Tag Archive: Tax relief

1. Singapore’s Tax Relief for Startups: A Boon for Entrepreneurs?

   11 September 2024 9:23 am Leave a Comment

   Singapore’s Tax Relief for Startups – Introduction

   Singapore has become a global hub for startups and entrepreneurs due to its business-friendly environment, strategic location, and supportive tax policies.

   To further boost the growth of new businesses, Singapore offers several tax relief programs designed to help startups during their early years.

   These tax reliefs make it easier for entrepreneurs to focus on growing their businesses without worrying about excessive tax burdens.

   What Tax Relief Programs Are Available for Startups?

   Singapore has introduced several tax relief programs specifically aimed at newly incorporated companies. The two main tax relief schemes are:

   1. Startup Tax Exemption (SUTE): Under this scheme, qualifying new companies are exempt from tax on the first SGD 100,000 of their chargeable income for the first three years. This gives startups a significant financial advantage during the critical early years when they may not be generating large profits.
      • For income above SGD 100,000, companies receive a 50% exemption on the next SGD 200,000. This means that a startup could potentially pay very little tax during its initial years, allowing it to reinvest more money into growing the business.
   2. Partial Tax Exemption (PTE): For companies that do not qualify for the SUTE scheme, there is the Partial Tax Exemption. This program allows companies to receive a tax exemption on the first SGD 10,000 of chargeable income and a 50% exemption on the next SGD 190,000. This program is available to all companies and offers ongoing tax relief even after the initial three-year startup period.

   Who Can Benefit from These Tax Relief Programs?

   To qualify for the Startup Tax Exemption (SUTE) scheme, companies must meet certain conditions:

   • They must be incorporated in Singapore.
   • They must be a tax resident in Singapore for the relevant Year of Assessment (YA).
   • The company must not have more than 20 shareholders, and at least one shareholder must hold 10% or more of the issued shares.

   It’s also important to note that the SUTE scheme does not apply to companies engaging in certain industries, such as property development or investment holding.

   The Partial Tax Exemption (PTE) scheme, however, is open to all companies, regardless of their size or shareholders, making it a flexible option for businesses that don’t qualify for the SUTE scheme.

   Why Are These Tax Reliefs Important for Startups?

   Starting a business often involves significant financial challenges, especially during the first few years.

   These tax relief schemes help reduce the tax burden on startups, allowing them to reinvest their profits back into the business.

   This can be particularly beneficial for tech startups, which often require significant capital for research and development (R&D) before they start generating profits.

   By offering tax relief, Singapore encourages innovation and entrepreneurship, helping businesses grow faster and contribute to the country’s economy.

   Conclusion – Singapore’s Tax Relief for Startups

   Singapore’s tax relief programs for startups provide a strong incentive for entrepreneurs to set up their businesses in the country.

   The Startup Tax Exemption and Partial Tax Exemption schemes reduce the financial burden on new companies, allowing them to focus on growth and innovation.

   For entrepreneurs looking to launch a business in Asia, Singapore’s supportive tax environment, combined with its strategic location and infrastructure, makes it an ideal place to start and grow a business.

   Final thoughts

   If you have any queries about this article on Singapore’s Tax Relief for Startups, or tax matters in Singapore at all, then please get in touch.

2. Digital Games Tax credit announced

   6 December 2022 7:26 am Leave a Comment

   Introduction

   Ireland’s Minister for Finance recently formally launched the Digital Games Tax Credit.

   The measure was originally provided for in Finance Act 2021 subject to commencement order and, importantly, EU State Aid approval.

   The European Commission has now provided that approval and  a commencement order has now been passed.

   It is expected that qualifying certificate holders are able to avail themselves of the relief from 1 January 2023.

   Digital Games Tax Credit – What is it?

   The credit takes the form of a refundable corporation tax credit in respect of qualifying expenditure on:

   • the design,
   • production; and
   • testing of a digital game

   The Digital Games Credit is available to digital gaming development companies that are

   • resident in Ireland, or
   • resident in the EEA and have a branch or agency in Ireland

   The rate of the credit is 32% of eligible expenditure. This is capped at a limit of €25m per project. A minimum project spend of €100,000 also applies.

   Qualification

   There are a number of requirements that must be satisfied in order to qualify for the credit, including:

   • Nature of the game;
   • Qualifying expenditure;
   • Certification;
   • Certification types and claim period;

   Nature of game

   The game must be one which integrates digital technology, can be published on an electronic medium, is interactive/built on an interactive software and incorporates as least three of the following elements:

   • text;
   • sound;
   • still images; and
   • animated images

   The digital game should not be produced solely / mainly as part of a promotional campaign or be used as advertising for a specific product.

   Further, the game must not be produced solely or mainly as a game of skill or chance for a prize comprising money or money’s worth.

   Qualifying expenditure

   There is a requirement for expenditure to be incurred directly by the digital games development company on the design, production and testing of a digital game.

   The categories of expenditure that may qualify for relief include:

   • employee related costs;
   • capital costs of assets used for the development of the game;
   • costs of renting or leasing equipment;
   • costs of consumable items, software, copyright and other intellectual property rights; and
   • sub-contractor payments subject to a €2m limit.

   Certification

   A company must obtain certification from the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media.

   When deciding whether it will grant such a certificate then the Minister will have regard to a matrix of cultural requirements. A points system is applied in assessing the merits of the application.

   Under the rules, there is a provision for the issuing of:

   • an interim certificate (issued to companies still in the process of game development); or
   • final certificate (issued to companies that have completed development of the game).

   Making a claim for the Digital Games Credit

   Where a company has been issued with an interim certificate then the credit can be claimed within twelve months following the end of the accounting period in which the expenditure was incurred.

   Alternatively, where a company has been issued with a final certificate, the company may make a final claim after deducting any amounts that have already been received under an interim certificate.

   Process for claiming relief

   The Digital Games Credit is first offset against any corporation tax liability company for the relevant accounting period.

   However, where there is no corporation tax liability or if the credit takes the company into a loss-making position, then the Company may make a claim for a cash refund.

   If you have any queries about the Digital Games Credit or Irish tax matters more generally, then please do not hesitate to get in touch.

   The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article