Corporate Tax- Singapore

Corporate Tax- Singapore
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Singapore follows a territorial-based tax system, where companies are taxed on income derived in or received in Singapore, as well as on foreign-sourced income remitted into Singapore. The corporate tax rate in Singapore is considered one of the most competitive globally. Here are key aspects of corporate taxation in Singapore:

### Corporate Tax Rates:

1. **Flat Corporate Tax Rate:**
– As of my last knowledge update in January 2022, Singapore has a flat corporate tax rate of 17%. This rate applies to both local and foreign companies.

2. **Start-up Exemption:**
– For qualifying start-up companies, a partial tax exemption is available on the first S$200,000 of chargeable income. Additionally, a further 75% exemption is granted on the next S$200,000 of chargeable income.

3. **Partial Tax Exemption for Other Companies:**
– Companies that do not qualify for the start-up exemption enjoy a partial tax exemption of 75% on the first S$10,000 of chargeable income and a further 50% exemption on the next S$190,000.

### Taxable Income and Basis Period:

1. **Taxable Income:**
– Companies are taxed on their chargeable income, which is derived from their total income adjusted for deductions and exemptions.

2. **Basis Period:**
– The basis period for a particular Year of Assessment (YA) is usually the financial year ending in the year preceding that YA.

### Foreign-Sourced Income:

1. **Tax Exemption for Foreign-Sourced Income:**
– Foreign-sourced income received in Singapore is tax-exempt, subject to certain conditions. This includes foreign branch profits, foreign-sourced dividends, and service income.

2. **Notional Tax Credit (NTC):**
– In situations where foreign-sourced income does not qualify for tax exemption, a company may be eligible for NTC, which reduces the Singapore tax payable on the foreign income.

### Goods and Services Tax (GST):

1. **GST Registration:**
– Companies with an annual turnover exceeding S$1 million must register for the Goods and Services Tax (GST). Voluntary registration is allowed for companies with turnover below the threshold.

2. **GST Rate:**
– The standard GST rate in Singapore is 7%, and it applies to the supply of goods and services in Singapore.

### Tax Filing and Payment:

1. **Corporate Tax Filing:**
– Companies are required to file their annual corporate tax returns with the Inland Revenue Authority of Singapore (IRAS).

2. **Payment:**
– Corporate taxes are typically paid in installments. The first installment is due within one month from the tax notice, and subsequent installments are paid every quarter.

### Tax Incentives:

1. **Investment Allowances:**
– Various incentives are available to encourage specific industries, such as Pioneer Certificate and Development and Expansion Incentives.

2. **Global Trader Program (GTP):**
– The GTP provides tax incentives for qualifying companies engaged in global trading activities.

### Transfer Pricing:

1. **Arm’s Length Principle:**
– Singapore follows the arm’s length principle for transfer pricing, and companies are required to adhere to transfer pricing regulations when dealing with related parties.

### Research and Development (R&D) Tax Incentives:

1. **Productivity and Innovation Credit (PIC):**
– The PIC scheme provides tax benefits for qualifying R&D activities, automation equipment, training, and intellectual property registration.

### Compliance and Advisory:

Given the complexity of tax regulations, it is advisable for companies to seek professional advice from tax consultants or accounting firms to ensure compliance with Singapore’s tax laws and to explore available incentives for optimizing their tax positions. Additionally, tax regulations are subject to change, and it’s important to refer to the latest updates from the IRAS or consult with tax professionals for the most accurate information.

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