Change in tax exemption scheme for Singapore company

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Change in tax exemption for Singapore company

 Singapore is one of the best options for start-up, not only because of its strong economic development but also government incentives and support for businesses. After completing the procedures to incorporate a company in Singapore, the business will enjoy many government incentives for income tax.

 

In this content, Global Links Asia will provide the information about current tax exemption scheme in Singapore.

 

Tax Exemption Scheme for New Incorporated Companies (First 3 YAs)

 

 

 

From the year of assessment (YA) 2010, the corporate income tax rate in Singapore is at 17% for both domestic and foreign businesses.

From YA 2005, the Tax Exemption Scheme for new Incorporated Company aims to promote entrepreneurship and support business to develop. Refer to the tax information from IRAS

Now, businesses get many other support sources to develop, from YA 2020, it will be changes in the above policy.

With the changes, qualifying companies will be given the following tax exemption for the first three consecutive YAs where the YA falls in:

YA 2020 onwards

  • 75% exemption on the first $100,000 of normal chargeable income; and
  • A further 50% exemption on the next $100,000 of normal chargeable income.

Example: suppose your company has the amount of Profit is SGD 230,000, tax payable is calculated as follow: 

 

SINGAPORE ($)

TOTAL ($)

TRADE

230,000

230,000 

TOTAL INCOME/LOSS

230,000

230,000

CI BEFORE DEDUCTING EXEMPT AMOUNT

 

230,000

LESS: EXEMPT AMOUNT

 

 

First 100,000 (75%)

75,000

 

Next 100,000 (50%)

 50,000

125,000

CI AFTER DEDUCTING EXEMPT AMOUNT

 

105,000

Tax on 105,000 (17%)

 

17,850

TAX ASSESSED

 

17,850

LESS: Tax Rebate YA2020 (20%)

(Note: Tax rebate will be changed base on YA)

 

3,570

TAX PAYABLE

 

14,280

LESS: Previous Assessment

 

 

TAX DISCHAGRED AS PER THIS ASSESSMENT

 

14,280

 

YA 2010 to YA 2019

  • Full exemption on the first $100,000 of normal chargeable income; and
  • A further 50% exemption on the next $200,000 of normal chargeable income.

Example: suppose your company has the amount of Profit is SGD 230,000, tax payable is calculated as follow: 

 

SINGAPORE ($)

TOTAL ($)

TRADE

230,000

230,000 

TOTAL INCOME/LOSS

230,000

230,000

CI BEFORE DEDUCTING EXEMPT AMOUNT

 

230,000

LESS: EXEMPT AMOUNT

 

 

First 100,000 (100%)

100,000

 

Next 130,000 (50%)

 65,000

165,000

CI AFTER DEDUCTING EXEMPT AMOUNT

 

65,000

Tax on 105,000 (17%)

 

11,050

TAX ASSESSED

 

11,050

LESS: Tax Rebate YA 2019 (20%)

(Note: Tax rebate will be changed base on YA)

 

2,210

TAX PAYABLE

 

8,840

LESS: Previous Assessment

 

 

TAX DISCHAGRED AS PER THIS ASSESSMENT

 

8,840

 

Tax Exemption Scheme for the Companies (From 4 YA) 

 

 

 

Except for enterprises that have enjoyed tax exemption scheme for newly New Incorporated Companies, all enterprises can enjoy Tax Exemption Scheme for enterprises as follows: 

YA 2020 onwards

  • 75% exemption on the first $10,000 of normal chargeable income; and
  • A further 50% exemption on the next $190,000 of normal chargeable income.

Example: suppose your company has the amount of Profit is SGD 230,000, tax payable is calculated as follow:

 

 

SINGAPORE ($)

TOTAL ($)

TRADE

230,000

230,000 

TOTAL INCOME/LOSS

230,000

230,000

CI BEFORE DEDUCTING EXEMPT AMOUNT

 

230,000

LESS: EXEMPT AMOUNT

 

 

First 10,000 (75%)

7,500

 

Next 190,000 (50%)

 95,000

102,500

CI AFTER DEDUCTING EXEMPT AMOUNT

 

127,500

Tax on 105,000 (17%)

 

21,675

TAX ASSESSED

 

21,675

LESS: Tax Rebate YA2020 (20%)

(Note: Tax rebate will be changed base on YA)

 

4,335

TAX PAYABLE

 

17,340

LESS: Previous Assessment

 

 

TAX DISCHAGRED AS PER THIS ASSESSMENT

 

17,340

  

YA 2019 and before

  • 75% exemption on the first $10,000 of normal chargeable income; and
  • A further 50% exemption on the next $290,000 of normal chargeable income.

Example: suppose your company has the amount of Profit is SGD 230,000, tax payable is calculated as follow: 

 

 

SINGAPORE ($)

TOTAL ($)

TRADE

230,000

230,000 

TOTAL INCOME/LOSS

230,000

230,000

CI BEFORE DEDUCTING EXEMPT AMOUNT

 

230,000

LESS: EXEMPT AMOUNT

 

 

First 10,000 (75%)

7,500

 

Next 220,000 (50%)

 110,000

117,500

CI AFTER DEDUCTING EXEMPT AMOUNT

 

112,500

Tax on 105,000 (17%)

 

19,125

TAX ASSESSED

 

19,125

LESS: Tax Rebate YA2020 (20%)

(Note: Tax rebate will be changed base on YA)

 

3,825

TAX PAYABLE

 

15,300

LESS: Previous Assessment

 

 

TAX DISCHAGRED AS PER THIS ASSESSMENT

 

15,300

 

 

For more detail information about tax policy in Singapore, please contact:

Email: Tony.Ho@globallinks.asia

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Global Links Asia

Support to Incorporate companies in Singapore, ...

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More in this category: « Singapore Corporate Tax Guide
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