Singapore Corporate Tax

• Singapore's effective corporate tax rate on profits up to S$300,000 is <9% .
• Singapore's corporate tax rate on profits above S$300,000 is 17%.

Note that there is a special tax exemption for startups. A qualifying Singapore start up can avail of a 0% tax rate on its first S$100,000 of profits for each of its first three consecutive tax filing years. To qualify for this exemption the company must a) be incorporated in Singapore, b) be a tax resident in Singapore, and c)  have a maximum of 20 shareholders, with at least one individual shareholder holding 10% of the shares.

Yes, you can. Any foreigner can incorporate a limited liability partnership (LLP) in Singapore. Once set up, the company is free to do business and receive income from other countries.

Yes. A newly incorporated Singapore corporation is eligible for a partial tax exemption during its first three tax filing years. A Singapore incorporated, local resident company with a maximum of 20 shareholders of which at least one individual shareholder has a 10% shareholding in the company is exempt from paying tax on its first S$100,000 of taxable income during the first three consecutive years of company incorporation.

Only a newly incorporated Singapore corporation that is a Singapore tax resident is eligible for the partial tax exemption (i.e. 0% tax on the first S$100,000 of taxable income for the first three tax filing years), provided it has a maximum of 20 shareholders of which at least one individual shareholder has a 10% shareholding in the company.

The following types of income are generally considered "non-taxable" income in Singapore:

• Capital gains such as,
  • Gains on sale of fixed assets; or
  • Gains on foreign exchange on capital transactions.
• Income that qualifies for tax exemption under the Income Tax Act such as,
  • Exempt shipping income derived by a shipping company;
  • Foreign-sourced income such foreign-sourced dividends, branch profits, or service income that is remitted into Singapore, provided the income was already subject to a minimum headline tax rate of 15% in a foreign jurisdiction.
• Foreign-sourced income that is not remitted into Singapore.

• A Singapore corporation must file its tax returns on annual basis by November 30 of each Year of Assessment (YA).
• The following documents must be filed with the Inland Revenue Authority of Singapore:
  • Form C: A prescribed form for declaring income,
  • Audited or unaudited accounts: Small exempt private companies (i.e. companies with no corporate shareholders, < 20 individual shareholders, and with < S$5 million annual revenue), and dormant companies (i.e. no accounting transactions during the year) can submit unaudited accounts.
  • Tax computation statement: Statement showing the corporation's taxable income after making relevant adjustments such as deductions from the net profit or loss.
• Note that a Singapore corporation must declare its revenue amount and Estimated Chargeable Income (ECI) by filing an ECI form with the tax department within 3 months of its financial year-end.

There is no difference in the tax rates for resident and non-resident corporations. However, non-resident corporations are not eligible for tax exemptions and benefits that include the following:

1. A partial tax exemption for a new Singapore corporation i.e. a 0% tax rate on the first S$100,000 taxable income for each of the first three tax filing years for a newly incorporated Singapore company, subject to certain qualifying criteria.
2. Tax benefits that are accorded to companies under the various tax treaties that Singapore has concluded with various countries.
3. Tax exemption for foreign sourced income that is remitted into Singapore if  that income was subject to at least a 15% headline tax rate in the foreign jurisdiction.

The above benefits apply only to Singapore resident companies.

A company is a tax resident of Singapore if its control and management is exercised in Singapore. In other words, the execution of management decisions by the company's board of directors is carried out in Singapore.

A company is considered a non-resident of Singapore for tax purposes when its control and management is exercised from outside Singapore. In other words, all board level decision making takes place outside Singapore.

There is no dividend tax in Singapore.

No. Capital gains are tax exempt in Singapore.

• Singapore has entered into more than 50 comprehensive double tax treaties with major countries around the world to minimize the occurrence of double taxation of income, while limited tax treaties cover shipping and/or air transport income.
• Depending upon the specific treaty, a Singapore corporation can avoid double taxation of income by the following means:
  • Tax credit relief i.e. credit will provided for foreign taxes paid by the Singapore corporation.
  • Tax exemption: The whole or a portion of the foreign income will be exempt from tax in Singapore.
  • Reduced tax rate: Certain types of income such as interest, dividends, royalties and profits from international shipping and air transport will be taxed at lower rates in Singapore.
  • Tax deduction: Singapore taxes only that portion of foreign income that is remitted into Singapore.
• Double taxation relief should be claimed while filing annual tax returns and must be reflected in the Singapore corporation's tax computation statement.
• If foreign income is received from non-treaty countries, a uni-lateral tax credit can be availed for.

Well, that would depend upon the taxation policy of your home country. However, Singapore has concluded 67 comprehensive tax treaties with partnering countries to help Singapore companies and individuals from being taxed by both countries. Singapore's double tax relief measures include tax credits, tax exemptions, reduced tax rates and relief by deduction.

Yes. Singapore imposes an indirect consumption tax - Goods and Services tax (GST) @ 7% on the supply of goods and services in Singapore and the import of goods into Singapore. Here are a few pointers on GST in Singapore:

• GST is applied to the selling price of goods and services consumed in Singapore.
• You must be a GST registered corporation if you want to charge GST to your customers.
• Note that GST is a tax paid by consumers.
• The sale and lease of residential land, and financial services are exempt from GST.
• There is no GST on export of goods and services out of Singapore.
• If your turnover turnover exceeds or is expected to exceed S$1million you must register for GST.
• If you do not qualify for GST registration you can still choose to voluntarily apply.
• GST returns must be filed with the tax department every 3 months.
• You must make GST payments to the tax department within one month of the end of the accounting period.

Your Singapore corporation is required to register for GST only if its annual turnover exceeds or is expected to exceed S$1million.

• A GST registered Singapore corporation must file GST returns once every three months.
• GST returns can be filed online.
• GST returns must be filed within a maximum period of one month after the end of the accounting period.
• 'Nil' returns must be submitted if there is no tax due for the accounting period.

• Yes. Non-resident companies or individuals who earn income in Singapore as a result of work done or services provided in Singapore are liable to withholding tax i.e. a certain percentage of their Singapore sourced income will be withheld and paid to the Singapore tax department.
• Only certain payments such as interest, royalties, rent from movable properties, management fees, director's fees and professional service fees are subject to withholding tax in Singapore.
• There is no withholding tax on dividends in Singapore.
• The withholding tax rate varies from 10% , 15%, 17%, to 20% depending upon the type of payment being made.