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Taxation System in Singapore

Resident Company

An organization is resident in Singapore if the administration and control of its business is practiced in Singapore. Administration and control of an organization’s business for the most part is vested in its members of board of directors.

Corporate Tax for Singapore companies

Corporation tax in Singapore is 17% for tax resident Singapore companies for income sourced from local or foreign remitted to Singapore; capital gains tax is not imposed by the government. The GST rate is very low at only 7%; it will be taxed in a progressive way at the ranges between 2% and 20% for personal income.

 

Singapore Quick Tax Facts for Companies
Corporate income tax rate 17%, with a partial exemption on the first SGD 300,000 of chargeable income
Branch tax rate 17%, with a partial exemption on the first SGD 300,000 of chargeable income
Capital gains tax rate Not taxable
Basis of taxation for residentsTerritorial, but foreign-source income may be taxable if received or deemed received in Singapore
Abroad Participation ExemptionYes, safe harbor provisions apply in respect of gains from disposals of equity securities, subject to certain conditions
Loss relief
- Carryforward
Indefinit
− Carryback1 year
Double taxation relief
Yes
Tax consolidationNo, but there is a group relief system for the
transfer of current-year loss items
Transfer pricing rulesYes
Thin capitalization rules No
Controlled foreign company rulesNo
Withholding Tax
− Dividends0%
− Interest0%/15%
− Royalties0%/15%
Technical Service Fee17%
− Branch remittance tax0%
Capital tax No
Real estate transfer taxProgressive up to 20% for non-owner occupied
residential property; 10% flat for other properties
Social security contributions7.5%-17% (employer portion), depending on age of employee
Capital taxNo
Stamp DutyVaries
GST
7% 
VAT

Tax Exemption and Rebate

Non-Resident Companies in Singapore

1. If a company’s income and profits are derived from overseas then it will be exempted for a non-resident Singapore company. As a result, it can be an exceptional entity to officially book worldwide income;

2. If an organization is supervised and controlled in Singapore, at that point it is viewed as a tax resident organization. Be that as it may, in the event that it is administered and controlled by directors and members living to outraise of Singapore, at that point it is considered as a non-tax resident organization;

3. If an organization is overseen and controlled in Singapore, at that point it is considered tax resident. On the other hand, if it is handled and controlled by members and directors residing outside Singapore, at that point it is considered as non-tax occupant.

4. A company formed in Singapore but considered as non-resident by the authorities is officially tax excused if all revenue and profits are derived from abroad. As a result, a well structured Singapore company can be an exceptional entity to lawfully reserve universal income. If a certain standard is met, it is probable for the overseas income of a Singapore resident company to be officially tax exempt;

5. The non-resident company must not have a Singapore bank account to claim for the foreign income to be tax exempted. Organizations are required to hold international bank accounts.

Tax Resident Companies

1. For a fresh registered Singapore resident organization that have close to 20 investors all through the premise time frame for that year where the majority of the investors are people holding the shares in their own particular names, or if nothing else one investor is an individual holding no less than 10% of the issued ordinary shares of the organization, business visionaries appreciate charge refund on the benefit in the initial three monetary years. 100% duty exclusion is feasible on the initial S$100,000 (US$78,000) and 50% exception on the following S$200,000 (US$157,000). The workable tax rate for an organization with S$300,000 of yearly pay in the course of this period is 5.7%. To access our corporation tax calculator click here;

2. The global withholding taxes can be minimized by the country’s 76 double taxation treaties which benefit the Singapore tax resident;

3. Singapore’s current budget plans (2008-2014) have commenced various tax deductions and credits for research and development movement. Singapore’s tax specialists released the most recent R&D

Examples for Clarify Tax System in Singapore

Tax exemption and partial tax exemption system for new start-up companies Companies can have the benefit of the partial tax exemption and tax exemption for new start-up companies, as given in the tables below.

 

Year of Assessment
(YA)
Tax rateTax exemption/ rebate
From 201017%
Partial tax exemption for companies
Chargeable income
% exempted from Tax
Amount exempted from Tax
First 10,000 SGD
@75%
7,500 SGD
Next 290,000 SGD
@50%
145,000 SGD
Total 300,000 SGD
152,500 SGD
Tax exemption scheme for new start-up companies
Chargeable income
% exempted from Tax
Amount exempted from Tax
First 100,000 SGD
@100%
100,000 SGD
Next 200,000 SGD
@50%100,000 SGD

2013 to 2018 year Corporate Income Tax Rebate

To deal with the increasing business cost Corporate Income Tax (CIT) Rebate is prearranged for all companies. The Finance Minister has declared in Budget 2017 that the CIT Rebate cap for YA 2017 will be elevated from $20,000 to $25,000 to help out businesses deal with the economic insecurity and carry on reformation. The rebate percentage will continue unaffected, at 50% of the corporate tax to be paid. In accumulation, the corporate income tax rebate will be based on the AY 2018 at a cheap rate of 20% on the total tax to be paid by the company with a capping of $10,000.

Below are the details of recapitulates for CIT Rebate in percentage and capping.

 

Year of Assessment (YA)
Corporate Income Tax Rebate
Capped at
201820%10,000 SGD
201750%25,000 SGD
201650%20,000 SGD
2013 - 201530%30,000 SGD

 

The rebate won’t make a difference to the income inferred by a non-resident organization that is liable to definite withholding tax. Organizations need not factor in the Corporate Income Tax Rebate when documenting the Estimated Chargeable Income and the Income Tax Return (Form C-S/C) as IRAS will figure it and permit the Corporate Income Tax Rebate naturally. Includes Registered Business Trusts, non-resident organizations that are not liable to a last withholding tax and organizations that get pay saddled at a concessionary charge rate.

2013 to 2018 year Corporate Income Tax Rebate

The CIT rebate is computed based on the taxes payable by the company post deduction of the abroad tax credits.

Example (1): Company with no taxable income

Chargeable income
Equal
Nil
Tax payable
EqualNil

Since there is no tax amount payable Tax Rebate for Corporate Income does not apply.

Example (2): Company with income chargeable at 17%

Year 2017

Chargeable income (after exempt amount)
500,000 SGD
Tax payable at 17%
85,000 SGD
Less: Corporate Income Tax Rebate ($85,000 x 50%, restricted to cap of $25,000)
25,000 SGD
Net tax payable60,000 SGD

 

Year 2018

Chargeable income (after exempt amount)
500,000 SGD
Tax payable at 17%
85,000 SGD
Less: Corporate Income Tax Rebate ($85,000 x 20%, restricted to cap of $10,000)10,000 SGD
Net tax payable75,000 SGD

Withholding Taxes

Dividends

No withholding charge is imposed on profits paid by organizations resident in Singapore. A 15% of interest is to be paid for the non-resident companies withholding charge unless the rate is diminished under a domestic exception or a tax treaty. Exclusions or reduced withholding taxes pertain to specific sorts of interests, for example, interest on interbank/interbranch exchanges of affirmed banks, interest gained on agreed bank deposit and Asian dollar bonds, swap exchanges on Asian cash units (other than Singapore dollars), interest  paid on loans got to secure qualifying vessels and certain affirmed overseas advances to purchase productive equipment.

 

The 15% tax is a final tax and be relevant just to interest not got by the non-resident from a business agreed on in Singapore and not inferable from a permanent establishment in Singapore. Any interest that does not fit the bill for the decreased rate will be exhausted at the predominant corporate tax rate.

Royalties

A 10% withholding tax applies to eminence installments made to an alien unless the rate is lessened under a local exception or an expensive arrangement. Singapore adopts a rights-based strategy to programming installments and installments for the utilization of, or the privilege to utilize, data and digitized merchandise. By and large, installments for the exchange of a “copyright right” pull in withholding charge, while an exchange of a “copyrighted article” does not. Comprehensively, the exchange of a copyright right enables the payer to “financially abuse” such right, which may involve the generation, adjustment or adaption and dispersion of the product, data or digitized merchandise; or the readiness of subsidiary works in view of the copyrighted programming system, data or digitized merchandise for dissemination.

The 10% assessment is the last expense and applies just to eminences not got by the alien from a business carried on in Singapore and not owing to a changeless foundation in Singapore. Any sovereignty that does not fit the bill for the decreased rate will be exhausted at the predominant corporate assessment rate.

Branch Remittance Tax

Branch remittance tax is not levied in Singapore.

Wage Tax/Social security Contributions

Singapore does not impose payroll tax.

Social security contributions for Singapore

The employee is a Singapore citizen or permanent resident (an immigration status) then both the parties the employers and employees should pay every month a certain amount to the Central Provident Fund (CPF) on cash emoluments who are exercising employment in Singapore.

Overseas employees (who are neither citizens nor permanent residents) and their company owners are not compulsory to donate to the CPF.

For the CPF it is 17% of the employer’s statutory contribution, subject to a monthly normal wage upper limit of SGD 6,000 and an overall annual wage ceiling of SGD 102,000.

The rate of the employee’s contribution is 20%. The contribution is paid by the employer (in reverence of its own liability and that of the member of staff).

If the employees are the under the age of 55 then these CPF rates are applicable and reduced CPF rates (as low as 7.5% for employers and 5% for employees) are appropriate for workers above 55 years of age.

Goods and services tax (GST)

The GST system of Singapore is based on a European-style VAT system. The GST is implied on the goods and services supplied by a chargeable person in Singapore and on the goods imported by the individual in Singapore.

GST in Singapore is categorized into three types for goods & services:

(1) Standard items are rated at 7% tax which includes commercial property transactions

(2) Items rated at zero include goods & services that are sold abroad

(3) Items which are exempted are the transaction and lease on residential lands, a sale of investment valuable metal and the provision of certain financial services.

The goods and services supplied domestically are standard-rated. International services and exported goods are zero-rated, but the people who supply zero-rated goods & services are still permitted to get credits or refunds for GST paid on their purchases.

Filing and Payment

From the end of a company’s financial year, it should present an estimated chargeable income to the IRAS. If the company is prompt in supplying the estimated chargeable income, then the projected tax might be paid in up to 10 installments.

Singapore Taxation and Investment 2017 (Updated June 2017) 17

The deadline for filing Singapore tax return is 30 November of the assessment year for profits produced in the previous financial year, an extension can be made till 15 December if the return is offered electronically. Usually, the taxes are to be paid within one month from the date of a notice of assessment.

From the 2020 year of assessment the IRAS will be the bringing-in electronic filing of corporate income tax returns and all companies will be essentially filed electronically

Accounting, Filing and Auditing Requirements

A Singapore company is required to register for GST if its annual sales go beyond or are expected to go over $ 1 million in any calendar year accordance with GST Law. AbroadBiz will be glad to help you with GST registration for a one-time payment.

Within 6 months of the end of the assessment year, the annual unaudited financial statements are to be submitted with the Accounting and Corporate Regulatory Authority (ACRA). Our company is an expert in accounting and bookkeeping services;

If the corporate turnover is below US$4 million and if there is no corporate shareholder then annual statutory financial audit is not necessary;

According to Section 197(1)(b) of the Accounting and Corporate Regulatory Authority (ACRA) entails a fine of S$300 for delayed filing of the annual return. The business director(s) are answerable to make sure an Annual General Meeting is held on time and the Annual Return is filed within one month of the same. Failing to comply with it is regarded as a fault and can lead to the prosecution of the director(s);

If the company comes under the category of a small company then annual statuary financial audit is not required. To be deemed as a small company, it is mandatory to fulfill 2 of the following circumstances for the earlier two periods of successive financial years:

  1. Should contain total annual profits less than SG$10 million,
  2. The overall assets should not be less than SG$10 million and
  3. The number of employees should be less than 50

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