Corporate Tax in Singapore
Here, you will find detailed information about Singapore’s Corporate Tax System. Paul Hype Page & Co helps companies with strategic tax planning, tax advisory, and accountancy services
IRAS (Singapore’s Tax Authority) governs Singapore’s tax system, helps develop a stronger economy, better environment and a more vibrant economy. All companies, regardless of industry, have a legal duty to pay taxes.
Singapore attracts investments from around the world by reducing its corporate income tax rate and introducing different tax incentives. At 17%, Singapore has one of the lowest corporate tax rates in the world.
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 tax exemption, and companies get 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 your 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.
- Taxes paid by companies on chargeable income is the final tax. All dividends paid by companies to its shareholders are tax free.
- Singapore has no capital gains tax (including sale of fixed assets, gains on foreign exchange, capital transactions etc).
Tax Residence of a Company
Tax residence of business entities for tax purposes refers to whether management and control are exercised in Singapore. The site where the directors of a company manage and control its business, and hold their board meetings is where the company is deemed resident (regardless of property location).
Whether a company is tax resident or not is significant for the following purposes:
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 agree 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 businesses will only pay taxes generally where income is generated. For example, a DTA between Singapore and Hong Kong states the conditions on which country will receive corporate tax based on business activities or operational production.
The objective of income tax treaties are 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 several countries, both Asia and internationally.
A company is taxed a flat rate on chargeable income, regardless of whether it is a local or foreign company.
Tax rates and tax exemption rates/rebates for each YA are:
Tax Exemption Scheme for New Start-Up Companies
A newly incorporated company which satisfies the qualifying conditions can claim full tax exemption on the first $100,000 of normal chargeable income* (excluding Singapore franked dividends) for each of its first 3 consecutive YAs.
To qualify for tax exemption, new start-up companies must:
- Be incorporated in Singapore (other than companies limited by guarantee**)
- Be tax resident in Singapore for the YA
- Have no more than 20 shareholders throughout the basis period of the YA:
- Shareholders are beneficially and directly holding the issuing shares in their own name, OR
- At least one shareholder is beneficially and directly holding at least 10% of the issues ordinary shares of the company
*A company is resident in Singapore if the control and management of its business is exercised in Singapore.
** From YA 2010, companies limited by guarantee are subjected to the same conditions imposed on companies limited by shares.
Corporate Secretaries will be fully responsible for the practice of ensuring that these conditions are met. It is important that Corporate Secretaries be highly qualified and well versed in local regulations and corporate laws, as they are responsible for the upkeep of important company files, reports and records.
Various tax incentives are available to companies. Here is a list of the Singapore governing bodies to apply for tax incentives.
FAQs about Tax Filing
1)What is Form C?
Your company must declare its income by completing the Income Tax Form for companies. This is known as Form C and must be completed each year.
Form C filing due dates for each YA are:
IRAS will send the first Form C to a newly incorporated company in the second year following the year of incorporation.
Thereafter, Form C for subsequent YAs will be sent to your company in Mar/Apr every year.
You may need to request for the first Form C to be sent to you earlier, that is, in the year immediately after the year of incorporation (instead of the second year following the year of incorporation) under certain circumstances.
Please note that income is assessed on a preceding year basis. This means that the basis period for any YA generally refers to the financial year ending in the year preceding the YA.
Your company is incorporated on 1 Jul 2007 and its financial year end is 30 Jun.
If your company’s first set of accounts covered the period from the date of incorporation (1 Jul 2007) to 30 Jun 2008, your accounts is for YA 2009. You do not need to request for Form C for YA 2008.
Your company is incorporated on 1 Jul 2007 and its financial year end is the 31 Dec.
If your company’s first set of accounts covered the period from the date of incorporation (1 Jul 2007) to 31 Dec 2007, your accounts is for YA 2008. In this case, you have to request for Form C for YA 2008.
- You can request for Form C via the form Request for Form C for Newly Incorporated Companies or Companies Granted Waiver to Submit Form C/Change of Particulars (36KB).
- If your company’s first set of accounts covered the period from the date of incorporation (1 Jul 2007) to 31 Dec 2008, your accounts is for YA 2009. In this case, since the first set of accounts is for YA 2009, you do not need to request for Form C for YA 2008.
Your accounts for the period from 1 Jul 2007 to 31 Dec 2008 is to be submitted with the Form C for YA 2009, which will be sent to your company in Mar/Apr 2009.When you file Form C for YA 2009, please note that you need to submit separate tax computations for YA 2008 and YA 2009 since your accounts covered a period of more than 12 months. You have to apportion the income for the period from 1 Jul 2007 to 31 Dec 2007 (YA 2008) and 1 Jan 2008 to 31 Dec 2008 (YA 2009).
When submitting Form C for YA 2009, please attach a covering letter stating that you have enclosed the tax computations for YA 2008 and YA 2009.
2)When to file?
The company has to file a complete set of returns (i.e. Form C, audited/unaudited accounts and tax computation) by the following dates:
* 30 Nov will be the filing deadline from Year of Assessment 2009 instead of 31 Oct
3)How to file Form C ?
For details on the filing and completion of Form C, refer to Filing Income Tax Form (Form C). You may also refer to the guide on “Essential Information for Newly Incorporated Companies” (287KB)
4)What is Estimated Chargeable Income (ECI) ?
Your 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 your company’s financial year end is 31 Dec, you have to furnish ECI for the accounting period ending 31 Dec 2007 by 31 Mar 2008.