CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Singapore Issues Guide On Taxation Of Start-Up Costs

Singapore Issues Guide On Taxation Of Start-Up Costs

by Mary Swire, Tax-News.com, Hong Kong

31 July 2014


On July 29, the Inland Revenue Authority of Singapore (IRAS) issued an e-Tax Guide to provide some guidance on determining the date on which business is deemed to commence for tax purposes.

The tax code in Singapore does not provide any definition prescribing when a business is regarded as having commenced. According to the guidance, the date of commencement of a business depends on the facts of each case.

Generally, IRAS states, a business may be regarded as having commenced when it has established its profit-making structure and started its first commercial activity. Once the date of commencement of business is ascertained, all expenses incurred prior to this date are pre-commencement expenses and do not qualify for a corporate income tax deduction.

It adds that, in determining the date of commencement of business by a taxpayer, the Comptroller of Income Tax (CIT) requires disclosure of a description of the taxpayer's main business and the activities carried on by the business; a description of its profit-making structure; whether the company has begun its day-to-day business operations; a chronological list of key events leading up to the profit-making structure being operationally ready; and a date on which the taxpayer considers business commenced.

The Guide explains that the CIT will distinguish activities that are merely preparatory or preliminary in nature and that are undertaken by the taxpayer before it is in a position to derive income from those conducted by the business on a day-to-day basis. Such preliminary activities may include signing a business contract, obtaining a loan to build infrastructure for the business, and the construction of that infrastructure.

The Guide also discusses a concession for enterprise development, which was introduced in 2004. Under this concession, a business is treated as having commenced its operations on the first day of the accounting year in which it earns its first dollar of business receipts (i.e. the deemed date of commencement of business). As such, revenue expenses incurred in that accounting year, including those incurred prior to the day on which the business earns its first dollar of receipt, will be deductible for tax purposes.

In addition, with effect from 2012, the concession for enterprise development was enhanced to allow a deduction for revenue expenses incurred one year prior to the deemed date of commencement of business.

Nevertheless, the Guide emphasizes that the concession for enterprise development does not preclude a business from substantiating that it has commenced operation earlier than the accounting year in which it earns its first dollar of business receipt.

TAGS: compliance | tax | business | accounting | corporation tax | Singapore | tax authority | tax breaks | Tax

To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »