Singapore's ideal geographical location and first world infrastructure has always attracted many companies and businesses to set up companies here as a launching pad to the rest of Asia.
There are many benefits in incorporating a company in Singapore, the most important being the tax benefits for new start up companies. The first S$100,000 net profit of a new start up company is tax exempt. The next S$200,000 net profits are subject to a tax rate of less than 9%. Any profits above S$300,000 are taxed at a rate of 17%.
New startups enjoy the above tax benefits for the first three tax years. With careful planning the full benefits of the tax exemptions can be enjoyed. Unfortunately, many firms that incorporate companies for new businesses coming into Singapore often fail to highlight this important fact.
The benefits are not taken away after the third year. From the fourth tax year onwards, the first $10,000 net income enjoys a 75% tax exemption and the next $290,000 enjoys a 50% tax exemption.
This means that after the fourth year a company effective enjoys for say a net profit of $300,000, $152,500 tax exemption, making it about 51% of net taxable profits.
In our experience, many news start ups in Singapore are usually small companies with limited resources and hence they try and save on the initial incorporation costs. This means that they are usually deprived of important tax planning considerations that need to be taken into account in this important initial stages.
Sandhurst consultancy provides all the necessary tax advice in the initial states of incorporation so that a client may make an informed decision on the type of company to incorporate. More important is that a new company once set up, would require expert help in satisfying the various filing regulations as laid down by the Company Act and ACRA (the accounting and corporate regulating body). If correct procedures are followed through, then the experience of setting up a company in Singapore is rather a breeze.