Singapore Tax Filing Information
Determining the First Year of Assessment (YA)
- The first YA is the basis period during which a company is incorporated.
- New start-up companies get a tax exemption, while other companies get a partial tax exemption from the fourth YA onwards.
Income Tax Basis Period
Singapore’s statutory income for YA is computed based on the income derived in the preceding calendar year (basis year) from all sources. This will form the basis of all tax assessments and provide a guide for yearly taxable income.
Income Tax Filing Due Date
- As of 2009, November 30 is the due date for Singaporean companies to file income tax. Tax guides are widely available if needed by businesses.
- A company must file a complete set of returns, which include Form C, audited/unaudited accounts, and tax computation.
- All companies must file their tax returns before November 30 to avoid enforcement action. A Company Secretary will compile and prepare the required documents.
Single-Tier Income Tax System
- Singapore introduced a single-tier corporate income tax system on 1 January 2003.
- The tax paid by companies on chargeable income is the final tax. All dividends paid by companies to shareholders are tax-free.
- Singapore has no capital gains tax (including sale of fixed assets, gains on foreign exchange, capital transactions, etc.).
Singapore Company Tax Incentives
Double taxation happens when income is taxed twice.
Double Taxation Agreements (DTAs) are concluded between participating countries globally to avoid income being taxed twice. DTAs stipulate that the country of residence agrees to either give credit to its residents for income which is taxed at reduced rates or to exempt the income from tax.
Companies that conduct internal business will usually only pay taxes where income is generated. A DTA between two countries states the conditions on which country will receive corporate tax based on business activities or operational production.
The objective of income tax treaties is to help businesses avoid double taxation on their income. This helps ensure the global market remains competitive and governments continue to receive taxes from businesses. Singapore has concluded tax treaties with many countries, both in Asia and beyond.
Details of Necessary Documents
Audited and Unaudited Financial Statements
In financial years starting on or after July 1, 2015, dormant companies and companies that meet the “small company” criteria are not required to audit their financial statements. This is provided for under the Companies Act.
A company qualifies as a “small company” if:
• It is a private company for the financial year in question (i.e. it is owned by 50 members or less); and
• It meets at least two of the following three quantitative criteria for the two preceding financial years:
- total annual revenue ≤ $10m
- total assets ≤ $10m
- number of employees ≤ 50
For a company which is part of a group to qualify for audit exemption:
- the company must qualify as a small company; and
- the entire group must be a “small group”, i.e. the group must meet at least two of the three quantitative criteria on a consolidated basis for the the two preceding financial years.
Please refer to ACRA’s website for more information on the Small Company Concept for Audit Exemption.
For financial years starting before July 1, 2015, dormant companies and exempt private companies with revenue of not more than S$5 million are not required to audit their financial statements.
One may refer to Pages 123 to 133 of ACRA’s Guidebook for Directors for a sample of audited and unaudited financial statements.
Companies that have filed a full set of financial statements with ACRA in the XBRL format are not required to file the same with IRAS. Please refer to ACRA’s website on how to prepare your financial statements in the XBRL format.
Business Expenses to Be Included in Tax Computations
Business expenses are expenses paid to keep a business in operation. Some examples are CPF contributions, wages, renovation, and advertising.
Business expenses may be deductible or non-deductible. When deductible, they reduce a taxpayer’s taxable income and the amount of tax which must be paid.
Deductible Business Expenses
Generally, deductible business expenses are those “wholly and exclusively incurred in the production of income”. In other words, they must satisfy all these conditions:
- Expenses are solely incurred in the production of income.
- Expenses are not a contingent liability, i.e. they do not depend on an event that may or may not occur in the future. In other words, the legal liability to pay the expenses must have arisen, regardless of the date of actual payment of the money.
- Expenses are revenue, and not capital, in nature.
- Expenses are not prohibited from deduction under the Income Tax Act.
Non-Deductible Business Expenses
Examples of Deductible and Non-Deductible Business Expenses
When and How to File Form C/C-S?
A company has to file a complete set of returns by November 30, the filing deadline, every year.
Filing Form C
Form C can be e-Filed in two ways:
What is Estimated Chargeable Income (ECI) ?
Definition of ECI
A company has to furnish an estimate of its chargeable income known as Estimated Chargeable Income (ECI) within three months from the end of its accounting period.
For example, if a company’s financial year end is December 31, ECI must be furnished for the accounting period ending on that day by March 31 of the next year.
ECI is an estimate of the company’s taxable income (after deducting tax-allowable expenses) for a Year of Assessment (YA).
Declaration of Revenue in an ECI Form
The ECI must be stated and company’s revenue must also be declared in the ECI Form. This declaration is compulsory with effect from January 2017.
Revenue refers to a company’s main source of income, and excludes items such as gain on disposal of fixed assets. If the company is an investment holding company, the main source of income is investment income (e.g. interest and dividend income).
Should the audited financial statements be unavailable, one can refer to the company’s management accounts for the purpose of declaring the revenue amount. Should the revenue amount based on audited financial statements be different from that declared in the ECI Form, and there is no change in the ECI, the revenue figure does not have to be revised.
When to File ECI
All companies including new companies are required to file ECI within three months from the end of their financial year except for companies that qualify for the administrative concession and those that are specifically not required to file.
Examples of ECI Filing Deadlines Based on Different Financial Year Ends
Companies will receive a notification from IRAS to file the ECI in the last month of its financial year. A company should still proceed to file the ECI within three months from its financial year end even if it does not receive an ECI notification.