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Category Archives: Taxation

Businesses to enjoy 250% tax deduction on wages if employees volunteer at IPCs

Businesses throughout Singapore are going to have the opportunity to take advantage of a 250% taxed deduction just by committing to sending their employees to do volunteer work.

Yes, you’re reading that correctly. The government of Singapore (through the new Business and IPC Partnership Scheme) is committed to making sure that businesses are able to reap significant rewards by encouraging their employees to volunteer at IPC partnership scheme volunteer opportunities.

Businesses large and small are going to be able to save 250% in the form of a tax deduction on wages and related expenses when they actually send out their employees to provide services through the Institution of Public Character.

Professionals are going to be able to provide services across a wide variety of areas, including legal services, human resources, accounting, and consulting programs. Those that lead more blue-collar style jobs are also going to have the opportunity to take advantage of this program, providing “hands-on” assistance through these volunteer organization that are in high demand as well.

Initiative to improve the amount of volunteers contributing to the growth of Singapore

Singapore has always (likely will always) have a serious eye to the future when they rollout programs like this.

Recognizing that they are volunteer numbers were dipping across the board, the overwhelming majority of individuals in the Singapore government banded together to come up with this scheme to encourage business operations, large organizations, and entrepreneurs throughout the nation to help reverse the tide.

The government hopes to establish a real culture of volunteerism throughout Singapore, and though they anticipate that this culture will take at least five years to really establish and some met, they are pouring all kinds of resources into the program to make sure that it gains tremendous momentum.

Businesses and volunteer organizations benefit – as do the volunteers themselves

Even though it may look like (on the outside, at least) that the businesses of Singapore and the volunteer organizations that receive volunteers are the main benefactors of this program, it would be a huge disservice not to mention the many benefits that the volunteers are going to enjoy along the way.

With these tax benefits coming to the businesses much of those rewards are going to trickle down to the employees themselves. On top of that, they are also going to get a tremendous amount of outside experience that they wouldn’t have received otherwise sitting in their office all the time and never getting the opportunity to see the impact of their career, their work, and they are ability’s firsthand.

A caring, cohesive, and community focused culture has always been important in Singapore. Businesses and employees (as well as those throughout the government) recognize that everyone has the opportunity to enjoy a much greater role in meeting the social needs of Singapore and really fostering the kind of close knit culture that is so important here.

The benefits of the program are many, and none should be surprised to learn that other nations adopt the same kinds of programs in their country to enjoy the same benefits as well!

Filing Your Income Tax By Mobile Phone Among New Measures Announces by IRAS

With April comes that dreaded time of the year again where many people in countries across the planet file their taxes. In Singapore, the process is no different. Or, perhaps it is. Taking steps to make filing income tax easier and simpler, the IRAS have announced a series of new measures to speed up the process. This includes being able to file your income tax using your phone, and more. Let’s take a moment to review some of these changes so you have a better sense of what filing for 2015 will be like.

Filing Today

Before we begin, let’s review a few of the important dates coming up. If you are filing online, then be sure to have all your information in and submitted by April 18. If you decide to submit your information via paper, then be sure to have the information sent by the April 15 deadline. Be sure, especially if you submit the paper, to file early. This will help you beat the typical rush of people trying to get their information in on time.

Tax Bill Preview

Want a preview of your tax bill presented online? The IRAS is making that possible, providing quick results for the nearly 1.4 million people and growing who use the no-filing service scheme. With an average return time of 3 business days, it has ever been easier to get tax results back, planning your finances accordingly and with greater predictive certainty.

‘File For You’ Easier

If you have someone file your taxes for you, or you file people’s taxes, then you are in luck as well. The IRAS has gone out of their way to provide an easier process for those who are commission earners who file taxes. In addition, the numbers of organization filing taxes for people and their early submission dates have nearly doubled, providing a faster system and quicker results for everyone involved.

Easier Time For Owners Of Tenant Residential Properties

Do you own one or more residential properties that have tenants? Also known as tenant rental properties, IRAS has taken steps to make there be a simplified tax filing structure. With more options available to those filing an online tax forms now available, filing your taxes will be easier than they have ever been in the past.

Immediate Confirmation For Personal Reliefs

There is a range of personal reliefs that people can apply for, including child relief, grandparent caregiver relief, and foreign maid levy relief. Typically, people would have to wait and hear back through their tax forms whether or not they qualified. IRAS now offers a program that provides instant yes or no responses depending on your situation. Simply fill it out, plan your finances accordingly, and rest assured that you qualify.

File On The Go

Last but not least, IRAS is offering a mobile platform for people to use to pay their taxes. Simple, straightforward, and easier than ever before, more and more people are getting their taxes in on time thanks to the mobile file on the go system put in place.

More tax breaks for firms that anchor pioneering activities in Singapore

Business leaders, entrepreneurs, and economists all over the world have long considered Singapore to be one of the world’s most brightly shining lights as far as a government friendly to business is concerned.

This nation has always fully embraced everything that they are businesses have to offer, and for decades they have worked diligently to create the kind of business friendly environment that has helped to attract business leaders from all over the world to her shores.

Many people believe that this is the reason that Singapore has been able to establish itself as maybe three most influential nation in the Pacific as far as international business is concerned – and new tax breaks for companies and firms that are looking to push forward incredible innovations in Singapore are going to only further cement this theory.

Singapore looks to attract even more foreign investment with these initiatives
The amazing thing about Singapore is that it has been able to almost effortlessly grow not only their local economic base by fostering entrepreneurial tendencies, creativity, and innovation in their own citizens but that they’ve also been able to do the exact same thing by attracting foreign investments as well.

This is a significant challenge for the overwhelming majority of countries out there, as they usually have to find ways to prioritize one group or the other.

Singapore, on the other hand, has been able to almost effortlessly attract foreign investors while at the same time supporting local businesses, capitalists, and entrepreneurs – and they’ve been doing so for decades.

This new tax initiative (called the Economic Expansion Incentives Act) is going to really help improve the amount of tax relief that businesses are going to be able to enjoy if they bring their “pioneering activities” to Singapore.

Bringing the headquarters of companies into Singapore

The major push that this new tax initiative is going to focus on is finding ways to attract foreign companies to not only set up satellite organizations and offices in Singapore, but to actually base themselves out of this very business friendly country.

In this way Singapore hopes to establish clusters of new industries, create fantastic jobs for the people of Singapore, and bring in a lot of extra revenue that wouldn’t have existed previously.

Singapore is able to do all of this so efficiently and effectively because they have been following a systematic plan to improve the conditions for businesses in their country over the past few decades. This is in no way, shape, or form a departure from “regular business” from the Singapore government, but is instead a natural extension of all of the previous initiatives that they have already put into play.

In fact, the Economic Expansion Incentives Act is a clarification on the tax relief extensions that were offered 20 years ago under the Development and Expansion Incentive scheme. Singapore is, has always, and likely will always support business innovation and fostering capitalists – and this tax break is only going to help them do so moving forward!

Productivity and Innovation Credit

Productivity and Innovation Credit (PIC) is a grant by the government of Singapore to boost expansion and growth of businesses associated with productivity and innovation activities. Many small companies and start-ups with accounting statements from 31st January 2010 and 31st December 2104 will benefit from the PIC scheme. The scheme runs from YA 2011 to YA 2015. PIC scheme is obtainable through Inland Revenue of Singapore (IRAS) the main tax authority in Singapore.

The grant has a significant advantage as any eligible business person will benefit from the tax deduction. However, there are six aspects that will make a completely eligible business to go through and incur some expenses, they include:

  • Employees training including the company`s directors: That will involve an in-house training of employees. A business that benefits from PIC will have to outsource the training the external service, providers. The costs to be incurred in the training include registration fees, meals and refreshments expenditure, training materials, and an aptitude test fees.
  • Purchase or leasing of PIC Automation equipment: enrolled benefits that benefits from PIC scheme will have to purchase laptops, Netbooks, Smartphones, Printers and scanners as well as Tablets. They will also be required to incur leasing expenses for cloud computing like Singtel (SAAS) Software-as-a-service.
  • IPRs Acquisition: Such acquisition costs for IPRs include overseas or local patent, trademark, integrated circuits layout design for speedy market penetration, geographical indication and copyright.
  • IPRS registration: eligible businesses for PIC scheme will have to register with IPRS for such fees which include: professional fees for a patent lawyer they hired, overseas or local official fees. No matter the expenses incurred, the application directly qualifies for PIC.
  • Research & Development: businesses will have to go through the Research & Development activities (R&D).
  • Approved Design Project: Firms eligible for PIC will be necessitated to have their design project get approval from Design Singapore Council.
  • Giving grant

    Product and Innovation Credit (PIC) Grant Overview and How It Works

    A business can claim up to 400% tax deductions as long as they have a total expenditure of up to $400 000 on each PIC qualifying activity. Businesses with the expenditure of up to $100000 will get a cash payout at 60% on an annual assessment from YA 2013 to YA 2015.

    Set Conditions for Productivity and Innovation Credit (PIC) Grant Cash Payout

    Not every business that is eligible for PIC scheme can qualify for a cash payout. Small and medium enterprises that qualify for cash payout will be required to:

  • Have active business activity within Singapore.
  • Incur qualifying expenses and permitted to PIC over the basis period for the qualifying YA.
  • Have at least three employees that are either a citizen or a permanent Singapore resident with CPF contributions. These three employees should not be sole-proprietors, company`s directors who are shareholders or partners under a service contract.
  • However for any business owners who find it difficult or complex in applying for cash payout or 400% tax deduction claimant, IRAS will be happy in offering complete guidance on these procedures.

    PIC Bonus

    From YA 2013 to YA 2015 small and medium businesses will benefit from PIC bonus that is basically a matching cash bonus for dollar-for-dollar on top of the existing allowances and tax deductions. To qualify PIC bonus, business is required to:

  • Incur a minimum of $5000 in PIC qualifying expense over the basis period for a YA that PIC Bonus is claimed.
  • Have active business activities within Singapore.
  • Have at least three employees who are either the citizen or permanent residents of Singapore that contributes CPF on their paychecks.
  • Any businesses eligible for PIC scheme should present themselves or check with IRAS for an application. There are immense benefits accrued apart from the operational finances such as employees training.

    Guide to the Singapore Tax System

    The core aim of the tax policy within the Singapore tax system is to raise revenue. 89.8% of this revenue is taken from the taxes imposed on Singapore citizens. This revenue is then distributed to important government operations in order to facilitate economic growth whilst still preventing inflation, maintaining a balanced budget and most importantly to deliver essential public services and goods. A lot of the revenue raised is put into the education system as highly educated citizens is considered of high importance by the Singapore government. A section of the tax revenue also goes towards national healthcare, and environmental protection as well as housing programmes.

    High resolution perspective graphic of a clock with words tax season.

    Further Tax Policy Objectives

    Although the primary aim of the Singapore tax policy is to provide funding for government operations, there are still other objectives that are considered important.

    Economic and Social Goals

    A highly important objective is the desire to increase economic growth by imparting a sense of economic and social goals within the citizens of Singapore. The government has used the tax system in order to reach this goal.

    • The Singapore government has gifted certain business with an accelerated capital allowance. This means that they receive funding for any assets that are used regularly by the business.
    • Parents have been provided with a tax rebate after the birth of every child up to the fifth child. The aim of this is to encourage families to have more children which will in turn increase social mobility and economic growth, as well as increasing the amount of highly educated adults.

    Competitive Rates

    By keeping corporate rates competitive, the government aims to encourage more foreign investment to give the economy an important financial boost. As well as, the government counteracts this by consistently keeping individual rates low in order to encourage tax payers to work harder.

     

    Tax Breakdown

    Income

    • Income Tax – This is a tax that is imposed on every individual that works within Singapore. Income tax is also charged to businesses. The amount of tax charged will be dependent on the level of income.

    Property

    • Property Tax – The government estimates the rental value of all properties that are privately owned. The final estimate of this represents the property tax that is charged to owners.
    • Estate Duty – The estate duty tax comes into play when the value of a deceased’s assets exceeds a pre-determined set amount.
    • Stamp Duty – When legal documents relating to stocks, shares and immovable property are concerned the stamp duty is imposed.

    Automobiles

    • Motor Vehicle Tax – Motor vehicle tax is imposed of automobile owners for two reasons. The first reason is to restrict the level of car ownership throughout the country and the second reason is to tackle the problem of extreme road congestion.

    Goods

    • Goods and Services Tax–Whenever money is given in exchange for goods including imports then the goods and services tax will need to be paid. This also includes products that have already been subjected to customs and excise duties. Therefore this can be considered a tax on consumption.

     

    6 steps to maximize corporate tax benefits for Singapore companies

    Every corporate entity residing in Singapore, being resident or non-resident, is required by IRAS to file a separate tax return every calendar year on all his incomes including gains or profits from a trade or profession and earnings from employment. This tax return filing must be done in respect to the tax compliance and preceding year given by IRAS.

    Two Young Businesspeople Calculating Bills At Desk In Office


    Corporate Tax Rates
    Beginning 2010, all corporate income in Singapore is taxed at a rate of 17%. However this can be reduced further if companies take advantage of several government’s corporate tax schemes and subsidies available.

    Save on corporate tax benefits scheme for your company

    In order to be encouraging new investments and maintain a conducive business environment, the Start-up Tax Exemption Scheme was introduced in the year 2004, which aids newly incorporated qualified companies on their taxable profits in the first 3 years of their newly startup operations.

    Tax exemption is given on normal chargeable income of up to a maximum of S$300,000 for each of the first 3 consecutive years of operation:

    Full tax exemption on the very first S$100,000 profit made by the company:

    • For the first S$100,000, there will be a 100% exemption and the exempt amount is S$100,000
    • For the next S$200,000, there will be a 50% exemption and the exempt amount is S$100,000
    • Therefore, the total exempt amount for income up to S$300,000 will be S$200,000

    The Government has also introduced the Partial Tax Exemption Scheme in the year 2008 for Small and Medium-sized Enterprises (SME) in Singapore.

    • For the first S10,000, there will be a 75% exemption and the exempt amount is S$7,500.
    • For the next S$290,000, there will be a 50% exemption and the exempt amount is S$145,000
    • Therefore, the total exempt amount for income up to S300,000 will be S$152,500

    Avoid double taxation

    At times, the foreign income of a Singapore resident company may be subjected to taxation twice. This happens once overseas, and a second time when the income has been remitted into Singapore.

    In such case, a foreign tax credit scheme by the Inland Revenue Authority of Singapore (IRAS) allows a company to claim a credit for tax paid in the foreign country against the Singapore tax that is payable on the same income.

    Under this, there are three types of credit or relief that can be claimed:

    Foreign Tax Credit (FTC):

    Companies may claim FTC to avoid being taxed twice. However anyone claiming has to be eligible and satisfy the following conditions:

    1. The individual must be a tax resident in Singapore for the relevant basis year;
    2. Tax has been paid or is payable on the same income in the foreign country; and
    3. The income is subject to taxation in Singapore

    Double Tax Relief (DTR):

    This credit relief aids in countering double tax scenarios

    Unilateral Tax Credit (UTC):

    This scheme affects foreign tax paid by Singapore tax residents in countries without DTA.

    UTC is allowed only when repatriated income is being generated from a professional, consultancy or other services which is not borne, directly or indirectly by a resident in Singapore. It is not deductible against any income accruing in or derived from Singapore such as employment income and dividends income.

    Keep More of Your Money words on a pie chart showing the portion or percent of your savings or income left after taxes, fees, charges and other costs

    Productivity and Innovation Credit Scheme:

    One of the very popular ways to maximize your corporate tax benefits in Singapore is applying for PIC.

    PIC (Productivity & Innovation Credit) is a scheme that has been implemented by the government to help businesses cope with rising operating costs such as rent and wages. For business to claim the PIC Cash Pay-out, one should fulfil the following any of the 6 qualifications:

    1. Lease or acquire IT (Information Technology) equipment.
    2. License/acquire IP (intellectual Property) Rights.
    3. Training fees.
    4. Registering of designs, patents and trademarks.
    5. Design projects.
    6. Research and development activities.

    This scheme aids businesses which invest in productivity and innovation by having their operations upgraded to create new value by providing tax deductions/exemptions for the 6 qualifying activities. Under this scheme, companies can enjoy 60% cash payouts or 400% tax deductions/allowances for investing in productivity and innovation improvements.

    In order to qualify for PIC, the expenditure has to be incurred on the basis period of the Year Assessment that has qualified. Next, the business needs to be active with at least sales revenue. The company should also consist of at least 3 local employees with CPF contributions during the last month of the quarter or the whole year where the payout option relates.

    To apply, the company should prepare the following documents that is required by the Inland Revenue Authority of Singapore (IRAS):

    • PIC cash payout application form ( Can be printed out from IRAS website )
    • Employee’s CPF contribution statements
    • Minimum of 3 copies of NRIC (Singaporean)

    Corporate Income Tax Rebate

    This scheme was introduced in year 2013. For year assessment of 2013 to 2015, the CIT rebate (Capped annually at S$30,000) grants a 30% relief to all Singapore incorporated companies.

    Corporate Income Tax Rebate has been extended to year assessment of 2016 to 2017 with a 30% relief and capped annually at S$20,000.

     Research Incentive Scheme for Companies

    Similar to PIC, this scheme aims in encouraging and to assist businesses to set up Research and Development centres in Singapore in strategic areas of technology.

    A proposed project must bring in R&D capability that is strategic on enhancing the competiveness of the company. Also, the programme has to be long term commitment by the company and result in measurable benefits. Training and increasing of research scientists and engineers as well.
    In terms of support that the RISC provides:

    30% support for equipment, materials and software costs

    50% support for manpower-related cost

    30% support for professional services

    30% support for intellectual property rights

    Pioneer Incentive

    This incentive aims to provide corporate tax exemption on income from qualifying activities. Any applicants who wishes to apply for this incentive are required to submit plans for new substantive contributions, including commitments that is significant in incremental capital expenditure. Also one has to submit their business spending and skilled jobs present in Singapore.

    What is Personal Tax in Singapore?

    In Singapore, the rates of personal income tax are among the lowest in the whole world. For you to determine your income tax liability in Singapore as a resident, you should first determine your tax residency as well as chargeable income amount before applying the rate of progressive tax to it.

    The following are the key points of income tax for people in Singapore which includes:

    • The rate of progressive tax in Singapore which starts at 0 percent and ends at 20% or above S$320,000
    • The country has no inheritance tax or capital gains
    • People are only taxed on incomes earned within Singapore. Those income earned by these individuals while working overseas/ other countries are not subjected to any taxation barring the few exceptions.

    • The Tax rules also differ and are based on people’s tax residency.
    • The Tax filing due date for citizens is on April 15 of every year and income tax is always assessed based on the preceding year basis.

    The rates of personal income tax

    Individuals living in Singapore are always taxed on the progressive tax rate. This means that filing the returns of personal tax is mandatory whenever your total annual income exceeds S$22,000. This means that you should not pay tax whenever informed by the Singapore tax department and they will submit your total tax return.

    Different rules of income tax often apply differently in Singapore often depends on the individual’s tax residency status;

    Personal Tax for the Singapore Residents

    You will be considered a tax resident whenever you are:

    • A Singaporean; or
    • A Singaporean who permanently Resides and have established their permanent home; or
    • A foreigner after staying or worked in the country for more than 183 days

    How do you calculate personal tax for the Singapore non-residents?

    First, you need to ensure that personal employment income is exempted from tax for the people staying in the country doing an employment not more than 60 days per year. In addition, the exemptions do not apply for the people with professions such as directors of companies, public entertainer or even exercising profession in the country. The professionals included are foreign experts, queen’s counsels, foreign speakers, consultants, coaches, trainers etc.

    For those people staying within the country in between 61 and 182 days in one year, are taxed on all the income earned within Singapore. However, they may claim donations and expenses to save their income from tax. Nevertheless, they are never eligible to make any claim amount as personal reliefs in their incomes. The employment income is also taxed at 15 percent on progressive resident rate and they will always pay the higher amount between the values after doing the calculations. Most of the consultant fess, director feed, as well as other incomes are all taxed at 20 percent.

    What is that tax treatment of the income earned overseas?

    Generally, all the overseas income that Singapore received on the or after the 1 Jan 2004 is tax exempted. This includes the overseas income that is paid into the Singapore bank accounts. In addition, a citizen does not need to declare his or her overseas income, which is not taxable.

    Here are the circumstances under which the overseas income may be taxable:

    • The income is received within Singapore through a partnership company in Singapore.

    • All the overseas employment/ income are incidental to personal Singapore employment. The above reason is part of the job why you don’t need to travel and work overseas if you want to save your income from tax.

    • When you have an employment outside the country on behalf of the Government of Singapore, you will always get tax exemptions. In addition, you should declare all the qualified taxable income earned overseas income under the employment income as well as other incomes that are applicable in the personal tax form.

    • Capital gains tax, estate duty and inheritance tax

    • Capital gains are investment income, which arises in the relation to the real assets, like property, financial assets (shares or bonds) as well as tangible assets like goodwill. In Singapore, these earns are never taxed.

    Inheritance tax is another tax, which you need to pay whenever you die and it comes out of financial estate, which you have left behind. This is referred to as the Estate Duty in Singapore and it was abolished effective the year 2008.

     

    What is Estimated Chargeable Income in Singapore?

    An Estimated Chargeable Income (ECI) in Singapore is an estimation of a Company’s taxable income in a given Year of Assessment (YA). According to Singapore’s rule and regulations, it is mandatory for all companies to file their ECI statement with Inland Revenue Authority of Singapore (IRAS) for the previous year of assessment within a period of 90 days after the end of their financial year. Companies with zero income (no chargeable income) are required to file ‘Nil’ or ‘Zero’ with IRAS unless that company qualifies for administrative concession that came into effect from 2013 Year of Assessment.

    Any Estimated Chargeable Income statement must include revenue (main source of income) of the company excluding items gained for disposal of fixed assets. For example, your revenue will be the investment income if you possess an investment holding company.

    In the event that the audited account at the period of filing ECI are not available, you can declare the revenue amount of your company by referring to its management account. When the audited accounts come into effect and if any difference is found from the declared amount in your ECI form, you will not be revise figures of the revenue, and there will be no change in the Estimated Chargeable Income (ECI).

    Consequently, if the Estimated Chargeable Income is slightly or much more than the real chargeable income of a company recorded in the Form C/ Form C-S, then the excess tax paid earlier will be automatically refunded.

    Who should file the Estimated Chargeable Income (ECI)?

    All companies incorporated in Singapore must file the ECI with IRAS, unless a company is exempted from filing ECI under the administrative concession that came into effect from YA 2013.

    According to the new administrative concession, all companies having their financial year ending October 2012 or beyond are free to file ECI if they if they meet the prerequisite conditions given below:

    The total annual revenue of the company is not more than $1 million for that financial year; and

    ECI* is NIL.

    *ECI is the total amount of revenue before exempt amount is deducted under the tax exemption scheme for a new start-up company and partial tax exemption scheme for companies that have existed for long.

    Advantage of Early ECI Filing

    For any company that files early ECI, IRAS gives it a flexible payment option. The company will be awarded with various instalment options. The early the company file Estimated Chargeable Income, the more will be given many instalments. These are some of the tax payment incentives that IRAS has come up with to offer any company that files its ECI early. For instance, if a company submits its early ECI statement by date 26th of the first month after the end of YA, it can pay its taxes in as much as 10 instalments. Again, if a company files ECI by 26th of the second month, it is given eight tax instalments. However, if the company waits for 26th of the third month, it is only warded six tax instalments.

    Result of Non-compliance

    If any company fail to submit the ECI to IRAS within 90 days at the end of its financial year, the will get NOA (Notice of Assessment) from IRAS based on the company’s revenue estimation done by IRAS. In the event the company with estimation amount from IRAS, they are given a period of 30 days to lodge a written online objection via myTax portal or they can send the written application IRAS’ corporate division. In the absence of an objection, then NOA will automatically become the true and fair assessment even if it controverts the total revenues declared as part of that company’s annual returns.

    Assistance of SingaporeTaxation.com.sg

    As long as you are not such conversant with compliance and process requirements, it can be a difficult task for you to file an ECI report free of errors. Therefore, it is advisable to seek for assistance of SingaporeTaxation.com.sg. This firm offers total solutions pertaining to ECI needs.

    Management Accounts versus Audited Accounts

    If it happens that the audited accounts are not present at the time of submitting ECI, you can use your company’s management accounts. The company will not be required to submit the revised figures when its audited accounts are finally out and there is no material change in ECI.

     

    Which types of Foreign Income is exempted from Tax for Singapore companies?

    There are three categories of foreign income that are exempted from the Singapore tax. People should learn about this information, so they can know their tax status. Three foreign income categories that are exempted from tax are foreign dividend, foreign profits, and also foreign sourced service income.

    Several Important Conditions for Getting the Tax Exemption:

    According to Section 13(9) of the Income Tax Act in Singapore, the tax exemption can be approved when three conditions are met. There are three different conditions that people have to consider when they want to apply for this tax exemption. Here are top three conditions that should be met by Singapore companies.

    1. The highest corporate rate that is received from the foreign country is about 15% or more of the foreign income that is received in Singapore.
    2. The foreign income is subjected to tax in the other countries where these incomes were received. In certain cases, the tax rate of the foreign income is different from the company tax rate. This situation is also acceptable as the condition for the tax exemption.
    3. The comptroller agrees that the tax exemption is beneficial for the person living in Singapore.

    Administrative Procedures:

    There are several procedures that people have to do when they are planning to apply for tax exemption in Singapore. All procedures should be done properly to avoid any problems in the future. There are several important information that should be submitted in the income tax return form (Form C), including:

    1. Sum of all incomes received
    2. Country where the income comes from
    3. Highest tax rate in the foreign country
    4. Confirmation letter to confirm that the foreign tax has already been paid in the original country

    All people should also fill in the Form C-S or Form C based on their conditions. This form should be submitted with all required information as mentioned above. All information should be submitted to IRAS upon request. It is important to contact this official to learn more about how to submit all documents to IRAS properly.

    After people fill out all of that information on the right form, the Comptroller is going to decide whether the foreign income can be subjected to tax or not. In order to complete all procedures, people have to fill the income tax return (Form C of Form C-S) completely before they submit their application. They also need to submit all documents that are required by IRAS department. These documents should be submitted based on the request.

    Certain documents that should be submitted to IRAS:

    1. Confirmation letter that is declared from the foreign country. This letter is going to be used to prove that the tax is already collected at the foreign country. This situation may happen because all the business activities are done in that particular country. Because of that reason, the foreign country is responsible to get all taxes from the business activities. Therefore, people need to submit this confirmation letter to enjoy the tax exemption in this country. There is no double tax in any types of business activities. After people pay their tax for their foreign-business activities, they don’t have to pay another tax in Singapore.
    2. Copy of the approval letter or tax incentive certificate from the foreign country. This is another important document that should be submitted to IRAS. When it is possible, people need to submit the dividend voucher. This voucher is going to state that the dividend can be exempted from tax in this country. Dividend can be used as an incentive for being involved in the business activities in foreign country. This document is very important in the case of the foreign-sourced dividend.

    After reading this article, you will get a better understanding of how to get tax exemption in Singapore. There are some other information that you can read from IRAS in Singapore. You can refer to the e-Tax guide for IRAS at www.IRAS.gov.sg. This site is specially created to help all Singaporeans in paying tax for their business activities. All visitors can read all important information about Singapore tax in this site. Before you can enjoy the tax exemption for any foreign business activities, you have to report all details to IRAS Singapore.

     

    What does capital gains tax means?

    Singapore is deprived of capital gains tax till now which actually attracts the investors to setup their companies or to have their regional branches in this country.

    The profit gained out of selling any capital assets is called capital gains. In such cases, there is a substantial difference between the selling and purchasing price. The selling price comes to be more compared to the purchasing price and the profit that is received out of selling is termed to be capital gains.

    The assets that come under capital assets are bonds, real estate, mutual funds, stocks, fine arts and other similar assets. Hence, in Singapore tax is imposed on the profit gained out of selling the capital assets. The amount of tax is fixed on it according to specific jurisdictions as every jurisdiction has different level of taxation based on different other criteria. So, in order to calculate tax, one has to check out the rules of the jurisdiction.

    Each jurisdiction has their different types and methods of imposing tax based on various kinds of capital assets. The tax on capital gains is also based on the time of holding the asset on their disposal. So, capital gains tax on the basis of time is mainly divided into two different categories which are named as the long-term period and the short term period. Generally, the holding period is calculated from the day when the asset is bought till the specific day when the asset is finally sold out.

    Following are the details about the two types of holding period: 

    1. Short-term holding period: The period which comes under 1 year or below is stated to be short-term holding period. For this category the tax on capital gains comes under normal tax category which ranges between 10% and 39.6% in 2013.
    2. Long-term holding period: The period of holding any capital asset for more than 1 year is generally considered as long-term holding period. And in this case the tax of the capital gains is considered according to the rates of the long-term capital gains. Moreover, the tax rate of the long-term holding period is less than the short term holding period and it ranges between 15% and 20 % range based on the marginal tax bracket.

    In addition to this, the high paying taxpayer companies or individual taxpayers have to pay 3.8% extra tax as Medicare contribution tax on their net capital gains amount. So, the maximum tax rate that could be applied on short term capital gains income comes as 39.6+3.8= 43.4% if it is calculated according to its normal rates and for a long term period it comes to be 23.8% that is, 20%+3.8%.

    Benefits of capital gains tax:

    Reasonably Lower Rates – As per our above discussion, it is clear that long-term capital gains taxes which ranges from 15% to 20% are lower than the short term capital gains taxes that ranges between 10% and 39.6%.

     

    Not Applicable for the Inventory – Another big advantage of capital gains tax is that it is not imposed on inventories in spite holding it for a year or above. It is done so because inventory is not regarded as a capital asset in Singapore. Let’s take an example. Suppose, you deal in buying and selling of lands and you have held a land for more than a year and then you make a decision to sell it. But, as land is considered to be an inventory asset you will not be charged with any tax as your capital gains will be considered as normal income since land is considered to be an inventory in respect to your business.

    Late Tax:

    You will simply come under the capital gains tax if your profit or loss is being observed. Let’s, imagine that your business is to buy and sell lands. But, you will not come under capital gains tax if the price of any land gets increased by SGD 8,000 in that particular year, but you haven’t sold it to other party in order to gain profit. Hence, you will have to give the capital gains tax only when you have purchased any land and sold it when the price has increased than your purchasing rate thus making a profit out of your land.