Singapore: Best Place to Start your Business - Part I

As part of its drive to foster local enterprise, the Singapore Government is sequentially liberalising policy. Recently, it passed a ruling to allow full tax exemption for new companies:

"Full tax exemption can be granted on normal chargeable income (excluding Singapore franked dividends) of a qualifying company up to $100,000, for any of its first three consecutive YAs that falls in YA 2005 and beyond.

To qualify for the tax exemption for a relevant YA under the new scheme, a company must:

• be a company incorporated in Singapore
• be a tax resident in Singapore for that YA
• have no more than 20 shareholders throughout the basis period relating to that YA;

and, any company that does not meet the qualifying conditions for any of its first three consecutive YAs falling in YA 2005 and beyond would still be eligible for partial tax exemption."

Income Tax Rates

• First $100,000 Nil
• The next $100,001 to $300,000 9%
• Thereafter a Flat Rate of 18%

Existing companies Corporate tax rate will drop from 20% to 18%. For small-to-midsize companies, these cuts bring the effective tax rate to significantly lower than Honk Kong's and make Singapore a very attractive destination for incorporating and growing a business. A Singapore company with profits around 300K will now have an effective tax rate of only about 9%.

The attractive tax rates make Singapore one of the lowest tax regimes in Asia after Hong Kong. Singapore is well on its way to become the best place to setup and grow business for global entrepreneurs. The government just announced a series of incentives and tax benefits to further sharpen the country's competitive edge, making it the most preferred place to do business in the world.


Link to Corporate Tax Rulings