Guide to Corporate taxes in Singapore
The simplicity of setting up a business operation in Singapore has attracted many foreign companies to conduct business in the country. Another prime attraction for foreign companies is the liberal tax policy that provides a lot of tax incentives to businesses. Its comprehensive double-tax treaties, one tier-tax system, free capital gains tax, tax relief rules, and attractive personal and corporate tax rates have made Singapore an attractive destination for investors and businesses alike.
This guide presents a general overview of the different taxes that individuals and corporations need to pay when conducting business in Singapore.
Singapore’s Corporate Tax Rates
|Nature of income||Tax rate|
|Corporate Profits up to S$300,000||8.50%|
|Corporate Profits exceeding S$300,000||17%|
|Capital gains accrual of a company||0%|
|Shareholders’ dividend distribution||0%|
|Income from foreign sources not brought in to the country||0%|
|Income from foreign sources brought in to the country||0-17% depending on cases|
Basic Facts about Singapore’s System of Income Tax
Maximum 17% corporate tax rate
Maximum personal income tax 20%
GST of 7%
Corporate tax filing timeline
Estimated Chargeable Income (ECI) filing
ECI means Estimated Chargeable Income. It is an estimate of company's chargeable income for a Year of Assessment.
All companies have to submit their Estimated Chargeable Income (ECI) within three months from the closing of their accounting year.
The ECI needs to be reported even if a company estimates its chargeable income as zero. Once the ECI is filed, IRAS will send a Notice of Assessment to the company and your company will need to pay the taxes. If there is a significant difference between the ECI provided and the chargeable income reported in the Form C/ Form C-S (Final return), IRAS may require the company to provide an explanation.
Figures reported in ECI are based on approximate figures of your accounts.
Form C/ C-S filing
By November 30th of the assessment year you are required to file a form C / C-S for your company. This can be called as a final return submission. For most of the small organisations the amount of income reported in ECI and in form C is same. However if there are differences then additional tax may need to be paid. The figures reported in form C / C-S are based on finalised figures of your accounts.
The secretarial firm you engage for incorporation of your company will be able to provide services for ECI and form C / C-S filing.
Tax-governing Body in Singapore
Matters involving individual and corporate taxes are governed by Income Tax Act of Singapore. This law empowers the IRAS or Inland Revenue of Authority of Singapore to implement tax measures in the country. This government body is known for its efficiency in managing, collecting, and effective administration of tax-related transactions.
Aside from its tax collection duties, IRAS also work closely with the Ministry of Finance in formulating tax policies, monitoring of external economic developments, and identifying tax measures that can be reviewed and changed. It also acts as the country’s representative in tax treaty negations, as well as advisor on property valuation and tax legislation.