The corporate tax filing season is upon us. All companies are to e-file their tax returns by 15th December 2020. Here are some common tax reliefs you should take note of that can help reduce the tax payable by your company,

***

Tax Exemption Scheme For New Companies

If you own a new company, you can be eligible for tax reliefs for the first 3 consecutive years of assessments (YA) where the YA falls in:

YA 2020 onwards

  • 75% exemption on the first $100,000 of normal chargeable income; and
  • A further 50% exemption on the next $100,000 of normal chargeable income.

YA 2019 and before

  • Full exemption on the first $100,000 of normal chargeable income; and
  • A further 50% exemption on the next $200,000 of normal chargeable income.

To qualify for the above tax reliefs, the company must be

  1. incorporated in Singapore;
  2. a tax resident in Singapore for that YA;
  3. have total share capital that is beneficially held directly by no more than 20 shareholders throughout the basis period for that YA where
    1. all of the shareholders are individuals or
    2. at least one shareholder is an individual holding at least 10% of the issued ordinary shares of the company

There is, however, an exception whereby a company whose principal activity is that of investment holding or which undertakes property development for sale, for investment, or for both investment and sale will not qualify for the above tax relief.

***

Partial Tax Exemption For Companies 

Qualifying companies can enjoy the following tax relief:

YA 2020 onwards

  • 75% exemption on the first $10,000 of normal chargeable income; and
  • A further 50% exemption on the next $190,000 of normal chargeable income

YA 2019 and before

  • 75% exemption on the first $10,000 of normal chargeable income; and
  • A further 50% exemption on the next $290,000 of normal chargeable income.

Do note that all companies including companies limited by guarantee can enjoy partial tax exemption. The only exception is companies that have already claimed the tax exemption scheme for new companies.

***

Deduction Of Expenses Incurred Before Commencement Of Business

Expenses incurred from revenue-generating activities one year prior to the first day of the financial year in which the company earned its first dollar of business receipt will be tax-deductible. This is to assist businesses in their development. This is not applicable to companies that are subject to tax in accordance with Section 10E of the Income Tax Act.

***

Need help with the tax preparation and filing for your company? Talk to our qualified tax consultants today!