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Taxation of General Partnerships in Singapore

Taxation of General Partnerships in Singapore

A partnership in Singapore is an association between two or more partners who can be individuals of companies. The general partnership is not perceived as a legal entity, such as a private limited liability company or even a private limited liability partnership. This is an important distinction because it determines the taxation of general partnerships in Singapore. The taxation will not be on the profits of the business but rather each partner will pay tax on the income he earns from the association.

Working with our accounting firm in Singapore can be useful for individuals and even companies that enter into a general partnership (as this association is also possible between legal entities, not only individuals). Our team can help investors understand the tax principles that apply to this legal relationship but can also assist in preparing the annual income tax return as well as with all of the other requirements set forth by the Inland Revenue Authority of Singapore. They can also help you register your company for GST in Singapore.

Also, in case you need an audit firm in Singapore, you can rely on our accounting experts.

Below, we answer some of the most common questions on the tax obligations and the filing procedures for the Singapore general partnership. Entrepreneurs can always reach out to one of our accountants for answers to other more specific questions.

What is the tax liability for a general partnership member?

Each partner of a general partnership is liable for taxation on his share of income derived from the legal relationship. This means that an individual will need to pay personal income tax on his income from the partnership while a corporation that is a partner will pay corporate income tax for its share of the partnership profits.

The tax liability for a partner in a general partnership depends on his level of profit. An accountant in Singapore from our team can give you detailed answers to this question based on the specific share of income earned. Investors who do conduct business via a partnership can request our specialized accounting services.

How is a general partner taxed in Singapore?

When the partners are individuals, the principles of personal taxation in Singapore will apply in their case. The personal income tax depends on the residency of the taxed person. For example, an individual is a tax resident in Singapore if he is a citizen or a permanent resident who lived/resides in Singapore except for situations that can be considered temporary absences. A foreigner who has lived or worked in Singapore for 183 days or more in a year before the year of assessment is also considered a tax resident. However, this condition does not apply to company directors. In all other cases, individuals are taxed as non-residents.

The personal income tax rate for a resident in Singapore is a progressive one and it is related to the value of the income. Thus, general partners who derive a higher income will pay a higher tax, at the current maximum of 22%. The lowest personal income tax rate is 0% on the first 20,000 SGD and 2% on the next 10,000 SGD.

When the general partner is a company, the corporate income tax rate at which it will be taxed at 17%. You can also watch our video below:

What are the filing requirements for general partnerships in Singapore? 

The partnership is not required to pay tax in the same manner as other legal entities, however, it must still observe the filing procedures related to accounting in Singapore. The general partnership needs to file an annual income tax return with the Inland Revenue Authority of Singapore that reflects the total income made by the partnership in the given tax year as well as any deductions claimed for expenses made in connection to running the business.

The income tax treatment for limited partnerships and limited liability partnerships is different in Singapore and we recommend that investors get in touch with an accountant in Singapore from our team in order to find out what specific conditions apply in these cases.

The general partnership is a business structure used by at least two and a maximum of 20 investors who are willing to share profits and need to observe the taxation principles on their share of income from the business. The level of liability is a high one, much as in the case of the sole proprietorship, and each partner can be liable for the actions of the others, meaning that careful consideration should be awarded to all aspects of doing business, including observing the taxation requirements.

We invite you to contact us for complete accounting services in Singapore irrespective of the type of partnership or other legal structure. We offer complete and tailored accounting solutions, suited to both local and foreign investors.