The Different Taxes A Company Has To Pay In Singapore

The Different Taxes A Company Has To Pay In Singapore

In Singapore, the taxes a company is liable to pay can be generally be broken down into 5 types.

Here’s a general overview of the 5 types of taxes you should be aware of when setting up a company in Singapore.

1. Corporate Income Tax

Corporate income tax is the income tax payable on the profits earned by a company. Corporate income tax rate in Singapore is fixed at a flat rate of 17%. However, there are many tax incentives and partial exemptions available to qualifying companies.

2. Goods And Services Tax (GST)

A company that has a revenue in of S$1 million or above for the preceding year must apply to be GST registered. As a GST registered company, it is then compulsory to charge output tax on the goods and services supplied.

GST is 7% standard rated. For exports and prescribed international services, these are 0% rated.

The purchases, the company may be able to claim on the GST paid to suppliers.

While the GST is fixed at 7% currently, it has been announced by the government that there is plan to revise the GST to 9% in the future.

3. Stamp Duty

Stamp duty is due when there is a transfer of unlisted shares or real property to a company. For purchase of unlisted shares, the stamp duty payable is 0.2% of the consideration or valuation whichever is higher.

For the purchase of real property, the stamp duty payable is:

  • 1% on the first $180,000
  • 2% on the next $180,000
  • 3% on the balance thereafter

For the purchase of residential property valued more than $1 million, 4% is levied on the amount in excess of $1 million.

Do note that companies buying residential properties are also required to pay an additional buyer stamp duty (ABSD) of 25% on the value of the property. There is also seller stamp duty payable for residential properties if the company sells within a stipulated time frame.

4. Property Tax

For the duration of owning the property, the company is obliged to pay yearly property tax. For non-residential properties, the property tax is a flat rate of 10% levied on the annual value of the property. For residential properties owned, it is a progress rate of 10% to 20% levied on the annual value.

5. Personal Income Tax

Personal income tax is levied on the income of individuals. A company only has to take note of this if it is bearing the tax on behalf of it’s employees.

Personal income tax for a tax resident in Singapore ranges from 2% to 22% with the first S$20,000 exempted.

 

Need help with accounting and taxable matters for your company? We have a team of qualified accountants ready to assist you. Talk to us today!

 

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How To Start A Home Based Business (HBB) In Singapore

How To Start A Home Based Business (HBB) In Singapore?

There is an increasing number of entrepreneurs in Singapore choosing to kick start their business as a home-based business, also commonly known as HBB. While we commonly associate home-based business with something to do with food such as baking cakes or cookies, it can also be a suitable set-up for freelance copywriters, home-based tuition teachers etc.

The great thing about working from your home is that you need up chalk up expenses from office or shop rental, which can be a great drain on your expenses as you are starting. Instead, the monies saved can be channelled to greater use such as marketing. In fact, nowadays, online presence is equally important if not more important than having a physical location.

Of course, there are certain limitations imposed by the authorities that you need to take note of:

  1. You cannot employ anyone from outside the household.
  2. There must not be any display of signages or advertisement outside the residential premises.
  3. The running of the business does not cause extra human traffic to the place of residence.
  4. No noise, smoke, smell, effluent or dust nuisances or danger should be posed to the surrounding residents.
  5. No loading and unloading of goods via vans and trucks.
  6. The business activities must be in compliance with the rules and regulations of other authorities.
  7. If you are staying in an HDB, it cannot be used as the business registered address. Private residential address are allowed.
  8. There must not be a material change to the use of the premise. It should still be primarily used for residential purposes.

Some common home-based business in operation are (but not limited to) baking, hairdressing, media freelancers and sewing. Do note that massage services are not allowed!

Ready to get started? Here are a few steps you should consider.

Register Your Business

Give your business an awesome name! More importantly, you should consider the business structure you wish to adopt. Will it be a sole proprietor or private limited company? It may not seem that important now but it may affect how you can scale your business going forward. I have written an article comparing the pros and cons of having a company versus a sole proprietorship in Singapore. 

You can get hands-on with the registration of your business or you can also seek help from a licensed ACRA filing agent here in Singapore. For some corporate secretary, they will also provide the use of a registered address as well as accompanying accounting services if required.

Depending on your trade, you may also be required to obtain certain licenses or permits before being able to operate. For example, if you are in the food business, you might be required to follow the food hygiene rules and regulations set forth by the Singapore Food Agency.

Plan Your Operating Budget

It will be foolish to dive headlong into the business without some basic resource planning. How much do you need to set aside for the purchase of equipments to run your trade? How much advertising budget do you need to allocate in the initial phase of the business? How are you planning to pay yourself? How are you going to price your products and services? How much start-up capital are you planning to have?

As the age-old saying go, if you fail to plan, you plan to fail.

E-Commerce / Website

To me, having an online presence is a must-have in today's society. The website doubles are a platform for you to tell the world about your passion and business. It is also a salesman cum order taker working 24/7 for you.

If you are a retailer, having an e-commerce site is a must. You can either do it on major platforms such as Lazada and Shopee which gives you a lot of traffic but you never really own your customer base, or you can consider building your own branding. You no longer need to have a degree in web design to build an e-commerce shop or website for yourself. Platforms such Wix and Shopify are so simple to use and the monthly subscription is rather affordable for a startup.

If you require a high degree of control over your ownership of your IP and customisation, consider engaging an experienced web designer to build your website from the ground up.

All the best of luck with your upcoming venture!

 

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Additional 40% Wage Subsidy For F&B Businesses Till 13th June 2021

Additional 40% Wage Subsidy For F&B Businesses Till 13th June 2021

As a result of the increased rate of Covid 19 infection, dine-in will be disallowed at all food establishments during the period of 16th May 2021 till 13th June 2021. In view of the impact, this will cause to the F&B businesses, there will be an increment of the wage support via the current Jobs Support Scheme (JSS). The wage support for salaried workers in F&B establishments will be increased from 10% to 50% during this period.

The 50% wage support is capped at $4,600 gross monthly wages paid to local employees. Self-employed individuals who make voluntary CPF contributions for themselves and their local employees will also qualify for the support.

On top of the wage support, there will also be a one month rent wavier for F&B tenants of government agencies who do not qualify for the enhanced JSS.

For private commercial tenants, the Government urges the landlords to provide support to their tenants during this difficult period.

 

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Professional Conversion Programme

Professional Conversion Programme - Get Funding To Offset Salary When Hiring New PMETs

In addition to the Jobs Growth Incentive which helps to lower hiring cost of locals, companies may further tap on the Professional Conversion Programme (PCP) when hiring Professionals, Managers, Executives and Technicians (PMETs) to further reduce their salary expenses.

There are several types of PCPs and for this article, we will be focusing on the Place-and-Train (PNT) and Redeployment / Job Redesign (JR) Re-skilling. 

The place-and-train is where the PMET is hired by a participating company before undergoing training to take on the new role. JR is aimed at companies undergoing internal restructuring. The existing PMETs might be rendered redundant due to the restructuring, the JR programme is to retrain and redesign the Job scope of these PMETs.

Benefits of The Professional Conversion Programme

In a nutshell, the PCP aims to encourage companies to be open to the possibility of hiring PMETs who are mid career switchers.

WSG recognises that the PMET may not have all the necessary skillset required for the new job role. Thus, they are offering to help companies co-share up to 90% of the salary payable of the new hire. In return, the companies must commit to a structured plan in order to retrain and re-skill the new PMET hire.

The funding support from PCP is stacked on top of the Jobs Growth Incentive if the company is eligible.

Who Is Eligible For Professional Conversion Programme?

To enrol into this programme, the PMETs and companies must meet the following requirements:

PMETs

  • Singapore Citizen or Permanent Resident
  • At least 21 years of age
  • Have graduated or completed National Service for at least 2 years
  • New job role must be substantially different from the previous one
  • Not related to shareholders of the hiring company
  • Not shareholders of the hiring company
  • Not ex-employees of the company or related entities

Company

  • Registered or incorporated in Singapore
  • Must offer employment with remuneration in line with market rate
  • Commit to the PCP training requirements
  • Be cooperative with WSG or its appointed partner on the required administrative matters related to PCP
  • For applications for redeployment/JR Re-skilling PCPs, companies are required to submit details of their business transformation plan for evaluation by the appointed programme partners.

Funding Support From PCP

This funding support will be given to companies directly. The balance salary and course fees shall be borne by the companies.

Singapore Citizens and Permanent Residents below the age of 40

  • Salary Support - Up to 70% of monthly salary for PCP training duration (up to a maximum of S$4,000 monthly)
  • Course Fee Subsidy - Up to 70% course fees (subject to cap)
  • In-House Training: Up to S$15 hourly

Singapore Citizen Trainees Above 40 or Long Term Unemployed Singapore Citizen Trainees

  • Salary Support - Up to 90% of monthly salary for PCP training duration (up to a maximum of S$6,000 monthly)
  • Course Fee Subsidy - Up to 90% course fees (subject to cap)
  • In-House Training: Up to S$15 hourly

Get Funding Support For Your Next Hire In Singapore

If you would like to effective use the grants available to help you offset hiring cost, do feel free to get in touch with us for a non-obligatory consultation.

 

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Enhanced jobs growth incentive Singapore

Enhanced Jobs Growth Incentive - Up To 50% Salary Support For All New Local Hires.

Follow the budget announcement in 2021, the government has confirmed the extension of the Jobs Growth Incentive for a further 7 months from February 2021 to September 2021.

What Is Jobs Growth Incentive (JGI)?

The jobs growth incentive in a job creation initiative by the government to promote hiring of locals. (Locals refers to Singapore citizens and Singapore permanent residents).

When the employer increases their local hires over the period in February 2021, the employer is eligible for a support of 25% (or 50% for mature local hires aged 40 and above, persons with disabilities or ex-offenders) of the first S$5,000 gross monthly wages payable to the new local hires.

The S$5,000 gross monthly wage cap will be further increased fo S$6,000 for mature local hires aged 40 and above, persons with disabilities or ex-offenders starting March 2021.

The JGI support will be for up to 12 months for non-mature local hires and 18 months for mature, persons with disabilities or ex-offender local hires. The count starts from the month of hire.

If the employer fail to retain their existing local employees during the qualifying period, their JGI payout will be reduced.

Who Is Eligible for Jobs Growth Incentive?

In order to be eligible, employer must fulfil ALL of the following:

  • Employer is created on or before 15th February 2021
  • There must be be an increment in total local workforce
  • Increase in local employees earning of gross wages of at least S$1,400 per month

The employer must continuously fulfil the above criteria and make CPF contributions timely in order to get the full JGI payout.

How Do I Apply For JGI Payout?

No action is required on employers’ part. The inclusion and payout is automatic. JGI payouts will start from March 2021, payable in 10 trenches till Jun 2023.

 

Looking for local hires for your company? Before you start, know all the various hiring grants you might be eligible for! Come talk to us today!

For all HR matters, be sure to engage the help of a MOM licensed employment agency.

 

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Letter of Consent Application To Be Discontinued

Letter of Consent Application To Be Discontinued From 1st May 2021

Starting from 1st May 2021, all dependent pass holders in Singapore who wish to gain employment will have to apply for an applicable work pass, e.g. employment pass, S pass or work permit. This will be a major change from the prevailing practice whereby dependent pass holders can gainfully be employed with an approved letter of consent (loc) from the Ministry of Manpower.

Dependant Pass Holders Of LOC Allowed To Work Till Expiry Date

Dependant pass holders with an existing letter of consent will be allowed to continue to work till the date of expiry of the letter of consent. After which if they wish to continue, they will have to transit to the applicable work passes. The terms and conditions when applying for the passes will apply as per normal.

LOC Holders Who Are Business Owners May Be Exempted

If the dependant pass holder with a LOC is a business owner, he/she may be exempted from the above rule and be allowed to continue running their business. However, the following 2 conditions must be met:

  1. The dependant pass holder is a sole proprietor, partner, or company director with at least 30% shareholding in the company; and
  2. The business hires at least 1 Singaporean or Singapore Permanent Resident, paying at least the prevailing qualifying salary (currently at S$1,400) and receives CPF contributions for at least 3 months.

Dependant pass holders who currently do not meet the above criteria can continue to run their business on their existing LOC until its expiry, or apply for a one-off extension of their LOC until 30 April 2022 when next renewing their dependant pass. Thereafter, they will need to meet the criteria stated above in order to renew their LOC or obtain an applicable work pass to continue working in Singapore.

Dependant pass holders who wish to start a new business can apply for a LOC to do so, provided that they fulfil the criteria set out above.

Further details will be released on 1 May 2021.

If you need to apply for a letter of consent, do get in touch with a licensed employment agency in Singapore to assist you.

 

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Market Readiness Assistance (MRA) Grant - Take Your Business Overseas

Singapore based companies looking to expand their operations overseas can tap on the market readiness assistance (MRA) grant.

If your business is eligible, you can get support up to 70% of eligible costs, capped at S$100,000 per company per new overseas market. The cost will cover 3 main areas of

  1. Overseas market promotion of up to S$20,000
  2. Overseas business development of up to S$50,000
  3. Overseas market set-up of up to S$30,000

Eligibility Criteria

To apply for MRA, your company must fulfil the following:

  1. Company is incorporated in Singapore
  2. Company must have at least 30% local shareholding
  3. Group annual sales turnover of not more than S$100 million; or company’s group employment size of not more than 200 employees
  4. Applicant must not have more than S$100,000 in overseas sales within intended target overseas country in each of last 3 preceding years

You can apply for as many MRA as you require. Your company may also apply to open several new markets at the same time. However, do note that the same expenses claimed via another grant will not be eligible for MRA reimbursement.

The Market Readiness Assistance Grant will be valid till 31st March 2023. Claims are disbursed on a reimbursement basis.

Getting Ready To Apply

It is important to note that the company should first make the application for MRA before signing any contract or commencing any form of work.

The services the company are claiming for should be provided by an unrelated external third party.

The vendor should have a good track record of past completed projects to show. The work to be done by the vendor must be spelt out in detail with the accompanying cost breakdown. An expected timeline of completion and milestones should also be listed.

 

If you are interested to find out more about how to best tap on the Market Readiness Assistance Grant, we have a team of qualified management consultants that are ready to assist. Get in touch with us today!

 

 

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How To Start An Import and Export Business In Singapore?

How To Start An Import and Export Business In Singapore?

Being a country with one of the busiest trading hubs in the world and the gateway to Asia, Singapore is probably one of the prime locations to start an import and export business.

Let us explore how you can get started doing an import and export business in Singapore.

Start A Trading Company

The first thing on the agenda will be to register and start a company in Singapore with ACRA. This is a rather straightforward process and if you are not familiar, you can always engage an ACRA registered filing agent to help you with the incorporation of a new company. The important thing to note is that under the company’s business activities, choose the relevant SSIC code which best describes your business.

Open An Account With Singapore Customs

Once you have your company successfully set up, you will receive the UEN number of the company. With this, you can then log onto the website of Singapore Customs to apply for a customs account.

With the account activates, you may then start to apply for custom permits. You can either opt to do it yourself or to engage the help of a declaring agent. As the procedure can be rather troublesome, most businesses will pay a declaring agent and have the work cut out for them.

It is also a must for the company to have ready an operating bank account whereby the custom duties or penalties will be paid from directly.

Importing Goods Into Singapore

When importing goods into Singapore, you are obliged to make a declaration to Singapore Customs.

This is done by first obtaining a customs import permit. Do check if your goods being imported are controlled items as additional clearance will be required.

Goods imported into Singapore for consumption will be subjected to Goods and Services Tax (GST) at 7% as well as duties payable on selected items (intoxicating liquors, tobacco products, motor vehicles and petroleum products).

Exporting Goods Out of Singapore

To export goods out of Singapore, you must make a declaration and obtain a customs export permit. GST and duties are not levied on export goods.

You should also need to check if the goods you are exported are controlled items. If so, you will be required to get additional clearance before you can export.

Transhipping Of Goods via Singapore

Tranship refers to the movement of goods between 2 places via Singapore as an intermediate port of call. As the goods are not imported into Singapore for consumption, they are not subjected to GST.

Nevertheless, you will still be required to obtain the necessary custom permit and check for controlled items status before you can proceed.

Certificates Of Origin

The certificate of origin helps to confirm the origin of the goods exported. For many businesses, the Singapore label helps to give consumers confidence in the product.

Certificates of origin are issued by Singapore Customs or any of the approved organisations. There are a set of rules that must be adhered to before the certificate of origin will be issued. Making a false declaration is an offence under the Regulation of Imports and Exports Act (RIEA).

Can Foreigners Start Import Export Business in Singapore?

The simple answer is yes. There are no additional conditions imposed upon foreigners for wanting to start an import and export business in Singapore.

 

The above article serves to give a general overview of starting an import and export business in Singapore. There are a lot more intricacies involved due to the varying nature of different goods. The good thing is you can always pay for freight forwarders or agents to handle the customs applications. If you are keen to get started, do check with us today to find out more!

 

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Financial Statements Explained

Financial Statements Explained - Balance Sheet, Profit and Loss Statement, Cashflow Statement

As a business owner or investor, it is important to keep a close tap on the company's financial health. This allows you to know how profitable the business is and also if the business has the ability to meet its near term debt obligations. As the business seeks financing or government grants, the institutions will also require the business to furnish their profitability report for the past years.

By doing regular book keeping and keeping proper accounting records of your business activities, you will be able to generate periodic financial statements. The holy trinity of financial statements are namely the balance sheet, profit and loss statement and cashflow statement.

Balance Sheet

The balance sheet is akin to taking a snapshot of the business. It shows the financial health of the business at any given point in time. On the balance sheet, you will see 3 main categories, namely assets, liabilities and equity.

Total Assets = Total Liabilities + Total Equity

Let me do a simple overview of each of these 3 categories.

Assets are anything of value or resource owned by the company. Common items include cash in banks, inventory, trade receivables, plants, property and equipments.

Liabilities are monies owed by the company to external creditors. Common items include trade payables, short and long term loans.

Equity is a sum of the paid up capital and the retained earnings of the company.

Ideally, the balance sheet should reflect a strong positive net asset. This will mean that company has no issue meeting their debt obligations and there are still surplus generated to be distributed amongst the shareholders.

Profit and Loss Statement

The profit and loss statement shows you the profitability of the business over any given period of time. Usually, we generate profit and loss statement for review on a monthly, quarterly and yearly basis. On the profit and loss statement, you will see how much sales the business generates and also what are the major expenses it has incurred in the operation. What you want to see if a growing net profit number over the years.

Total Sales - Cost of Sales - Expenses = Net Profit (before tax)

By comparing profit and loss statement over different periods, you will be able to tell if the business is actually growing or dying. This is usually of particular interest to investors who are looking to come on board.

You will also need to refer to the profit and loss statement for your early corporate tax reporting purposes.

Cashflow Statement

Last but not least, cashflow statement let you verify what is being shown on the profit and loss statement. Especially for small business, often times, the lack of cashflow is the biggest problem faced. The business may show a very impressive profitability for the year but the inability to get paid on time may result in negative cashflow for the business.

The cash flow statement measures how well a company manages its cash position, meaning how well the company generates cash to pay its debt obligations and fund its operating expenses.

To sum it up, there is no point in showing profitability when you are not able to stay afloat to pay off expenses in the near term. Those receivables will eventually become bad debts.

 

To fully stay on top on how your business is doing, it is important to review your financial statements regularly. Identifying potential red flags early can help you go a long way. Need help with your company's financial statements? Consider engaging the service of a professional accountant in Singapore!

 

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Foreigners’ Guide To Setting Up Company In Singapore

Foreigners’ Guide To Setting Up Company In Singapore

If you are a foreigner looking to set up your company in Singapore, this article will walk you through the process and requirements.

Before you get started, it is important you consider the various corporate structure set up available. As a foreigner, you can consider setting up your business via a exempt private limited by shares company or a partnership. For today’s article, we will be focusing on the requirements and steps to set up a exempt private limited by shares company.

1. Determining the Company Name

Start first by deciding on a suitable name for your company. Avoid using contentious words such as names of famous people or countries or anything that may potentially infringe on other’s trademarks. Doing so may result in rejection or delay in approval and this will in turn delay the time required to get your company up and running.

We always recommend our clients to come up with 3 preferred choices and apply to have any 1 of names approved.

Once this is done, you may then be able to proceed to incorporating the company.

2. Determining the Type Of Company

You can choose between a private company limited by shares, exempt private company, public company limited by shares or a public company limited by guarantee. This is very much dependent on the number of shareholders the company will have and the type of shareholders (whether if there is any company whom is a shareholder).

If you are setting up a charity or non-profit organisation, then your choice will be to set up a public company limited by shares.

For most of our clients, exempt private company will be the best fit for their purpose. You can have up to 20 shareholders whereby all of the shareholders must be natural persons.

3. Appointment of Directors and Company Secretary

In order for the company to function, the company must have onboard at least 1 director and 1 company secretary.

A company director is an officer appointed to run the company on behalf of the shareholders. He/She must at all times, act in the best interest of the company.

The director must be at least 18 years of age and in good legal and financial standing.

Do note that the company must have at least 1 local resident in Singapore as a director. Local resident refers to someone who is a Singapore Citizen, Singapore Permanent Resident, Entrepass holder or Employment Pass holder.

As a foreigner setting up a company in Singapore, you will need to appoint at least 1 director who is a local resident in Singapore. If you do not have anyone suitable, you can decide to engage a nominee director service.

Within 6 months, the company must also appoint someone as a company secretary. The company secretary must be a natural person who is locally residing in Singapore.

Someone who is serving as a director may also take on the role of a company secretary for the company, provided there are at least 2 directors in the company.

If you engage us for your company incorporation, we will serve as your company secretary.

4. Shares and Shareholders

The company requires at least 1 shareholder. As a foreigner, you are allowed to be the 100% sole shareholder of the company.

You need to decide on how many shares to be issued upon incorporation. Minimum is SGD $1.

When you get more investors in the future, you can increase the issued shares of the company to be distributed out to vested parties.

5. Registered Office

All local companies in Singapore must indicate a registered office with a local address. This is the place whereby all important correspondences can reach the company and also where all the important documents and registry of the company are kept.

This registered address must be accessible to the public during office hours. It may or may not be the same address whereby your business is operating.

6. Company Constitution

The constitution is a legal document that specifies how the company will be governed, rights and obligations of the various stakeholders of the company. Unless there are specific needs, we recommend the usage of the model constitution provided by ACRA.

7. Financial Year End

You will also be required to determine the financial year end of the company. This date will decide when your company have to do annual return filing. This can be changed subsequently.

8. Business Activity

During incorporation, you will be asked to state down the business activities whereby your company will be engaging in. There is a pre-determined list that you can choose from. For certain trades, you may be required to secured additional licenses from the relevant government department before you can begin operating.

9. Company Bank Account Opening

The opening of a company bank account can only be done after the company has been successful set up.

For foreign owned companies, the checks conducted by the banks are a lot more rigorous. But nevertheless, it can be done and many of our foreign clients have successfully opened their company bank account.

Getting Ready To Submit Application To Incorporate New Company

Before the submission proper, it will be important that you first consider the points stated above. Thereafter, you should have the personal documents of the stakeholders ready. These include passports, address verification etc.

As a foreigner, you will need to engage a registered filing agent to do the incorporation on your behalf. 

If you would like to find out more about the cost of setting up a company in Singapore, get in touch with us today!

 

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