Frequently asked questions about Singapore corporate taxes
- The initial annual profit of S$100,000 is tax exempted in each of the first three years;
- The succeeding annual profit of S$200,000 is subject to 8.5% tax rate;
- A flat tax rate of 17% is applied to profits beyond the S$300,000 earnings.
In Singapore, the tax related information must be filed with IRAS two times.
Firstly- Within 3 months from the accounting year end you must file ECI (Estimated chargeable income) with IRAS. This as name suggest is estimated amount.
Then by November 30 of the assessment year you must file a corporate tax return. The tax return must cover earnings from the company’s last financial year.
Figures reported in tax return can differ from ECI, however in case of huge differences the explanation must be provided.
Unaudited accounts can be filed by a company provided that it meets all of the following criteria:
- Annual revenue of the company does not go beyond S$5 million;
- The company has 20 or less total shareholders;
All shareholders are individuals.
All other companies, are mandated by tax authorities to file audited accounts.
To attract more investments, Singapore provides tax exemption on capital gains provided that these earnings are not derived solely from investments trading.
Singapore does not tax dividends on earnings from shareholdings. The tax-free earnings can then be divided among shareholders.
- Its shareholders must be 20 or less;
- At least one individual shareholder must own 10% of the total shares of the company;
- It must be incorporated in Singapore; and
- It must be a Singapore tax-resident.
- In its first three years of operation, the first S$100,000 taxable income in each of the year is not taxed. The next S$200,000 will have a partial exemption tax rate of 8.5 percent. Earnings beyond S$300,000 are subject to the normal 17% corporate tax rate.
- Beyond three years, the company will enjoy a 9% corporate tax rate for any taxable income not exceeding S$300,000; in excess of the said amount, the 17% corporate tax rate applies.
No. There is no limitation on the amount of dividend that can be declared and repatriated out of Singapore. The only practical limitation can be the amount of profit and amount available in your bank account.
No. Dividend is paid out of post-tax profit of the company. It needs to be approved in the AGM of the company. So as such it is done annually once.
The exemptions and tax privileges accorded in the first three years of operations cannot be carried over to subsequent years, even when a company is not able to claim such benefits.
A tax return and ECI filing is mandatory for every Singapore company regardless of its earnings.
The unutilised losses can be carried forward to offset against your company's assessable income for the subsequent YAs if there is no substantial change in the shareholders* and their shareholdings as at the relevant dates.
Similarly, the unutilised capital allowances can be carry forward to offset against the assessable income of the subsequent YAs if there is no substantial change in the shareholders* and their shareholdings as at the relevant dates and there is no change in the company’s principal activities during the relevant dates.
Taxes are charged on the profits of the company. Which is calculated after deducting business expenses from the sales receipt.
Royalty income, whether generated in Singapore or generated outside but received into the country, is subject to tax. This refers to income from payments received on the use of copyrighted materials, trademarks, or patents.
For a company whose main business is of stock / derivatives trading, the income generated is considered as a business income. As such any company that deals solely on stock trading cannot enjoy the capital gains exemption privilege as the profits earned from trading is considered as its income.
Yes in most of the circumstances (Depending on DTA) you can claim credit from tax payable for the tax withheld in overseas country. For this you will need to provide withholding tax certificate at the time of filing your company’s income tax return.