Singapore Corporate Tax

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.

Here’s what you need to know.

Singapore Corporate Tax Rate

The Singapore corporate tax rate is at 17%. This is a flat rate on chargeable income, regardless of whether it is a local or foreign company

Requirements for the Company Tax Exemption Scheme

To qualify for the tax exemption, the company must:

Be incorporated in Singapore
Be a tax resident in Singapore for the Year Assessed
Have no more than 20 shareholders throughout the basis period of the Year Assessed
Have its shareholders beneficially and directly holding the issuing shares in their own names OR have at least one shareholder beneficially and directly holding at least 10% of the issued ordinary shares of the company

Company Tax Exemption Scheme for New Startup Companies

If your company satisfies the qualifying conditions, you are eligible for the tax exemption scheme. You can claim a 75% tax exemption on the first S$100,000 and a 50% tax exemption on the next S$100,000 of normal chargeable income for each of the first 3 consecutive years of assessment.

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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:

Purchase of fixed assets

Buying a fixed assets like machinery or furniture allows a company to accumulate 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.

Offset profits

Many companies which have made losses in prior years can lower tax by utilising those losses to offset profits for the current year, lowering the amount of tax money they will be to pay.

For this purpose, companies need to pass 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.

CHECK YOUR TAX PAYABLE

Enter your chargeable income to generate the net tax payable for new startup exemptions and partial tax exemptions.

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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:

Have a total annual revenue of S$5 million or less
Did not have any estimated chargeable income during the relevant 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.

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:

Incorporated in Singapore with annual revenue not exceeding S$5 million
Income must have corporate income tax imposed at 17% and therefore no claims on tax reduction
No claims on any foreign tax credits or investment allowances for the purposes of tax reduction

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:

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.

NOTE: Notice of Assessment (NOA) will be sent to the company once IRAS approved all forms submitted. The Notice of Assessment provides information about all of the company’s tax liabilities and is due within 30 days of receiving it.

OUR SINGAPORE CORPORATE TAX SERVICES

Engage us as your trusted corporate tax specialist with these corporate tax services. You’ll get a peace of mind on all taxation regulations and requirements, so the focus can be on your company.

Keep you updated on the Singapore tax regulations and compliance requirements
Monitor the statutory deadlines and meet compliance filing deadlines
Preparation and filing an estimated chargeable income
Preparation and reviewing of tax provision calculations
Preparation and reviewing the tax computation and Form C
Submission of finalised tax computation and Form C
Provide advice on the tax payments due dates upon receipt of Assessments

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.

How does corporate tax work in Singapore?Dylan2023-02-21T11:20:52+08:00

How does corporate tax work in Singapore?

Singapore corporate tax leverages on the territorial tax system and levies taxes on profits instead of revenue. All the profits generated by your Singapore company are taxed at a flat rate of 17%. Once you successfully register your business, you will be responsible to pay your corporate taxes and hiring a business consultant who is experienced with Singapore corporate tax is necessary to understand the taxation system.

How much does it cost for corporate tax filing in Singapore?Dylan2023-02-21T11:21:28+08:00

How much does it cost for corporate tax filing in Singapore?

Our services for filing corporate tax in Singapore are divided into two categories: for existing clients and for new clients. For our existing clients, tax computation and filing is S$600. For new clients, do reach out to us so we can understand more about your tax filing requirements.

What are the filing deadlines I need to take note of?Dylan2023-02-21T11:22:42+08:00

What are the filing deadlines I need to take note of?

The corporate tax filing deadlines are as follows:
Financial Year End (FYE)
You can choose any date, like March 31st basic deadline for filing your reports

Estimated Chargeable Income (ECI)
3 months after FYE
Your filed taxable income minus all tax-allowable expenses

C-S/C Annual Tax Returns
November 30th year after the FYE
Report your taxes following the Singapore standards

How is Income Assessed in Singapore?Jeremy2022-06-27T12:20:27+08:00

How is Income Assessed in Singapore?

Income is assessed on a preceding year basis. This means that the basis period for any Year of Assessment (YA) generally refers to the financial year ending in the year preceding the YA.

Got questions for Singapore corporate tax?

Speak to our consultations today to gain clarity to your questions today.

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.

Why Is Singapore a Tax Haven?

4 Ways to Reduce Corporate Tax in Singapore

Singapore Income Tax: Tax Residency & Tax Rates 2023

Singapore Auto-Inclusion Scheme: How It Works

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