Singapore has a flat corporate income tax rate of 17% for all businesses, regardless of size or industry. This is one of the lowest corporate income tax rates in the world. There are also a number of tax exemptions and tax deductions in Singapore available to businesses. Singapore’s favourable tax policy and friendly ways to reduce tax payable make it an attractive destination for local and foreign entrepreneurs. For some reference, feel free to check out our introductory guide to Singapore’s taxes.
Singapore is ranked sixth in the world on the US News list of countries that have the most favourable tax environments. In addition to various corporate tax incentives in Singapore, there are also a number of personal tax incentives for individuals to take advantage of.
What are Tax Deductions in Singapore?
Singapore tax deductions refer to certain expenses or donations that individuals and businesses can claim to reduce their taxable income. The Inland Revenue Authority of Singapore (IRAS) oversees these deductions and provides guidelines on what expenses or donations are eligible for deduction. By claiming these deductions, individuals and businesses can potentially lower their overall tax liability.
Here are some common tax deductions in Singapore:
Personal Tax Deductions / Tax Reliefs
- Earned Income Relief (EIR)
- Spouse Tax Relief
- Parent/Handicapped Parent Relief
- Qualifying Child Relief (QCR)
- Handicapped Sibling Relief
Business Tax Deductions
- Business Expenses
Businesses can deduct ordinary and necessary expenses incurred in the production of income. Examples are salaries, rent, utilities, and other operating costs. - Capital Allowances
Businesses can claim capital allowances on qualifying assets, like machinery, equipment, and vehicles. - Foreign Tax Credit
Singapore provides relief from double taxation for businesses that pay taxes on foreign income. - Input Tax Deductions
Registered businesses can claim input tax deductions for Goods and Services Tax (GST) paid on purchases and expenses.
Charity Tax Deductions in Singapore
A type of tax relief that is offered to qualifying individuals and businesses who make donations to approved charities. IRAS maintains a list of approved charities on its website.
What are Tax Exemptions in Singapore?
Tax exemptions in Singapore refer to the specific provisions that allow certain individuals, businesses, or organizations to be exempt from paying taxes on certain types of income or transactions. These exemptions were implemented by the Singapore government as a means to encourage economic growth, attract investments, and support specific industries or activities.
For businesses operating in Singapore, there are also several tax exemption schemes available. The most notable one is the partial tax exemption scheme for companies. Under this scheme, a company is entitled to a partial exemption on its chargeable income up to a specified amount. Additionally, newly incorporated companies may benefit from the start-up tax exemption scheme which provides further tax relief during their initial years of operation.
While these tax exemptions can provide significant benefits for taxpayers in Singapore, they are subject to specific eligibility criteria and conditions set by the IRAS.
What are Tax Incentives in Singapore?
Singapore tax incentives refer to the various schemes and provisions offered by the government to encourage businesses and individuals to invest, innovate, and contribute to the country’s economic growth. Tax exemptions and tax reliefs are both considered to be tax incentives in Singapore.
Some of the available key tax incentives in Singapore include:
- Corporate Income Tax Incentives
- Productivity & Innovation Credit (PIC) Scheme
- R&D Tax Incentives
- Start-up Tax Exemptions
- Personal Income Tax Reliefs
Related Reference: Tips and Tricks to Navigating Tax Season in Singapore
Tips to Lower the Tax To Be Paid
Tax incentives and tax deductions in Singapore can help businesses legally reduce their taxable income, effectively reducing the taxes they have to pay. While there are various types of deductions and incentives available, here are some tips that business owners should keep in mind when attempting to lower their tax liabilities:
- Stay Informed
Singapore tax laws and regulations are subject to changes. So it is crucial to stay up-to-date with the latest tax updates and amendments in Singapore. - Leverage Available Deductions
Take full advantage of all eligible deductions. Keep thorough records of your business expenses, including receipts and invoices, to support your claims for deductions. - Explore Tax Incentives
Singapore offers various tax incentives tailored to different industries and business activities. Investigate whether your business qualifies for any specific incentives. - Compliance and Record-Keeping
Ensure that your business complies with tax regulations and maintains accurate financial records. Mistakes or discrepancies can lead to penalties and audits. - Professional Assistance
Consider availing of professional accounting & tax services like the ones provided by Lanturn. Having a team of experienced professionals means you can readily take advantage of the first four tips effortlessly.
Lanturn’s Accounting & Tax Services
Lanturn is committed to delivering results that streamline client’s financial management and optimize your business’s performance.
- Automated Expense Management
Our user-friendly cloud technology automates expense management, freeing up your team to focus on your core business process. - Hassle-free Compliance
Our integrated LCS / Zave platform ensures that you and your business are always up-to-date with compliance and accounting matters. - Efficient Task Management
Our innovative task-management technology empowers our team to work seamlessly with you, efficiently tracking all the information needed to close your accounts. - Hassle-Free Expense and Bill Capture
Simply photograph and send your expenses and bills to our dedicated email address, and we’ll take care of the rest. - Minimised Tax Bills
Our OCR technology guarantees swift and accurate cost capture, effectively minimising your tax bill. Trust our in-house team of experts to maximise the use of tax incentives and tax deductions in Singapore for your business.
From GST Registration to ECI Submission, Lanturn offers a wide range of tax services. Experience the difference with Lanturn’s expert accounting and tax services. Trust Lanturn to handle your accounting, compliance, and tax so you can focus on your business’s growth and success.
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