Corporate taxes are a vital part of Singapore’s tax system. They ensure that the relationship between Singapore’s companies and its tax system is stable and secure. They also serve as an important source of revenue for the government, which uses them to better serve Singapore’s people.

Corporate Tax in Singapore

Corporate tax is a fundamental element of the economy of every country. The taxes which are paid by corporations help the country’s financial mechanisms run smoothly. The imposition of corporate tax also ensures that companies across the country abide by all the tax laws and regulations by which they are bound. Such is also the case in Singapore.

 

Corporate Tax in Singapore

Corporate taxes are taxes imposed on the income of companies in a certain country. Corporate taxes are related to topics such as taxable income, net profits, shares and shareholders, withholding tax, dividends, and several other relevant areas.

Corporate tax in Singapore is imposed at a flat rate of 17% of a company’s taxable income. This taxable income is calculated by subtracting a company’s deductible expenses from its taxable revenue. Taxable revenue is defined as income which has either been earned in Singapore or remitted into Singapore. Deductible expenses are expenses which have been incurred by a company for the express purposes of the generation of the company’s income. Therefore, for expenses to be classified as deductible, the company will have to be able to provide evidence that the expenditure was required to help the company generate profits.

 

Filing Corporate Tax in Singapore

Every business owner in Singapore is required to file corporate tax appropriately and accordingly. The first step to be completed when filing corporate tax in Singapore is that of filing an Estimated Chargeable Income (ECI) form. This form estimates the company’s total amount of chargeable income with the Inland Revenue Authority of Singapore (IRAS) within three months of the financial year-end of the company. Only companies which are specifically exempt from filing an ECI form do not have to do so. These companies which are exempt are those which have a total annual revenue of S$5 million or less and which did not have any estimated chargeable income during the relevant year of assessment (YA).

Once this has been done, the company owner is to file the company’s annual income tax return with IRAS. This income tax return specifies the exact amount of a company’s income during a specific tax year. It must be filed by every company in Singapore. Even companies which are to be struck off or liquidated as well as companies which have made losses instead of profits must file this income tax return. Dormant companies are also to file an income tax return, but when they do so, they are to submit a more simplified variant instead of the standard tax return form.

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E A S I E R • F A S T E R • B E T T E R

The vast majority of companies based in Singapore must use Form C to file an income tax return. Information which is to be submitted on a copy of Form C includes tax computation, financial statements, and supporting schedules. However, there are also certain companies which are to use Form C-S instead of Form C for this purpose. Such companies must have fulfilled the following criteria: they must have been incorporated in Singapore, their annual revenue is not allowed to exceed S$5 million, their income must have corporate income tax imposed at 17% and therefore not claim any reductions in tax rate, and they must not claim any foreign tax credits or investment allowances for the purposes of tax reduction.

Once IRAS has assessed and approved all forms which have been submitted, it will send a Notice of Assessment to the company. The Notice of Assessment provides information about all of the company’s tax liabilities. Should the company intend to object to the tax assessment specified by IRAS, it may also use the Notice of Assessment to do so. As long as there are no problems regarding the Notice of Assessment, the company must pay the amount of corporate tax specified within 30 days of receiving it. This amount may be paid via Internet banking, cheque, interbank GIRO, or even telegraphic transfer.

The entire process of filing corporate tax can be tedious and time-consuming. For this reason, we at Paul Hype Page & Co are willing to be of service. Our tax experts will work with you so that all your corporate taxes are properly filed and accounted for. We will even submit all that is necessary to IRAS for you.

 

Reduction of Corporate Tax in Singapore

In Singapore, there are several ways by which a company might be able to reduce its corporate tax burden. One such method is by claiming and carrying forward any possible capital allowances. Capital allowances can be claimed in the form of tax deductions. They pay for a company’s acquisitions of machinery or equipment which are used to generate income for the company. Any capital allowances which have gone unused during a particular YA may be carried forward to subsequent YAs as long as the company has not made any major changes to its primary business activities or shareholdings.

Companies might also reduce their corporate tax burden by carrying their net losses forward. Many companies which have made losses would like to reduce their financial burden by lowering the amount of tax money they will be to pay. For this purpose, companies may carry such losses forward to subsequent YAs subject to approval regarding the Shareholding Test. The Shareholding Test states that there must not have been any substantial changes in the shareholding of the company between the end of the YA in which the company incurred the losses and the beginning of the YA which is related to the income from which these losses are to be deducted.

Corporate tax planning can be rather complex. There is much to be understood, and business owners who do not properly understand it could end up suffering in financial terms. However, you do not need to worry about such being the case. All you have to do is contact us at Paul Hype Page & Co. Our tax specialists will help you with your corporate tax planning to ensure that you adhere to all the relevant corporate tax regulations and also help you reduce your total tax burden.