Singapore Corporate Tax
Corporate tax is present in all jurisdictions. In the year 2003, Singapore introduced a Single Tier system for filing all corporate tax requirements. In the single tire system of corporate tax, there isn't any form of double taxation levied on the company's services. The tax rate of the company is charged based on the revenues and profits earned. The amount of tax is charged on the revenues earned by the business. For tax purposes, the business is only taxed once on the revenue or profits earned. Dividends that are offered to shareholders are exempt from any form of tax. Hence, through the Singapore Corporate Tax system, the system of double taxation is avoided.
The current rate of corporate tax charged in Singapore is 17%. However, several exemptions are provided to small businesses and entrepreneurs. Apart from this, there is no form of capital gains tax charged on the properties in Singapore.
Why is the Submission of Singapore Corporate Tax Crucial?
In every jurisdiction, companies are required to file corporate taxes with the respective revenue authorities. Non-compliance of filing taxes is a punishable offence. Moreover, a company filing taxes would get additional benefits, such as different forms of incentives and tax schemes. Filing tax under Singapore corporate tax is crucial for the following reasons:
- It ensures that your company or entity is complying with the respective laws.
- Filing regular tax returns will ensure the smooth and seamless integration of your company.
- All jurisdictions around the world require companies to file tax returns. Similarly, in Singapore, tax is filed to ensure the development of the nation.
- Singapore corporate tax follows the Single tier system of taxation. Due to this, no form of double taxation is charged on the company. Because of this, Singapore is an attractive hub for foreign investments. Thriving business opportunities are due to this form of taxation.
- In compliance with the rules of the ACRA and IRAS, companies require to maintain records of the tax filed. Apart from the above institution's, compliance has to be maintained with the Singapore Companies Act.
- By levying tax on entities, businesses can receive additional taxation benefits. Such benefits act as an exemption for running the business.
Who Regulates Singapore Corporate Tax
The primary regulatory authority for Singapore Corporate Tax is the Inland Revenue Authority of Singapore (IRAS). They are responsible for setting corporate taxes for different entities in Singapore. Apart from this, IRAS carries out all the processes of tax within the jurisdiction of Singapore. The Singapore Companies Act provides the minimum requirement of corporate tax for all entities registered as businesses in Singapore. An entity that is registered as a business in Singapore has to find out whether it is eligible for any form of exemptions under Singapore Corporate Tax. If the entity is eligible for any exemptions, then it must make an application to the IRAS.
Eligibility criteria for Singapore Corporate Tax
- Any corporate entity that is registered in Singapore would have to file a minimum amount of corporate tax.
- All businesses that are registered in Singapore are required to file corporate tax. The rate of corporate tax in Singapore is 17%.
- A company or entity in Singapore has to be considered a tax resident in Singapore to levy any form of tax. A tax resident in Singapore is a company that carries out business in Singapore.
- A foreign company that carries out business through a branch office is considered a tax resident in Singapore.
- If the services are provided in Singapore by an international company, it is considered a resident in Singapore to file tax to the IRAS.
- Even if the services are conducted outside by a foreign company, and the remuneration is received in a Singapore bank account, then for corporate tax treatment, the company is considered a tax resident of Singapore.
- If the services or remuneration is not received in Singapore, then no corporate tax can be levied on the company.
Types of Singapore Corporate Taxes
The following taxes are present under the Singapore Corporate Tax regime:
General Corporate Tax in Singapore
This is the tax levied by the IRAS on all entities which have their business registered in Singapore. The residential status of the individual would be considered to determine whether the corporate tax would be levied or not. If the company falls under the definition of a tax resident, then this form of tax is levied on its revenues. However, there is no amount of double taxation levied on the revenues of the business. Smaller businesses or start-up companies can claim several exemptions. If they are eligible, then they would have to apply for an exemption.
Singapore Personal Tax
Personal Tax is levied on an individual. This is a form of an individual tax that is present. This tax would be applicable for entrepreneurs and employees receiving a taxable salary. The amount of tax applicable to income below SGD 20,000 is 0%. Income, which is more than this amount, is charged accordingly as per the tax rates under the IRAS.
Singapore Goods and Services Tax
Singapore Goods and Services Tax (Singapore GST) is a form of value-added tax charged on the import of goods and services in Singapore. This is also charged within the borders of Singapore; the tax levied on the supply of goods and services. In the chain of tax cycle, there are raw materials suppliers, manufacturers, and consumers. The GST tax is levied on all processes of the taxation chain until it reaches the final customer. The current rate of GST in Singapore stands at 7%.
Singapore Property Tax
A tax that is levied on the purchase of property is known as property tax. Property tax falls within the Singapore Corporate Tax regime. Property tax is charged on all industrials and commercial properties. The rate of property tax stands at 10%. Capital gains tax, obtained from the sale of the property, is not charged in Singapore.
Withholding tax is the Singapore Corporate tax charged on the amount of revenue that is withheld. This form of tax is paid to the IRAS. This tax is only applicable and charged on non-resident companies and individuals. When a non-residential company receives money or carries out a service for a Singaporean company and receives some income, this source of income must be withheld. Tax on the withheld amount must be paid to the IRAS. There are specific criteria for withholding tax:
- The income must come from a Singaporean Source.
- The services must be carried out for a Singaporean Client.
- The company must be termed as a non-resident to pay this form of tax.
- A person is considered a non-resident in Singapore if he has stayed for more than 183 days outside Singapore.
- Beneficial Owner/ beneficial control- When it comes to ownership and control of the organization, then it is important to understand the meaning of control. If foreign shareholders majorly control a foreign company, it is considered a foreign company for taxation. If the company is making decisions in Singapore and is controlled by shareholders predominantly based in Singapore, then it is characterized as a Singaporean resident for tax purposes.
The withholding tax is charged at the rates of the services. For the tax treatment, the rate of withholding tax chargeable on the company is different for specific services rendered.
Bilateral and Multilateral Taxes in Singapore
The Government of Singapore has entered into various bilateral and multilateral treaties with different countries to ensure that there is no system of double taxation present. This is beneficial for both the parties in the respective countries. Abolishing double taxation is one of the benefits of this form of taxation.
Singapore Corporate Tax Process
- To pay Singapore corporate rate, the company or entity must be classified as a tax resident in Singapore for the assessment year. For taxation, the year of assessment will be the previous year. This is a 12 month period. Take, for example; the tax has to be paid for 2020, then the year of assessment will be 1 April 2018 to 31 March 2019.
- The company has to check if there are any forms of exemptions that apply to it under the Singapore Corporate Tax Regime.
- If there are no exemptions then the company must carry out the corporate tax filing process. The rate at which the company has to file corporate tax is 17%.
- Corporate tax for an entity is filed by taking the number of taxable revenues less than the number of deductible expenses. Deductible expenses are classified as the expenses which are used in the production of the service or product. These exemptions are allowed by the IRAS as a deduction.
- An entity must show the number of deductible expenses when it is filing its corporate tax.
- The company is allowed to claim a specific amount of allowances. Such allowances are known as capital allowances. This will take care of the cost of writing off specific assets of the company.
- Corporate tax has to be filed within the prescribed deadline to the IRAS. There are different deadlines for online and offline methods. The following are the dates.
a) Online- 15 December.
b) Offline- 30 November ( Documentation Form).
Enterslice Advantage- Singapore Corporate Tax
At Enterslice, our professionals have expert knowledge of Singapore corporate tax services. We act as a one-stop-shop for all your business needs. Using our Singapore corporate tax services would provide you with the following benefits:
- We will assist you with the corporate tax filing with the IRAS.
- We monitor and keep you updated on the Corporate Tax Filing with the IRAS.
- We assist in checking if your entity is eligible for an exemption under the Singapore Corporate Tax Regime.
- We also help you in understanding the whole taxation process.