Guide to Singapore Corporate Tax: Key Information for Businesses

Singapore’s corporate tax system is designed to be efficient and business-friendly, offering competitive rates, a simple structure, and numerous incentives. At Apexia Corporate Advisory, we provide expert guidance to help businesses navigate the complexities of corporate taxation in Singapore.

• Single-Tier Tax System
  • Corporate profits are taxed only once at the company level.
  • Dividends paid to shareholders are tax-exempt.
• Flat Corporate Tax Rate
  • The corporate tax rate in Singapore is a flat 17%, one of the lowest globally.
• No Capital Gains Tax
  • Gains from the sale of investments or assets are not taxed, providing businesses with greater financial flexibility.

Basis Period & Year of Assessment

Your company is taxed on the income earned in the preceding financial year.

This means that income earned in the financial year 2024 will be taxed in 2025. In tax terms, 2025 is the Year of Assessment (YA), as it is the year in which your company’s income is assessed to tax.

To assess the amount of tax, IRAS looks at the income, expenses, etc. during the financial year. This financial year is known as the 'basis period'.

The basis period is generally a 12-month period preceding the YA.

• Standard Corporate Tax Rate
  • A flat rate of 17% applies to taxable income for all companies.
• Effective Tax Rate
  • Due to tax exemptions and incentives, the effective tax rate for many companies is significantly lower than the standard rate.

Corporate Tax Incentives and Exemptions

Singapore offers a range of incentives and exemptions to support businesses, especially start-ups and SMEs:

• Start-Up Tax Exemption (SUTE)
  • For qualifying new start-ups, the following exemptions apply to the first three years:
    • 75% exemption on the first S$100,000 of taxable income.
    • 50% exemption on the next S$100,000.
• Partial Tax Exemption (PTE)
  • For companies not eligible for SUTE, the Partial Tax Exemption applies:
    • 75% exemption on the first S$10,000 of taxable income.
    • 50% exemption on the next S$190,000.
• Productivity and Innovation Credit (PIC)
  • Tax deductions and cash payouts for businesses investing in innovation and productivity improvements.
• Double Tax Agreements (DTAs)
  • Singapore’s extensive DTA network with over 80 countries minimizes the risk of double taxation for businesses with cross-border operations.

Other Taxes Relevant to Businesses

• Goods and Services Tax (GST)
  • GST is a value-added tax levied on the supply of goods and services in Singapore. The current GST rate is 8% (as of 2023), increasing to 9% in 2024.
  • Businesses with an annual taxable turnover exceeding S$1 million must register for GST.
• Withholding Tax
  • Applicable to certain payments made to non-residents, such as:
    • Interest
    • Royalties
    • Management fees
  • The rates vary based on the type of payment and applicable DTAs.
• Property Tax
  • Levied on properties owned by businesses, based on the annual value of the property.

Corporate Tax Filing Requirements

• Estimated Chargeable Income (ECI)
  • Companies must file their ECI within three months from the end of their financial year.
• Annual Tax Returns
  • Companies must submit Form C-S or Form C to the Inland Revenue Authority of Singapore (IRAS) by November 30 each year.
• Financial Statements
  • Companies are required to prepare financial statements in compliance with the Singapore Financial Reporting Standards (SFRS).

Benefits of Singapore’s Corporate Tax System

• Global Competitiveness:
  • Singapore’s low tax rates and business-friendly policies attract foreign investment.
• Tax Incentives for Growth:
  • Incentives like SUTE and PTE reduce tax burdens for start-ups and SMEs.
• No Tax on Dividends:
  • Dividends paid to shareholders are not subject to additional taxes.
• Simplified Compliance:
  • The tax filing process is streamlined with digital submissions via IRAS’s myTax Portal.

Common Mistakes to Avoid

• Missing Deadlines:
  • Late submission of tax returns or ECI can result in penalties.
• Misunderstanding Tax Incentives:
  • Ensure you meet the eligibility criteria for exemptions and rebates.
• Incorrect Tax Filings:
  • Errors in tax filings can lead to audits or additional tax liabilities.
• Failing to Declare All Sources of Income:
  • Ensure all income, including overseas income, is declared unless exempted.
• Overlooking Deductions:
  • Claiming non-deductible expenses or failing to claim allowable deductions can impact tax filings.
• Inaccurate Reporting:
  • Providing incorrect details in tax filings, such as financial data or company particulars, may lead to penalties.
• Not Keeping Proper Records:
  • Failure to maintain proper records for at least five years can result in compliance issues.

How Apexia Corporate Advisory Can Help

At Apexia, we provide tailored tax advisory services to help businesses navigate Singapore’s tax system effectively. Our experienced team offers guidance on tax laws and ensures compliance to minimize errors and avoid penalties. From filing accurate returns to leveraging available incentives, we help businesses achieve their financial goals while staying compliant with regulatory requirements.