All About Singapore Corporate Tax

One of Asia"s rapidly growing business hub is Singapore. Many entrepreneurs choose Singapore because of its intricate legislation that protects intellectual property while facilitating business ventures. Hence, businesses located in Singapore benefit from productive ties with the other tiger economies while maintaining the name of a reputable and trustworthy jurisdiction. The corporate tax policy in Singapore further adds to the image of the country as an ideal location for company incorporation through the implementation of fair and competitive tax rates. For all these reasons Singapore has taken the forefront over the past decade as a globally recognized business nation.

By taking a look at Singapore's corporate tax policy it is possible to understand one of the many factors that contribute to Singapore's popularity with entrepreneurs.

In Singapore, foreign and local companies pay tax equally. Though this may sound unfavorable at first glance, but in the long run, Singapore favors its own businesses as it does offshore companies, thus the entrepreneurial culture that exists within Singapore.

All income sourced in Singapore or remitted into Singapore by Singapore companies are taxed. What this means is a company that is incorporated in Singapore but does most of its business with other Asian countries and receives its income overseas, is legally not liable to tax in Singapore. Business transactions are often more complicated and for that reason it is recommended to seek assistance from a professional services firm that is experienced in Singapore tax policy, in order to ensure compliance with the law. The general corporate tax rates that apply in Singapore are as follows. This article will explain later the existing substantial tax benefits for entrepreneurs and start-ups.

A reduction of Singapore's corporate tax rate from18% to 17% was made in 2010. Depending on the amount of income received, the tax is charged in blocks. A small tax rate of 4.5% is charged on the first S$10,000 of income. The next S$290,000 of profits is charged at 8.5% and thereafter, all income is charged at 17%. Thus, a mere S$360 will be charged on a small company that makes S$8,000 in 2010. A medium sized company that makes S$250,000 in 2010 will be taxed a total of S$20,850, an effective rate of 8.34%. A larger company making S$1 million in 2010 will be taxed a total of S$144,100, an effective rate of 14.41%.