Singapore Publishes Blueprint For Tax Guidelines For New Businesses.

Staff meeting

The Inland Revenue Authority in Singapore published an electronic Tax Manuel on July 29th. The purpose of such a manual is to give tax guidelines to new business owners. To help them better determine what their first day of business actually is.

According to this narrative published by the Authority, the exact date a company actually starts doing business is not really specifically stated, but is determined on a case by case basis. Normally the Authority has determined that a business was considered active as the first documented business transaction. When that first business transaction is documented that is the first day of business. Any expenses that a owner had prior to that first transaction, can be used as a tax deduction.

A wide array of documentation is required by the Comptroller of Income Tax, to determine what the first day of business is for the business owner. Things that need to be documented and turned over to the agency, is a ledger of day to day operations. Transactions, amounts paid, amounts sold, etc. The business owner also has to state when their first day of business was. The agency uses that date, and compares it to the official ledger, between the two, the business owner's ledger and stated date, to determine the official start date.

The published blueprint carefully instructs tax payers, how they can determine, what is an actual start date of doing business, verses prior work that takes place before the official start date. Some of the activities that occur prior to the start date are, signing a lease, stocking product, acquiring loans to name a few. The blueprint also addresses a certain exception that was instituted in 2004. The concession gives tax payers a little leg room so to speak. The taxpayer under this exception is that the taxpayer can count their first business day  in the accounting  year, in which the first monies are earned. By doing that, a taxpayer can count all of their prior expenses in that same accounting year, and deduct those expenses. However tax payers can not count any prior days of business related expenses prior to the accounting year, in which the first transaction took place.

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