CORPORATE TAX IN SINGAPORE
Many investors choose Singapore to start their company as the country is a tax haven jurisdiction. The low corporate tax rate of 17% and business-friendly taxation policies make Singapore an attractive destination for businesses.
Singapore companies do not have to pay corporate taxes to tax authorities of more than one country the use of double taxation agreements (DTAs) with over 80 countries where Singapore firms can claim.
TYPES OF CORPORATE TAX IN SINGAPORE & THEIR RATES
Find out the corporate tax rates below.
|Type of corporate tax||Tax rate %|
|Headline Tax on corporate profits||17%|
|Effective Tax on newly start up company on $300k Profits is||7.34%|
|Effective Tax on existing company incorporated more than 3 years on $300k Profits is||8.39%|
|Tax rate on one off capital gains from company’s divestment||0%|
|Tax rate on dividends distributed to local and overseas shareholders||0%|
|Tax rate on foreign-sourced income not accruing in or derived from Singapore||0%|
NEW START-UP TAX EXEMPTIONS IN SINGAPORE
Just started your new Singapore company? Tap on the new Tax Exemption Scheme to enjoy tax-free operations for the first 3 Year of Assessment (YA). You can also continue to enjoy Partial Tax Exemption (PTE) from the fourth year onwards. Find out more about the ins and outs of corporate tax in Singapore here at Paul Hype Page & Co.
REDUCE YOUR SINGAPORE CORPORATE TAX BILL
TAX EXEMPTION FOR NEW START UP COMPANIES
Here are other ways to reduce corporate tax, aside from the new start-up exemption:
CHECK YOUR TAX PAYABLE
Enter your chargeable income to generate the net tax payable for new startup exemptions and partial tax exemptions.
How to File Your Yearly Corporate Tax Filing?
STEP 1 ： File Estimated Chargeable Income (ECI)
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 IRAS within three months of the financial year-end of the company.
Only companies which are specifically exempted from filing an ECI form do not have to do so. These companies which are exempt are those which:
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.
STEP 2 ： File Tax Computation With Form C/CS
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 version instead of the standard tax return form.
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:
What Business Expenses to Be Included in Tax Computations?
Business expenses are expenses paid to keep a business in operation. However, 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:
Singapore Corporate Tax FAQs
We’ve picked the top 4 questions that we get asked the most when it comes to Singapore corporate tax. Check them out below.
SINGAPORE CORPORATE TAX ARTICLES
Get insights on the Singapore corporate tax landscape so you understand the exemptions that you can have for your business and more.
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With strong presence in Singapore, and other key Asian markets, we are effective in planning and advising corporate taxation.