Singapore’s corporate tax system is well-regarded for its competitive rates, ease of compliance, and numerous tax incentives. Here are the key aspects to consider:
- Corporate Tax Rate: The standard corporate tax rate in Singapore is 17%. However, effective rates can be significantly lower due to various incentives and exemptions.
- Start-up Tax Exemption (SUTE) Scheme: For qualifying new start-up companies, the first S$100,000 of normal chargeable income is exempt from tax for each of the first three consecutive years of operation. A further 50% exemption is given on the next S$200,000 of normal chargeable income.
- Partial Tax Exemption Scheme: For companies that do not qualify for the SUTE, a partial tax exemption is available. The first S$10,000 of normal chargeable income is exempt from tax and a further 50% exemption is given on the next S$190,000 of normal chargeable income.
- Foreign-Sourced Income: Singapore follows a territorial basis of taxation, meaning foreign-sourced income is not subject to Singapore tax. However, foreign-sourced income received in Singapore by a resident company may be taxed, subject to certain exemptions.
- Double Taxation Agreements: Singapore has an extensive network of Double Taxation Agreements (DTAs) with various countries to prevent double-taxation of income. These agreements allow businesses to claim tax relief for taxes paid in foreign jurisdictions.
- Goods and Services Tax (GST): If the annual turnover of your company exceeds S$1 million, you are required to register for GST. The current GST rate is 7%.
- Filing Requirements: Companies must file an Estimated Chargeable Income (ECI) within three months from the end of their financial year. In addition, an annual tax return must be filed with the Inland Revenue Authority of Singapore (IRAS) by November 30th of each year.
- Record Keeping: Companies are required to keep proper records and accounts of business transactions. The records must be kept for at least five years from the end of the financial year in which the transactions occurred.
- Withholding Tax: If your company pays certain types of income to non-resident individuals or companies (such as interest, royalties, or management fees), you may need to withhold tax.
The specifics of your company’s tax obligations can vary depending on your business activities, structure, and whether you engage in international trade. Therefore, it’s recommended to consult with a tax advisor to fully understand your tax obligations.