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April 22, 2022
How Accounting and Tax Services Help Avoid the Consequences of Late Payment and Non-Payment of Corporate Tax
Business-friendly, flourishing economy, and impressive developments, all this come to mind when somebody mentions Singapore. These things are also the reasons the country is considered one of the most picked places by tourists and expatriates, especially entrepreneurs. But beyond Singapore’s booming business landscape, there is one thing every business owner should take a closer look at. And that is tax.
Consider Accounting and Tax Services to Avoid Tax Penalties in Singapore
The Inland Revenue Authority of Singapore (IRAS) will impose penalties if a business fails to file its taxes on time, including issuing a Travel Restriction Order (TRO) and other legal actions. This is the last thing many business owners want to happen. That is why a professional must take care of taxation and other functions related to a company’s compulsory contribution to the state revenue.
Whether a startup or an established enterprise needs a corporate solutions’ provider to help them form, manage, and grow, an expert by their side makes sure their business would not suffer from the consequences of late payment or non-payment of corporate tax in Singapore. Business owners can spend more time on income-generating activities that contribute to business growth if they entrust an expert to manage accounting and tax services.
In a saturated business hub like Singapore, a business losing its footing is bad news. That is why establishing a rigid business foundation from the start is essential, especially amidst tight competition. What better way to cement a successful future and multiple breakthroughs than having a long-term partner who can manage tax and accounting services single-handedly? So, choose a reliable business solutions’ provider now and witness better changes in your business.
What Are the Different Taxes in Singapore?
The fact that Singapore is a small island nation with world-class infrastructures and luxury destinations and entertainment already speak of success. But if you look past the expansive business skyline, the country in itself is a self-made business and finance giant. Without a doubt, foreign investors are lured into doing business here because it is on top of the list for the most business-friendly and tax-friendly business hubs.
If you are looking into business opportunities in Singapore, tax is something you should learn and understand heartily. Tax is a contribution mandated by the laws, and the government levies it either from workers’ income, business profit, or costs of some goods, services, and transactions.
Below are the different taxes in Singapore:
Goods and Services Tax (GST)
Income Tax for Limited Liability Partnership (LLP)
Income Tax for Sole Proprietors and Partnerships
With Holding Tax and Property Tax
Corporate tax in Singapore is only applicable to companies with incomes sourced from the country. Both resident and non-resident companies are responsible for contributing to the state’s revenue. The government requires these companies to file for income tax, whether received or derived within Singapore’s territory.
On the other hand, it is essential to note that no tax is required on any person or company’s income from other territories. However, a 17% flat tax rate is chargeable to a company’s taxable income, such as capital gains, sale of fixed assets, and gains on foreign exchange on capital transactions, among others.
Both goods and services that are made and imported to Singapore are subject to a 7% tax. GST is exclusive to goods and services, and it does not cover other services related to finance, sales, and lease. GST is comparable to the Value Added Tax or VAT in other countries, like Hungary, the Philippines, Puerto Rico, and Russia, to name a few.
The most enticing part of starting a business in Singapore is its income tax rate between 0% and 22%, depending on an individual’s earnings made in the country exclusive of capital gain and inheritance tax, according to the World Economic Forum.
In Singapore, LLP is a business structure with two or more partners, who must be at least 18 years old and living in the country. Partners can also be a body corporate of another business or LLP. Although a company is an LLP, it is not taxed as an entity. Rather, incomes from LLP’s profits are categorised as a partner’s personal income, in which the personal income tax rate is applied. Therefore, it is not the partnership liable to tax, but the partners.
A sole proprietorship or a partnership’s business income is part of an owner’s personal income. The personal income tax rate is applicable in this situation, too. This happens when customers pay for goods produced in Singapore, or you make money through overseas sales and receive it in Singapore. Remember that a business or an individual that makes income in Singapore is under the country income tax policies. Taxable incomes include salary, interests from deposits, and other chargeable income sources.
Other than that, sole proprietors and business partners can avail of tax incentives or exemptions to reduce their taxes. It helps keep their business running in Singapore. Tax deductions, rebates, and tax relief are also available to keep their business afloat in the country.
A business incorporated in Singapore, but its employed staff, agents, and partners are non-residents, is subject to withholding tax. The IRAS will collect the withholding tax from these companies. Tax withheld from them comes from overseas commissions and fees and offshore non-resident partners and employees.
Meanwhile, property tax covers all properties in Singapore, like Housing and Development Board (HDB) flats, offices, factories, warehouses, and even vacant lots. Property owners may pay a 10% taxation rate before the 31st day of January every year. There is a deduction to this rate depending on certain conditions set up by the appropriate regulating bodies.
ContactOne Is Your Partner in Handling Corporate Accounting and Tax Services
If your business’s taxes and accounting tasks left you scratching your head, then you need a provider who can deliver productivity like Xero Accounting Singapore or better. ContactOne is ready to take on financial jobs. Call us now on +65 6333 0633 or +65 8666 3633, and we will walk you through options and ideas to make your business its best version.