Corporate Tax Singapore (Company Tax)

The Singapore corporate tax system contributes to the growth of small and medium businesses of the Island nation with the help of various schemes and provisions. The one-tier tax system, effective tax rate, full and partial tax exemption and other schemes have given the SMEs a huge boost.

The corporate tax Singapore designed to contribute to the growth of its small and medium businesses. It provides them with various schemes, grants, and benefits. The one-tier Singapore company tax system, effective tax rate, full and partial tax exemptions and other schemes are there to attract the new entrepreneurs and support the existing SMEs. In addition, Singapore is home to all kinds of professionals like tax agents to simplify things for the newcomers.

 

Singapore Corporate Tax Rate for Startups YA 2010-2019

The corporate tax Singapore is one of the most competitive in the world. Apart from the lower Singapore corporate tax rate in the country, the economic environment it offers is conducive for individuals willing to incorporate a Singapore company.

The territorial-based corporate tax system of Singapore is particularly helpful to new start-up companies in Singapore. The new tax resident companies in Singapore qualify for tax exemption scheme for new start-ups. If you are doubtful about your residency status, discuss it with your Singapore tax agent or corporate tax services provider.

The following table illustrates, in brief, the corporate tax rates applicable to the startups in Singapore.

Chargeable income	Tax exemption (%)	Tax Rate
Upto $100,000 for first 3 years	100.00%	0.00%
Next $200,000	50.00%	8.50%
Above $300,001	0.00%	17.00%

** Other than companies in the investment holding and property development for sale and/ or for investment, all other new companies qualify for the exemption for the startups.

 

Qualifying Criteria for Singapore Startups

However, to claim tax exemption for start-ups, they have to meet three qualifying criteria presented below:

• They must be incorporated in Singapore
• They need to be a tax resident of Singapore for that YA
• They should not have more than 20 shareholders
• All of the shareholders must be individuals and at least one of them must own at least 10% of the issued ordinary shares

Partial Tax Exemption to Other Companies (YA 2010 to YA 2019)

Companies other than the startups also enjoy tax benefits in the form of partial tax exemption.

Chargeable income	Exemption (%)	Amount exempted from Tax
First $10,000	75	$7,500.00
Next $290,000	50	$145,000.00
Total $300,000		$152,500.00

Corporate Tax Rebate

In order to keep their overhead expenditures down, Singapore government offers corporate tax rebate to the companies.

Year of Assessment	Corporate Income Rebate (%)
2018	40%, capped at $15,000
2019	20%, capped at $10,000

One-Tier Corporate Income Tax Singapore

The one-tier corporate tax system came into effect on January 1, 2003. Under it, the company tax Singapore paid by the businesses is the final tax and the dividends distributed by them to their shareholders are tax-free.

The system made tax code easy for the companies. It also reduced compliance and administrative costs for them. They also get to pay the higher dividend to their all shareholders.

Singaporean Taxes for Investors

In addition to the entrepreneurs, investors also love Singapore. The country is a major destination for the foreign direct investment.

Other Taxes	Tax Rates
Tax on Capital Gains	0.00%
Tax on Dividend	0.00%
Tax on Inheritance or Wealth	0.00%

Tax Residency Status of a Singaporean Company

The tax residency of a company plays an important part in determining how much amount it pays in taxes. In Singapore, the status is determined on the basis of the location where the board meeting is held and exercise effective control of the fundamental policies and decisions of the company.

Singapore follows territorial-based tax system. The company’s corporate tax is calculated based on the income derived in the preceding year. Both, resident and non-resident companies have to pay tax on income accruing in or derived from Singapore. Their foreign income remitted in actual or deemed to be remitted into Singapore is also taxed. Foreign income, under certain conditions, may be tax exempted.

Productivity and Innovation Credit (PIC) Scheme

The intention behind starting PIC scheme was to motivate SMEs in adopting the culture of innovation and productivity. Since YA 2013, there has been good take-up of the scheme. However, the authorities have decided to put an end to the PIC scheme after YA 2018.

The companies can still qualify for it by doing their shopping as late as on the last day of their basis period for YA 2018. The companies can claim 40% of their expenditure incurred on or after 1 Aug 2016. Under the Scheme, companies can claim 400% tax deductions if their expenditure falls in any of the Six Qualifying Activities.

If you have any expenses to claim, claim it this time, as its eligibility is not determined by the date of submission of the application but by the dates of expenses. The corporate income tax (CIT) rebate was initially introduced for helping companies in an optimistic manner to effectively deal with the increasing costs of business operations.

Avoidance of Double Taxation

Singapore has as many as 80 Avoidance of Double Taxation Agreements (DTAs) with other countries. The resident companies/individuals of Singapore and the treaty partner greatly benefits from DTAs. During the cross-border trade, they do not have to bear the double tax burden or have to pay only reduced rates.

Tax Deductions for Donations

As per the Singapore Budget 2018, qualifying donations will keep on enjoying tax deductions of 250 percent for another three years (till Dec 31, 2021). It means, a company’s taxable amount is reduced by S$2,500 if it donates S$1,000 to a registered charity.

E-Filing of Corporate Tax Singapore

Singapore is pursuing the Smart Nation policy. It has taken steps to harness technology to achieve cost-effective delivery of public services. It has, now, proposed phased approach to e-filing of corporate income tax returns (ECI, Form C, and Form C-S filing) from the Years of Assessment (YAs) 2018 to 2020 as follows:

YA	Target Group
2018	Companies with revenue more than $10 million in YA 2017
2019	Companies with revenue more than $1 million in YA 2018
2020	All companies

Tax Agent for Singapore Corporate Income Tax Return

The authorities hope that the phased approach to e-filing of corporate income tax Singapore will give the smaller companies the time needed to modify their in-house processes for the preparation of tax computation and e-filling of FORM C/FORM C-S to IRAS.

Alternatively, they can also get professional help from the corporate tax filing agents or the corporate taxation services providing firms for the filing of their Form C, Form CS, or Form C-S. The policy is aimed at improving the tax industry’s productivity and lowering the compliance costs of businesses.

Due Date for Singapore Company Tax Filing

The tax agents assist their clients in filing their Singapore corporate tax return by using either online technology or by submitting paper documents. This may be the last chance of using paper-filing for many companies to do so before the due date of November 30. The due date for e-filing is December 15.

TaxationServices.com.sg is a trusted tax agent in Singapore. We offer corporate tax Singapore services that ensure all your corporate tax needs are taken care of. In addition to that, our guidance services for minimizing your Singapore corporate tax are highly regarded. Our aim is to make your day-to-day business operations easy and hassle-free.

Please feel free to contact us on +65 6536 0036 or drop in an email at info@taxationservices.com.sg