Understanding IRAS:
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Navigating the complexities of tax regulations is crucial for businesses to maintain financial stability and maximize their profits. In Singapore, the Inland Revenue Authority of Singapore (IRAS) is a crucial governing body responsible for administering tax policies and regulations. IRAS sets and enforces tax rules that businesses must adhere to in order to ensure compliance with Singapore’s tax laws. These rules outline the obligations and requirements for businesses in areas such as tax filing, deductions, exemptions, and reporting.
IRAS plays a significant role in supporting businesses by providing clarity and guidance on tax matters. It educates and assists businesses in understanding their tax obligations, helping them navigate the complexities of Singapore’s tax system. IRAS also offers various schemes, incentives, and exemptions that businesses can leverage to optimize their tax strategies and reduce tax burdens.
IRAS TAX REVENUE FY2021/22
60.8 billion in tax revenue was collected for FY2021/22
| COLLECTION BY TAX TYPES | AMOUNT | PERCENTAGE |
|---|---|---|
| Corporate Income Tax | $18.2B | 30% |
| Individual Income Tax | $14.2B | 23% |
| Goods and Services Tax (GST) | $12.6B | 21% |
| Stamp Duty | $6.8B | 11% |
| Property Tax | $4.7B | 8% |
| Betting Taxes | $2.3B | 4% |
| Withholding Tax | $1.9B | 3% |
| TOTAL | $60.7B | 100% |
By implementing and enforcing tax rules, IRAS fosters a fair and transparent tax environment, promoting compliance and ensuring a level playing field for businesses. It enables businesses to focus on their operations while fulfilling their tax obligations in a responsible and efficient manner. In this blog, we will provide insights into common tax deductions and exemptions offered by IRAS, supported by relevant statistics. Additionally, we will highlight how Mercans can assist businesses in optimizing their tax strategies to ensure compliance and maximize tax benefits.
Productivity and Innovation Credit (PIC)
The PIC scheme encourages businesses to invest in productivity-enhancing activities and innovation. Eligible businesses can enjoy tax deductions or cash payouts for qualifying expenditures. According to IRAS statistics, from 2011 to 2017, over 97,000 PIC claims were approved, resulting in more than SGD 4 billion in tax benefits.
How Mercans Can Help
Mercans can assist businesses in identifying eligible expenditures, preparing documentation, and optimizing claims under the PIC scheme. Our expertise ensures compliance with IRAS requirements, maximizing tax benefits for businesses.
Double Tax Deduction (DTD) for Internationalization
Under this scheme, businesses can claim a double tax deduction for qualifying expenses incurred while expanding overseas. This encourages businesses to explore international markets. In 2019, over 8,700 DTD claims were made, resulting in tax savings of approximately SGD 568 million.
How Mercans Can Help
Mercans offers comprehensive tax planning and advisory services, assisting businesses in navigating the complexities of international tax regulations. We ensure businesses maximize their double tax deduction claims while ensuring compliance with IRAS guidelines.
Start-up Tax Exemption (SUTE)
SUTE aims to support newly incorporated companies. It provides full tax exemption on the first SGD 100,000 of chargeable income and a partial tax exemption on the next SGD 200,000. In 2019, IRAS granted SUTE to approximately 6,500 newly incorporated companies.
How Mercans Can Help
Mercans provides expert guidance to start-ups, helping them understand the eligibility criteria and application process for SUTE. We assist in optimizing tax structures to maximize the benefits for new businesses.
Research and Development (R&D) Tax Incentives
IRAS offers tax incentives to encourage businesses to invest in R&D activities. Qualifying expenses, such as manpower costs and consumables, are eligible for enhanced deductions or cash payouts. In 2019, over 1,600 companies claimed R&D tax benefits, amounting to SGD 850 million.
How Mercans Can Help
Mercans assists businesses in identifying eligible R&D activities, preparing robust documentation, and optimizing tax claims. Their expertise ensures compliance with IRAS guidelines, maximizing the benefits for businesses engaged in R&D.
Bottom Line
Understanding the tax deductions and exemptions offered by IRAS is essential for businesses to optimize their tax strategies and maximize financial benefits. The statistics presented demonstrate the significant tax savings and benefits that businesses have achieved through IRAS schemes. By partnering with Mercans, businesses can leverage their expertise in tax planning, compliance, and optimization to navigate the complexities of IRAS regulations effectively. Our’ comprehensive services ensure businesses stay compliant, minimize tax liabilities, and unlock the full potential of tax benefits offered by IRAS, ultimately contributing to their growth and success.