating these exemptions requires a thorough understanding of eligibility and compliance. One IBC, with its extensive expertise and global presence, provides top-tier consultancy services, guiding businesses through the complexities of tax exemptions to ensure compliance while maximizing their financial benefits, supporting companies in making informed decisions for growth and success.