COUNTRY
Singapore
SINGAPORE CORPORATE TAXATION
Most international investors choose Singapore to set up their operations for various reasons. One of the main reasons is due to the tax benefits available. Singapore has approximately 80 tax treaties signed with other countries to avoid double-income taxation. Singapore’s corporate tax rate is also one of the lowest in the world.
Singapore’s government adopts a territorial tax system, and companies are only taxed on income sourced in Singapore. Income taxes are charged on chargeable income and not on income generated. Chargeable income is income minus all deductible expenses for the assessment period. Non-deductible expenses are added back to profits for income tax computation purposes.
OVERVIEW OF CURRENT COMPANY TAX RATE SINGAPORE
| Types of Income | Tax Rate |
|---|---|
| Net profit on income generated or received in Singapore | 17% |
| Foreign sourced income not remitted to Singapore* | 0% |
| Capital gains | 0% |
| Dividends distributed post Tax | 0% |
* A company must be a non-resident company to qualify for the same.
Tax residency rule:
A Singapore company tax rate is also determined by the tax residency of the company.
A Singapore company is only considered a tax resident in Singapore if it meets the following criteria.
1. Control and management are exercised in Singapore.
2. Income is produced or generated in Singapore.
3. Income is remitted to Singapore.
Hence, a well-structured Singapore company can be fully tax exempted. (i.e enjoy a 0 percent tax rate).
A company’s tax residency must be assessed annually and it can change from year to year.
TAXABLE INCOME IN SINGAPORE
Based on Singapore corporate tax rules, generally, income generated in Singapore and income remitted to Singapore from a foreign source is taxable.
The following types of income are also deemed taxable in Singapore.
- Gains and profits from any trade or business
- Income generated from an investment such as interest and property rental income
- Royalties, premiums, and any other profits from properties
- Other gains that are considered revenue in nature
SINGAPORE CORPORATE INCOME TAX INCENTIVE AVAILABLE FOR NEW STARTUP COMPANIES 2023
Singapore incorporated company with less than 20 shareholders and at least 1 individual shareholder holding more than 10% shareholding is entitled to the tax exemptions scheme for new start-up companies. If your company is eligible and qualified, you will be able to enjoy the following incentives;
75% exemption on the first $100,000 of normal chargeable income*; and
A further 50% exemption on the next $100,000 of normal chargeable income.
Tax Incentives Available For All Tax Resident Companies In 2023
From the financial year 2019 onwards all Singapore companies are entitled to a 75% tax exemption on the first $10,000 of normal chargeable income and a 50% tax exemption on the next $190,000 of normal chargeable income.
Also known as value-added tax in European countries. A Singapore must register for GST if its revenue exceeds S$ 1 million in the previous 12 months or if you expect the company to exceed its revenue in the next 12 months. The GST rate is 8% effective 2023 and is charged on domestic consumption. Generally, products and services sold to foreign customers are exempted from the GST requirements. The Singapore GST Rates are as follows:
| 8% on Standard Rated Supplies | GST is charged on most local sales and services as it will fall under this category. |
| 0% on Zero Rated Supplies | Examples are items such as the sale of a laptop to an overseas customer, where the laptop is shipped to an overseas address. Or services that are classified as international services. |
| 0% on Exempted Supplies | Examples are items where the sale of goods is delivered from overseas (outside Singapore) to another place overseas. |
Development and Expansion Incentive
Tax incentives are available to companies that are expanding into the Singapore market to upgrade their operations. Under the program, all qualifying companies can enjoy a 10% tax rate for 5 years.
Investment allowance
Under an investment allowance scheme, companies can receive up to 100% of a tax credit on the capital expenditures incurred for qualified projects during a tax year. Investment allowances are usually provided for 5 to 8 years, depending on the applicant’s business activities.
Withholding Tax in Singapore
Withholding tax is also applicable for Singapore Companies when it’s making a payment to non-resident companies or individuals for services and work done. Generally, withholding tax will be useful if the income is derived from a Singaporean Source or services are provided by work done in Singapore and on selected types of payments such as interest, commission, royalties, management fees, and services rendered.
The following items are exempted from further tax:
- Dividends declared after Profit.
- Foreign sourced service income/dividends
- Royalties subject to terms and conditions.
TAX FILING DEADLINE 2023 SINGAPORE
All Singapore-incorporated companies must annually submit two of the following returns to the tax authority (IRAS) before Singapore’s corporate tax filing deadline.
Estimated Chargeable Income (ECI):
A company has to file its ECI within 3 months from the end of the financial year unless the company qualifies for the ECI filing waiver or the company is specifically not required to file ECI.
ECI estimates your company’s taxable profits (after deducting tax-allowable expenses) for a specific Year of Assessment (YA).
A company must file its ECI within 3 months of its financial year-end.
Form C or Form C-S: In both Form C or Form C-S
A company must declare its corporate income tax for a specific year. A Form C filing requires the company to submit a detailed tax computation using the prevailing corporate tax rate Singapore with the relevant supporting documents such as financial statements and detailed profit & loss statements.
Whereas form C-S is a simplified filing that does not require additional documents.
The corporate tax filing deadline in Singapore is due by November 30 annually.
Relin Consultants provides corporate services in Singapore. We provide tax filing services and can assist our clients with tax planning and Singapore business tax optimization.
Contact us now to obtain more information about your Singapore business setup. You can also reach out to us for matters relating to Singapore income tax for foreigners.
FAQs
How Much Is A Corporate Tax In Singapore?
A 17% rate is charged on all qualifying corporate income. However, there are various tax incentives available to companies. Hence the effective tax rate is lower at 8.5% to 13% after considering all incentives.
Is Corporate Tax In Singapore Low?
The corporate tax rate in Singapore is 17% while the effective tax rate is even lower considering the various tax incentives.
Is Singapore A Tax Haven?
Singapore is sometimes referred to as a tax haven because it offers various tax advantages to offshore non-resident companies.
Singapore has many Free Trade Agreements (FTAs), and Double Taxation Treaties (DTTs) and has been ranked one of the world’s most competitive and open markets.
How Can Singapore Companies Reduce Corporate Tax?
There are various ways a Singapore company can legally reduce corporate tax. A company can check and apply for available investment exemptions or it can assess and claim exemptions on foreign-sourced income for tax relief.
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