Singapore is a wonderful place to do business, and the government is very welcoming to foreign companies big and small who want to contribute to the city-state’s ongoing economic miracle. It’s quite simple to register a business in Singapore, and the restrictions are fairly light, but there are still some things that you need to be diligent about, and the foremost is taxes.
While Singapore’s tax structure is very business-friendly when compared to many nations, it is also quite strict. If you are a foreign entrepreneur planning to run a small business there it is highly advisable that you make use of the expert services of an accounting company in Singapore that will make sure there are no discrepancies in your finances that could cause you trouble in tax season!
All of the money a small business earned in a particular year will be taxed by the government, a process regulated by the Inland Revenue Authority of Singapore, or IRAS. It is important as a small business owner that you understand that Singapore tax laws are highly ethical and strictly enforced, and that the corporate tax filings of all small businesses in the city-state are meticulously inspected to prevent tax fraud or incorrect tax filings.
Let’s now examine the steps that your small business must take to file business tax returns in Singapore:
1. It’s critical that you keep your business’s financial records and documents in careful order, organization is an absolute requirement during tax season. You will need to ensure that all of your financial documents and records are readily accessible and available for potential inspection.
The following are the financial essentials you must prepare in advance over the fiscal year:
• Your previous year’s company tax return
• Your taxpayer ID number
• Your bank account & credit card statements
• All relevant accounting information needed for accurate filing
Organizing all of these records can be problematic considering the large number of transactions and statements that take place throughout the year, so we will stress again that using a Singapore based accounting service that knows the ropes will help you enjoy a trouble free tax season!
2. Understand what tax deductions your small business can take- It’s important that you be aware of all the possible tax write-offs you are able to claim during your filing so you don’t end up paying in excess of what you actually owe. These deductions will vary based on the type of small business you own, but the following are some of the most common money-saving tax deductions you can claim, to give you an idea:
• Business-related insurance
• Office and commercial space rent
• Office supplies, equipment, and machinery
• Vehicle and vehicle maintenance expenses
• Business meals such as client dinners, etc.
Keeping a highly organized overview of your business’s spending will allow you to easily identify available write-offs and save you a lot of money!
3. Be sure to file your business taxes by the correct deadline. Every business in Singapore is required to file its annual tax return with the IRAS by November 30. The profits accrued in the financial year ending in the prior year will form the basis for the tax return filing in the present year.
Be warned that missing the deadline and not filing for an extension has major negative implications that can cause big trouble for your company’s reputation as well as its finances! The penalties might take the form of hefty fines of up to $50,000, or in some extreme cases, imprisonment of up to 5 years! Make absolutely sure you follow the guidelines!
While Singapore is business friendly, and even lenient toward businesses overall, taxes are a serious issue! Be sure to get it right so you can continue to enjoy being part of this thriving economy!
