One of the major taxes companies in Singapore pay is the corporate tax. The levy is applied to the income generated in the city-state at a flat rate of 17%. However, there are also exceptions to this rule.
Below, our accountants in Singapore present the main highlights of the corporate tax, as well as our services related to it.
Table of Contents
The standard corporate tax rate in Singapore
Singapore is frequently quoted as the primary example of countries that continues to diminish corporate income tax rates and introduce several tax incentives in order to attract foreign investments.
The corporate income tax amount has been fixed at 17% since 2010 and it is planned on the basis of the business’s chargeable income i.e. taxable revenues, less permissible costs, and other allowances.
Singapore adopted a one-tier company tax system under which tax remunerated by a company on its chargeable income is the ultimate tax. All shares paid by a company are excused from tax in the hands of the stockholders. A corporation is taxed at a flat rate of 17% on its chargeable income unrelatedly of whether it is a local or foreign firm.
Singapore companies can benefit from corporate tax exemptions of:
- 75% on the initial SGD 10,000;
- 50% on the next SGD 190,000.
This way, the non-taxable income amount reaches SGD 102,500.
Capital increases such as gains on the sale of fixed possessions or gains on foreign exchange on capital trades are not chargeable.
Some income such as foreign-sourced dividends, division profits and service income established by a resident corporation that satisfies the qualifying circumstances may be excused from tax under the provisions of the “Singapore Income Tax Act”, as our local accountants remind.
We are at your service with more information about the dividend tax in Singapore.
Corporate tax rebates in Singapore
According to our accountants in Singapore, the corporate income tax rate is 0% on the first S$100,000 chargeable income for each of the first three tax filing years for a brand-new integrated business that meets the following circumstances:
• belongings and stock-holding businesses are not eligible;
• must have no more than 20 individual stockholders;
• in the case of company shareholders, one individual must hold at least 10% of the issued bonds.
Other Singapore corporate tax rebates are available for other companies. They will be provided as non-taxable cash grants of SGD 2,000. For non-eligible companies, the following facilities will be offered:
- a 50% rebate from the corporate tax with a value that does not exceed SGD 40,000 if the cash grant does not apply;
- a tax rebate with a maximum value of SGD 38,000 if the grant applies.
The goods and services tax (GST) is another important tax in Singapore and our accountants can assist with GST registration.
Tax residency for companies in Singapore
From a taxation point of view, a company is deemed as a resident or non-resident. This status is assessed by the Inland Revenue Authority. If a company is controlled or managed from Singapore, it is considered a resident of the city-state. As such, the place of incorporation is not a mandatory condition for a business to have its tax residency here.
When it comes to the taxation of foreign companies, respectively branches and subsidiaries, they will be taxed on the income derived in Singapore.
If you want to incorporate a company, our accounting firm in Singapore can assist with the registration for taxation and GST.
The corporate tax on income earned abroad
Singapore companies generating profits in other countries will also pay the corporate tax. However, they may be subject to foreign tax credits to not pay the same levy in the city-state and the country in which the income was earned. This is possible through Singapore’s double tax treaties or through the foreign-sourced income exemption scheme (FSIE) for businesses not qualifying for a double tax agreement.
Under the FSIE regime, companies can benefit from tax exemptions on dividends remitted to Singapore from other countries, profits of branches, and income derived from the provision of services. There are several conditions to be met to qualify for the Singapore FSIE.
Please note that for some companies, audited financial statements are required, cases in which our auditors in Singapore are at your disposal. Our accountants are also at the service of local and international businesses with payroll services in Singapore.
For accounting services and more details about the corporation tax, please contactour accountants in Singapore.