Content of Guide
1. Overview of Corporate Tax
Singapore has one of the most attractive corporate tax schemes in Asia. The Inland Revenue Authority of Singapore (IRAS) is the main body for administering, assessing and collecting tax. With a default headline fixed flat rate of 17%, it makes Singapore attractive to international investments and Businesses in Singapore.
Single – Tier Taxation
Singapore adopts a single –tier tax system under which tax paid by a company on its chargeable income is the final tax. Under this system, profits are taxed at the corporate level and this is a final tax. Singapore dividends are tax exempt.
Other key features of the Singapore corporate tax regime are
- There is no capital gains tax
- There is no withholding tax. Interests, royalties or rents paid to foreigners are subjected to a tax of up to 15%
2. Corporate Tax Rates & Exemptions
Companies in Singapore are tax according to income that is earned in the preceding year. This would mean that income earned for the financial year of 2018 (YE18) is taxed in 2019 (YA), and paid for in 2019.
To assess the amount of tax, IRAS looks at the income, expenses, etc. during the financial year. This financial year is known as the “basis period”.
The basis period is generally a 12-month period preceding the YA.
Corporate Tax Rate
Not accounting for any tax exemptions, the fixed flat rate is 17%. However, all Singapore Tax Resident Companies, regardless of age and structure would be eligible for some form of tax exemption — resulting in an effective tax rate lower than 17%.
Corporate Tax Exemptions
- For new start-up Companies
Up until YA 2019, qualifying new companies are given the following tax exemption for their first three consecutive YAs:
- Full exemption on the first $100,000 of normal chargeable income; and
- A further 50% exemption on the next $200,000 of normal chargeable income.
From YA 2020 onwards tax exemptions for qualifying new-startup companies will be given the following tax exemption:
- 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.
- For all other Singapore Companies
In YA 2019:
- 75% tax exemption on the first $10,000 of normal chargeable income; and
- A further 50% exemption on the next $290,000 of normal chargeable income.
From YA 2020 onwards:
- 75% exemption on the first $10,000 of normal chargeable income; and
- A further 50% exemption on the next $190,000 of normal chargeable income.
3. Corporate Tax Rebate
Corporate income tax rebate is given to all companies to ease business costs and support restructuring by companies.
The tax last and final rebate given in YA 2019 is
- 20% corporate income tax rebate, capped at $10,000 for YA 2019.
4. Corporate Tax Filing Deadline
Depending on your tax filing method, the Corporate tax must be filed annually by:
- 15 December if filing online; or
- 30 November if the company wishes to physically file the Income Tax Return.
Late filing of corporate tax is an offence. The company’s officers (e.g. their directors) may be prosecuted in court.
In court, the company’s officers and the company may be fined up to $10,000 and $1,000 respectively. The company may be allowed to settle its fine through paying a composition amount of between $200 and $1,000.
5. How to File and Pay your Corporate Tax
The process for filing and paying your corporate tax typically flows in this order:
- Unless exempted, File the Estimated Chargeable Income (ECI).
- File the annual Income Tax Return (Form C/FormC-S)
- Receive IRAS’ Notice of Assessment (NOA)
- Pay the assessed corporate tax
Tax filing and computation does not need to be completed. Please feel free to reach out to us and we’d be happy to assist. You may want to look at our Tax Services to understand how we’d help.