Can you give an overview of corporate taxation in Singapore?
- Singapore adopts a territorial tax system whereby tax is imposed on all income accrued in or derived from Singapore, as well as on all foreign-sourced income remitted to the country. There are tax exemptions for a few types of qualifying foreign-sourced income (dividends, branch profits and service income).
- No capital gains tax in Singapore.
- No withholding tax on dividends.
- No capital duty, capital acquisitions tax, inheritance or estate tax, or even net worth/wealth tax in the city-state.
- Advance ruling on income tax implications before a transaction is possible.
- No significant restrictions on foreign exchange transactions and capital movements in Singapore.
- There are certain restrictions on the lending of Singapore Dollars (SGD) to non-resident financial institutions, but these restrictions do not apply to the lending of SGD to individuals and non-financial institutions, including corporate treasury centres.
- Inward re-domiciliation regime is available in Singapore (foreign entities can transfer their registration to Singapore, thereby retaining their corporate history and branding
What are the corporate tax rates in Singapore?
When are companies taxed in Singapore?
Does Singapore has a Goods & Services Tax (GST)?
Importantly, all Singapore companies and businesses with annual turnover exceeding S$1 million are required to register for GST.
How is withholding tax calculated in Singapore?
- 15% for interest, commission, fee in connection with any loan or indebtedness;
- 10% for royalty or other payments for the use of or the right to use any movable property;
- 10% for payments for the use of or the right to use scientific, technical, industrial or commercial knowledge or information or for the rendering of assistance or service in connection with the application or use of such knowledge or information;
- 17% for payments of management fees;
- 15% for rent or other payments for the use of any movable property;
- 15% for payments for the purchase of real property from a non-resident property trader.
How is corporate tax residency determined in Singapore?
Singapore has concluded Double Tax Agreement (DTA) with many countries. For a Singapore tax resident company to enjoy the benefits of DTA, the company has to obtain a Certificate of Residence (COR). In issuing a COR, the Inland Revenue Authority Of Singapore (IRAS) looks for the said company’s “fixed place of operations”. Generally, this refers to a place of management, an office, or a certain amount of floor space, with a degree of permanence and regular usage. Few pointers here are:
- from where the management and control of the company was exercised,
- the place of residence of the company’s executive directors, and
- location of the books and records of the company.
What are the tax forms that companies in Singapore must submit yearly?
- Estimated Chargeable Income (ECI) form must be submitted within three months from the company’s financial year end except for (a) companies that fulfil the conditions under the Administrative Concession; and (b) certain entities that are not required to file ECI; and
- Corporate Income Tax Returns commonly known as Form C-S or Form C must be submitted by November 30 (or December 15, in case of e-filing), of each year except dormant companies for which IRAS has waived the requirement to file.
How is a company’s fiscal year determined in Singapore?
Tips – we recommend our clients to keep the company’s FYE within 365 days for the first 3 YAs in order to take full advantage of full tax exemption scheme available for qualifying new start-up companies.
Does Singapore allow the offsetting of losses?
When is the corporate tax filing season in Singapore?
(a) e-filing: December 15, 2018
(b) Paper filing: November 30, 2018
These dates are the same every year. Do note that Singapore companies have 11 months – if their financial year ends in December, to 22 months – if their financial year ends in January, to prepare and file their returns.
What are the time frames for corporate tax filing in Singapore?
Also, importantly, companies can enjoy up to 10 interest-free monthly instalments when they file their Estimated Chargeable Income electronically within three months from their financial year end.
Currently, about 81 percent of corporate taxpayers file their tax returns on time in Singapore.
What happens if companies don’t file their tax returns on time?
- When payment is not received by the due date, a 5% penalty can be imposed on the overdue tax.
- A 1% additional penalty per month may be imposed if the tax is still not paid 60 days after the 5% penalty is imposed.
- The 1% penalty is imposed for each month that the tax remains unpaid, up to a maximum of 12 months.
What is the difference between Form C-S/Form C in Singapore?
From YA 2017, companies will qualify to file Form C-S – an Income Tax Return form simplified to three pages – if they meet all of the following conditions:
- incorporated in Singapore;
- an annual revenue of $5 million or below
- only derives income taxable at the prevailing corporate tax rate of 17%; and
- is not claiming any of the following in the YA:
- carry-back of Current Year Capital Allowances / Tax Losses
- group relief
- investment allowance
- foreign tax credit and tax deducted at source
Companies that do not meet the Form C-S qualifying conditions will need to file Form C together with their financial statements, tax computations and supporting schedules
How to calculate taxable income in Singapore?
Generally, deductible business expenses are those ‘wholly and exclusively incurred in the production of income’. Meanwhile, non-deductible business expenses includes personal expenses such as travel or entertainment not related to the running of the business, and capital expenses such as expenses incurred to incorporate a company and purchases of fixed assets.
What are the common mistakes to avoid while calculating the taxable income in Singapore?
A company may receive different streams of income taxable at different tax rates, i.e. the prevailing corporate tax rate and concessionary tax rates. That’s why it is important to avoid incorrect classification of non-qualifying income under the concessionary tax rate category; incorrect identification of direct and common expenses; and adoption of inappropriate bases in the allocation of common expenses and capital allowances.
What are the capital gains tax rates in Singapore?
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