Paying taxes is a necessary duty of every citizen who's part of a nation, but it is also something that no one really likes. Regardless, many Singapore-based small to medium enterprises (SMEs) are incentivized to grow and prosper using tax cuts, benefits, and breaks. With these exclusions, your SME or startup should be able to enjoy loads of savings throughout the tax season.
How to Avail of Tax Savings
The IRAS (Inland Revenue Authority of Singapore) has introduced the SUTE (Startup Tax Exemption Scheme) as a way to encourage new businesses, particularly SMEs, to set up shop in the country. It has benefited and continues to benefit SMEs in general since 2004. It specifically provides newly incorporated qualifying companies tax exemptions from their taxable profits in the first three years of their founding.
Full SUTE Tax Exemption
Full tax exemption is provided under the SUTE program for normal chargeable income of up to 300,000 SGD during the first three years. Here are the specific amounts to note:
Partial Tax Exemption
The Partial Tax Exemption Scheme came about in 2008, again for the sake of giving exemptions to SMBs. Under this scheme, the rates for exemption on the normal chargeable income of up to 300,000 SGD include the following:
The PIC Scheme
As for the PIC (Productivity and Innovation Credit) scheme, it is a scheme that encourages SMEs to focus more on automation and innovation. IRAS introduced PIC back in 2010.
Any company can acquire a lucrative 400 percent tax deduction or allowance and/or up to 60 percent payouts for investment in productivity and innovation improvements approved by the government. SMEs can leverage significant tax savings from PIC even though its PIC bonus component has presently been terminated (the 100 percent cash bonus on top of the PIC above benefits).
The Reasoning Behind These Tax Exemptions
It is in the best interests of Singapore to incentivize SME productivity because that sector is responsible for 70 percent of the country's employment. It is not an exaggeration to call SMEs the lifeblood of the Singaporean economy. Before these small businesses are established, they'll need all the help they could get from such exemption schemes that are designed to redirect maximum tax savings to their particular industry.
At any rate, Servcorp also serves as a valuable ally to these SMEs from Singapore. That is because the company offers dependable serviced and virtual office packages that significantly decrease the overhead expenses of these enterprises so that they could better reach their profit potential. Please call +65 6690 6162 for more information.