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Main Taxation Regulations in Singapore

Main Taxation Regulations in Singapore

Singapore has a low taxation regime that is advantageous for businesses and it is one of the main reasons why the city-state is considered one of the most attractive locations to do business in Asia. The Income Tax Act is the main legislative source for the manner in which taxes are levies both on companies and on individuals who derive income from Singapore.

The main taxation regulations in Singapore are presented in this article. Investors who need more information about the Income Tax Act as well as particular taxation situations, such as for branches or subsidiaries or  who need various accounting services, such as payroll in Singapore, can reach out to our accounting firm in Singapore.

What is the Singapore tax system like?

Taxation in Singapore is levied on a territorial basis. This means that both companies and individuals are subject to tax on the income they derive from a source in the city-state and not for foreign-derived income. This can be taxed when it is considered remitted into Singapore, however, this does not apply on those cases where the said income was already taxed in another location that imposes a profits tax of at least 15%. An accountant in Singapore can give you more information about this principle.

Some of the main types of taxes in Singapore include the following:

  • the income tax;
  • the property tax;
  • the estate duty;
  • the goods and services tax;
  • the estate duty;
  • the stamp duty;
  • betting taxes;
  • customs and excise duties;
  • motor vehicle taxes.

Some of these taxes, like the ones applicable to motorized vehicles, were imposed for the purpose of controlling car ownership and allowing for a vehicle decongestion in the city. Because of its free port status, Singapore has a low number of export and import duties. Other taxes can include foreign worker levy and airport passenger taxes. One of the experts at our accounting firm in Singapore can give you more information about these.

Taxes in Singapore are imposed as per the Income Tax Act and the governing tax authority is the Inland Revenue Authority or IRAS. This agency is the principal tax administrator for the Ministry of Finance. IRAS has a role not only in the collection of taxes but also in the creation of the tax policies and for maintaining the overall attractive tax system in Singapore.

What are the taxes on companies in Singapore?

The corporate income tax rate is the main tax for companies in Singapore. It has a value of 0% on the first 100,000 SGD of taxable profits and a value of 8.5% on taxable income of up to 300,000 SGD. Taxable income above this value is subject to the standard corporate income tax rate of 17%.

As far as the income tax filing regulations are concerned, companies in Singapore are required to file a complete set of returns on 30 November (for hard copy) and 15 December (for e-filing).

Companies in Singapore can be eligible for a corporate income tax rebate, subject to a cap of 15,000 SGD. One of our accountants can give you more details.

Singapore has signed a number of tax treaties and this allows companies to be protected from double taxation on income when they are involved in business activities in both countries.

The Goods and Services Tax is the Singaporean equivalent of the Value Added Tax and it applies to the supply of goods and services. Its standard rate of 7% and a zero-rate is also applicable. Registering for GST is mandatory for companies that have an annual turnover of more than 1 million SGD or when they are expecting that the total sales within the next 12 months will exceed this value. Voluntary registration is also an option. All companies registered as GST payers are required to file a return.

Our agents can help you with complete accounting services in Singapore for your company.

What are the taxes on individuals in Singapore?

Individuals who are residents and derive income from Singapore are taxed at progressive rates between 0% on the first 20,000 SGD and 22% for more than 320,000 SGD. Non-residents in Singapore are taxes in a different matter according to the period spent in the city-state. Thus, an individual is considered a non-resident for taxation purposes when he spent time in or worked in the city for less than 183 days in a certain tax year. For those who spend between 61-182 days in Singapore in one year, their entire income derived from Singapore will be taxed. Director’s fees and remuneration, as well as consultant fees, are taxed at rates between 15% and 22%.

Investors can contact our accounting firm in Singapore for complete details on the taxation of resident and non-resident companies and individuals. Our team offers various accounting services and packages for companies, addressing the needs of businesses of all types and sizes.