Archive for the ‘Tax’ Category
Singapore is a rapidly growing hub for business in Asia. Many entrepreneurs choose Singapore because of its effective legislation that protects intellectual property while facilitating business ventures.
Furthermore, Singapore is favourably located at the centre of the expanding Asia economy. Given the favourable location, businesses benefit from the productive alliances with various huge economies while being to maintain the name of a prestigious and reliable jurisdiction. By executing a fair and competitive tax rates, Singapore has uphold its attributes of being the ideal place for setting up a business. For all these reasons Singapore has taken the forefront over the past decade as a globally recognized business nation.
All in all, the main reason behind why Singapore has been so popular with businessmen and corporate entities is that of its cooperate tax policy.
Singapore’s Corporate Tax
In Singapore, foreign and local companies pay tax equally.
This may sound unfavourable at first glance but in fact, Singapore favours its own businesses as it does offshore companies, thus the entrepreneurial culture that exists within Singapore.
All income from Singapore are taxed– income remitted in Singapore or derived in Singapore. The latter means that even if the business is incorporated in Singapore but the transactions is mostly done in other countries the income remitted in other countries will not be taxed. For some practical reasons, businessmen who wants to set up a company in Singapore are advise to seek a professional guidance regarding Singapore tax policy for them to be able to adhere to the tax incentives and policies accordingly.
Because of the corporate tax policy of Singapore which address issues and vital needs of incorporation, Singapore has gain a lot of respect from businessmen around the world. The Singapore government has implemented tax exemptions for new companies, in order to facilitate the process of starting and growing a business from scratch. It is vital to take note that most start-up companies encountered several concerns and costs, including registration costs, costs in employment, marketing, building and other aspects necessary to start up a business. Unfortunately, not all countries like Singapore understand the need to provide solutions to alleviate concerns and cost of newly built corporations.
In Singapore, there is an exemption of tax for a newly incorporated Singapore for the first annual profit of S0,000 for the first three years of business. This exemption applies only to companies that are (i) tax residents in Singapore (ii) have 20 shareholders or less (iii) at least 10% of its shareholders are individuals. For companies that do not comply with these criteria, although full tax exemption is not available for the first S0,000 of profits, partial exemption still applies. Companies that do comply with the full exemption, also benefit from partial tax exemption on the next S0,000 of profits. It involves a 50% tax exemption on a maximum of S0,000 of profits for partial exemption and involves S0,000 of profits for those that benefit from full exemption. This works out to a tax rate of approximately 8.5% on the first S0,000 of profits, an extremely low rate for an OECD member country.
Singapore provides a tax environment that is highly favourable to company setup without causing detriment to the social and economic environment the Singapore government provides for its people. With such low tax rates working effectively in a nation that maintains prestige, efficiency and high quality of life, many may begin to question the need for such high tax rates in other nations. Ultimately, tax benefits, amongst Singapore’s many other impressive facets, provides a key selling point for entrepreneurs. No wonder, Singapore has continued to be a vital business location not just in Asia but also worldwide.
Singapore is a rapidly growing hub for business in Asia. Many entrepreneurs choose Singapore because of its effective legislation that protects intellectual property while facilitating business ventures.
Furthermore, Singapore is favourably located at the centre of the expanding Asia economy. Given the favourable location, businesses benefit from the productive alliances with various huge economies while being to maintain the name of a prestigious and reliable jurisdiction. By executing a fair and competitive tax rates, Singapore has uphold its attributes of being the ideal place for setting up a business. For all these reasons Singapore has taken the forefront over the past decade as a globally recognized business nation.
All in all, the main reason behind why Singapore has been so popular with businessmen and corporate entities is that of its cooperate tax policy.
Singapore’s Corporate Tax
In Singapore, foreign and local companies pay tax equally.
This may sound unfavourable at first glance but in fact, Singapore favours its own businesses as it does offshore companies, thus the entrepreneurial culture that exists within Singapore.
All income from Singapore are taxed– income remitted in Singapore or derived in Singapore. The latter means that even if the business is incorporated in Singapore but the transactions is mostly done in other countries the income remitted in other countries will not be taxed. For some practical reasons, businessmen who wants to set up a company in Singapore are advise to seek a professional guidance regarding Singapore tax policy for them to be able to adhere to the tax incentives and policies accordingly.
Because of the corporate tax policy of Singapore which address issues and vital needs of incorporation, Singapore has gain a lot of respect from businessmen around the world. The Singapore government has implemented tax exemptions for new companies, in order to facilitate the process of starting and growing a business from scratch. It is vital to take note that most start-up companies encountered several concerns and costs, including registration costs, costs in employment, marketing, building and other aspects necessary to start up a business. Unfortunately, not all countries like Singapore understand the need to provide solutions to alleviate concerns and cost of newly built corporations.
In Singapore, there is an exemption of tax for a newly incorporated Singapore for the first annual profit of S0,000 for the first three years of business. This exemption applies only to companies that are (i) tax residents in Singapore (ii) have 20 shareholders or less (iii) at least 10% of its shareholders are individuals. For companies that do not comply with these criteria, although full tax exemption is not available for the first S0,000 of profits, partial exemption still applies. Companies that do comply with the full exemption, also benefit from partial tax exemption on the next S0,000 of profits. It involves a 50% tax exemption on a maximum of S0,000 of profits for partial exemption and involves S0,000 of profits for those that benefit from full exemption. This works out to a tax rate of approximately 8.5% on the first S0,000 of profits, an extremely low rate for an OECD member country.
Singapore provides a tax environment that is highly favourable to company setup without causing detriment to the social and economic environment the Singapore government provides for its people. With such low tax rates working effectively in a nation that maintains prestige, efficiency and high quality of life, many may begin to question the need for such high tax rates in other nations. Ultimately, tax benefits, amongst Singapore’s many other impressive facets, provides a key selling point for entrepreneurs. No wonder, Singapore has continued to be a vital business location not just in Asia but also worldwide.
By investing in QNUPS, the expats can make sure that their lifelong income and amassed wealth will be passed on their family members free from tax deductions. These schemes come with a host of additional benefits which help the retirees plan their taxes efficiently. Firstly, while you can start putting money into the scheme as early as when you are 18 years old, with no maximum age limit you can continue to invest in the scheme even after retirement as long as you want. Unlike other pension schemes, the amount you invest is not limited to what you earn through employment only. Instead you can invest funds obtained from any source and also use the scheme to protect valuable possessions. Moreover, with no maximum limit on the investment you can keep on adding to your asset and create a huge legacy which can be passed on to your beneficiaries.
Besides being exempted from IHT, QNUPS also offers protection to your asset from local death taxes, succession laws as well as wealth taxes. Hence, your investment can grow free from taxes and can even be inherited in full. These schemes not only enable full control over your assets, but by avoiding local succession laws, they ensure that you shall choose who would inherit your assets. With the government announcing a rise in the rate of capital gains tax, the higher rate taxpayers can now invest and grow their assets and pass it on to their heirs without any tax cuts.
Like any other pension scheme, you can obtain an income from QNUPS too. You can draw this income once you reach the age of 55, before which you can take small loans from your savings. While you can continue investing for life, you can also take out a lump sum from your savings, the remainder of which would be transferred to your beneficiaries in the event of your death. The HMRC also offers certain flexibilities which allow retirees over the age of 80 to invest in bulk amounts and create tax efficient advantages for their family members and themselves.
When you work in an office, retail establishment, or other job in which you get a steady paycheck, you most likely do not have to fret about earnings tax planning. As long as you could have your dependents and your exemptions set accurately, your organization ought to take out enough money each week to have your taxes paid by the end of the year. Chances are you’ll even get a refund. Nonetheless, should you do business from home, freelance in any way, or are paid strictly in cash, you have to ensure you have enough money each April to pay your taxes for the prior year.
Revenue tax planning generally is a bit difficult. If you do not make loads, you could by no means have to worry about paying in, but it’s best to never assume that this is not going to be the case for you. If you shouldn’t have taxes taken out of your earnings, there is always a chance that you will make enough to should pay in. The tax laws change every year, and those that keep the same are complicated. If you happen to can afford it, it is likely to be wise to have an accountant working for you in order that you know what you are doing and to ensure you have what you need to pay your taxes.
Paying an accountant shouldn’t be all the time necessary. If you want to take care of earnings tax planning on your own, you need to be thrifty and be good at saving. You have to assume that you are going to pay in, and that what you’re going to pay in isn’t one thing you might have sitting round as cash on hand or in a savings or checking account. You have to have an account that you just use all year long only for taxes and tax planning. You should in all probability save about one quarter to 1 third of what you earn in this account. That should guarantee you will have loads of cash to pay your taxes. Anything left over is a bonus!
For those who live in a house where one in all you will get a paycheck with taxes taken out each week, and the other works freelance, you will have just a little extra leeway. That is only as a result of a few of what the partner with the paycheck pays in will counteract what you’ve got earned in case you are making below a certain amount. Which means that they may have been due a refund, but that amount goes to pay your taxes. Whereas this sounds like a bummer, you are mainly breaking even moderately than having to pay in. That may be a good factor in revenue tax planning. It does not all the time work out this manner, however this break up household means of being paid might help it damage much less when the IRS wants money.
Remember that taxes are high in some cases, but if you do not use some revenue tax planning and save what you must pay in, you’ll pay a whole lot extra in case you are late or do not pay at all. The IRS can tack on all kinds of fees and penalties which are going to harm and might double and even triple what you owe. When you find that you do not have enough to pay come time to file taxes, speak to the IRS a couple of fee plan. They are going to usually work with you if you reach them earlier than you’re late to let them know you need some help.
In this article we’re going to look at the main ways of tax planning with the use of family members…
Paying wages to your spouse/civil partner and children through your Business
Your spouse/civil partner may not have any income at all, and most certainly your children don’t. This means their personal allowance is being wasted every year. Even children are entitled to a personal allowance.
If the amount up the level at which national insurance becomes payable of £5,715 in 2010/11 was paid to them as a wage, they would pay no tax on it and your business profits could be reduced.
Please note that children under the minimum school leaving age can only work a limited number of hours per week and local by-laws may restrict them further.
If you pay just 20% income tax and 8% Class 4 National Insurance on your business profits this would save you £1,600 for 2010/11 on each salary.
And how many children do you have?
STOP! It’s not quite that simple. To pay wages like this you need to follow the following rules…
It must be for work actually done. Now it’s going to be tough to argue your 2-year-old son is working for you but many spouses/civil partners do work and mature children may also help out. Maybe they do the books, answer the phone, stuff envelopes, etc. Keeping out of your way so you can get on doesn’t count, as valuable as it may be. Draw up a list of their responsibilities to help your case. At present they do it for free because it’s a family business but they can be paid for it. If you make your spouse a director, all the responsibilities imposed by Company Law on taking on this role must be worth something. You can also pay a family member a wage where you have a property that you rent out and the individual manages the properties. It’s reasonable to pay them a salary commensurate with what they actually do. How much would it cost to get someone in to do that job? The national minimum wage level is at least a good place to start but a higher wage can be paid if you can justify it.
The amount must actually be paid. It’s no good the accountant just putting it through the accounts at the end of the year. Pay it, ideally through a bank account rather than cash so it’s easy to prove it’s been paid and record it in your accounting records.
Comply with any PAYE procedures such as getting a P46 signed, completing an end of year PAYE forms as you would do for normal staff. It may also help keep up their National Insurance Contribution record even if they don’t pay National Insurance on the salary.
Making your spouse/civil partner a partner or shareholder in your business to reduce your tax bill
This has been very topical with the so-called Arctic Systems case involving Mr & Mrs Jones. The case was originally won by the Revenue but on appeal to the High Court has been won by the taxpayer and finally on appeal at the House of Lords has been won by the taxpayer and that decision is now final.
The basic idea is that income that is created by your efforts in the business is paid to your spouse/civil partner who pays lower rates of tax than you do, thus saving tax and NI for the whole family.
For example, for 2010/11 if your self-employed business had profits of £70,000, then £43,875 is taxed at basic rates but the remaining £26,125 of this is taxed at 40%, plus 1% NI. So by introducing your spouse/civil partner into the business they can pay basic rate tax on profits that would otherwise be taxed at higher rates.
As with many things in the tax world, its not always that simple. The major obstacle the Revenue has been trying to put in the way is what is known as the ‘settlements legislation’.
In a nutshell this says if you give something to your spouse which is not wholly or substantially a right to income (meaning that the subject of the gift has a capital value as well as an income producing element), and income that does arise will be treated as the spouse’s income for tax purposes.
However, after a long running battle in a well-known tax case known as Arctic Systems it is at present law that if you give your wife some ordinary shares in your company or perhaps a share in your partnership, this is not just a right to income but it also contains capital rights, as by owning the share they become entitled to a proportion of the assets when the business is closed down and have voting rights. Therefore the share is not just a right to income.
The actual facts of this case that was finally won by the taxpayer at the House of Lords cannot now be appealed are as follows…
Federal Solar Tax Credits Extended through 2016 for Off-Grid and Grid tie Systems!
On Wednesday, October 1, 2008, the Emergency Economic Stabilization Act of 2008 was signed. This act is very good news for solar customers since it contains to renewable energy legislation. Thirty per cent of commercial solar investment tax credit was extended to commercial and residential installations through the year 2017.
What this means is that the previous ,000 cap for residential solar installations will be eliminated under this new legislation. Starting January 1, 2009, if you purchase a residential solar electric system, you will be eligible for a 305 tax credit which includes installation.
You can even purchase your system now and wait till after Jan.1 2009 to install it, thus taking advantage of the 30% credit. You can use a sizing calculator to figure out your system needs.
You can always find more information on the rebates and financial incentives available in your state from the following resources:
http://www.dsireusa.org is a helpful guide to energy tax credits.
DSIRE list of Rules, Regulations and Policies lists all the net metering and licensing laws for each state as well as local and the utility companies.
They also list loans, grants, rebates, etc. that are offered by state, federal, non-profit, utility and local financial programs. This is listed for all states.
In order to get your federal tax credit, download the IRS form 5695, ‘Residential Energy Credits’ from http://www.irs.gov, then simply fill it out and file it with IRS.
The form that is available right now is (form 5695) which is for 2007, with the ,000 cap in place, However, with this new legislation, we are looking forward to much more specific information to be forthcoming.