singbusiness

Tax Rates and Exemptions for Companies

Taxation Guide Companies

Definition and Filing
Tax Rates and Deductions
Tax Exemption Schemes

Definition and Filing

A company qualifies for taxation in Singapore if

  • its business entity is incorporated or registered under the Companies Act or any law in force in Singapore.
  • a foreign company registered in Singapore such as a branch
  • a foreign company incorporated or registered outside Singapore

Filing

For companies with December financial year end the basis period for each YA is the preceding calendar year ended 31 December.

Companies with non-December financial year end the basis period for each YA is the preceding accounting year ended 30 June.

Each company has to furnish an estimate of its chargeable income known as Estimated Chargeable Income (ECI) within three months from the end of its accounting period.

Furthermore, each company is required to declare its income by completing an Income Tax Form for companies, known as Form C, each year. The due date for filing of Form C for each YA is 30 Nov of each year.

Download IRAS' "Essential Information for Newly Incorporated Companies

Proper records of its financial transactions and retain the source documents, accounting records and schedules, bank statements and any other records of transactions connected with your business must be maintained and a company must retain the records for a period offive years from the relevant YA.

Tax Rates

Singapore adopts a one-tier corporate tax system under which tax paid by a company on its chargeable income is the final tax. All dividends paid by a company are exempt from tax in the hands of the shareholders.

A company is taxed at a flat rate of 17% (2010) on its chargeable

  • income accruing in or derived from Singapore
  • income received in Singapore from outside Singapore
    • gains or profits from any trade or business
    • income from investment such as dividends, interest and rental
    • royalties, premiums and any other profits from property
    • other gains of an income nature

Capital gain such as gains on sale of fixed assets or gains on foreign exchange on capital transactions is not taxable.

Some Income such as foreign-sourced dividends, branch profits & service income received by a resident company that satisfies the qualifying conditions may be exempted from tax under the provisions of the Singapore Income Tax Act.

For further information see IRAS.

Deductions

  • Productivity and Innovation Credit
  • Business expenses
  • Capital allowances
  • Industrial building allowance
  • Land intensification allowance
  • Unutilised losses, capital allowances and donations
  • Group relief
  • Loss carry-back relief

see IRAS for definitions

Tax Exemption Schemes

Effective from YA 2008, a partial tax exemption is given to companies on normal chargeable income (excluding Singapore franked dividends) of up to $300,000 as follows:

Exempt amount

First  $  10,000 @ 75% = $    7,500
Next  $290,000 @ 50% = $145,000
Total $300,000      $152,500

Tax exemption scheme for new start-up companies

A qualifying company can claim

  • for full tax exemption on the first $100,000 of normal chargeable income (excluding Singapore franked dividends) for its first three consecutive YA.
  • a further 50% exemption is given on the next $200,000 on a qualifying company's normal chargeable income (excluding Singapore franked dividends).

Exempt amount

First  $100,000 @ 100% = $100,000
Next  $200,000 @  50% = $100,000
Total $300,000      $200,000

How to qualify for the start-up exemption

  • be incorporated in Singapore
  • be a tax resident in Singapore for that YA
  • have no more than 20 shareholders throughout the basis period for that YA where
    • all of the shareholders are individuals beneficially and directly holding the shares in their own names; OR
    • at least one shareholder is an individual beneficially and directly holding at least 10% of the issued ordinary shares of the company.