Companies are subject to "corporate taxes". The current corporate tax rate for all companies is a flat rate of 18%.
This guide is not meant to be a comprehensive guide on income tax. It only covers the tax obligations for companies.
The Basics
Tax Rates & Exemptions
Deductions & Reliefs
Double Taxation Agreements
Filing Your Estimated Chargeable Income
Filing Your Tax Return
Payment Of Taxes
Where Can I Get Help?
The Basics
Taxable Income
- Any income that is "accrued" or received in Singapore by a company is liable to tax.
- The company may be incorporated or registered in Singapore or elsewhere.
Capital Gains
- Capital gains are not subject to tax. For instance, if a manufacturing company sells the factory that it has been using to manufacture its goods, the profit on sale of the factory is not subject to tax.
One-Tier Corporate Tax System
- The one-tier corporate tax system, which took effect from 1 January 2003, was introduced to replace the old imputation system.
- Under the one-tier corporate tax system, Singapore resident companies can issue one-tier exempt dividends, i.e. shareholders will not be taxed on such dividend income.
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Tax Rates & Exemptions
- For Year of Assessment (YA) 2008 and YA 2009, companies are taxed at a flat rate of 18% on their chargeable income. From YA 2010 onwards, companies will be taxed at 17%.
- There are three tax exemptions to help companies tide through economic downturns, encourage entrepreneurship and position Singapore as a business hub.
Partial Tax Exemption*
- From the YA 2002, a partial tax exemption is given on the company’s chargeable income (excluding Singapore franked dividends) of up to S$100,000, which is subject to tax at the normal corporate tax rate as follows:
- 75% tax exemption for the first S$10,000 chargeable income
- 50% tax exemption for the next S$90,000 chargeable income
- From YA 2008, the amount of normal chargeable income (excluding Singapore franked dividends) qualifying for the partial tax exemption will be increased to S$300,000 and the tax exemption will be given as follows:
- 75% tax exemption for the first S$10,000 chargeable income
- 50% tax exemption for the next S$290,000 chargeable income
Full Tax Exemption For New Companies*
- With effect from YA 2005, full tax exemption can be granted on the first S$100,000 of the normal chargeable income (excluding Singapore franked dividends) for any of its first 3 consecutive YAs.
- From YA 2008, a further 50% exemption is given on the next S$200,000 of the normal chargeable income (excluding Singapore franked dividends) for each of its first 3 consecutive YAs.
- There are conditions and criteria you need to satisfy in order to make use of this tax exemption. Please refer to our write-up on Tax Exemption For Start-ups.
Tax Exemption For Foreign-Sourced Income*
- Foreign-sourced dividends, foreign branch profits and foreign-sourced service income remitted into Singapore on or after 1 June 2003 by a Singapore resident company will be tax exempt if:
- the headline tax rate of the foreign country from which income is received from is at least 15% in the year the income is received; and
- the foreign income had been subjected to tax in the foreign country from which they were received.
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Deductions & Reliefs
Your chargeable income (the portion that is subject to taxes) is your total income minus away any deductions and reliefs. To lower your taxes, you should make use of all available deductions and reliefs.
Deductible Expenses
- You can deduct expenses that are wholly and exclusively incurred in the production of the company's income.
Items such as rent, wages paid to employees, accounting fees, director’s fees and director’s salary are all considered "deductible expenses".
You need to pay particular attention to these expenses as different rules apply to them:
- medical expenses
- life insurance premium
- motor vehicle expenses
- research & development expenses
- interest expenses relating to non-income producing assets
- impairment loss on trade debts
Capital Allowances
- You may claim capital allowances when you purchase fixed assets for your company, e.g. machinery and furniture and fittings.
Unutilised Losses, Capital Allowances And Donations
- Losses, capital allowance and donations can be used to offset against adjusted profit. Any part of the losses or capital allowance not fully used to offset income in the financial year is termed as "unutilised" or "unabsorbed".
- You can also carry forward unutilised losses, capital allowances and donations to offset income made in the next financial year.
- With effect from Year of Assessment 2006, you can also carry back unutilised losses, capital allowances and donations of up to S$100,000 in the current year to offset the income made in the preceding year.
Group Relief
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Double Taxation Agreements
What Are Double Taxation Agreements (DTAs)?
- DTAs are agreements signed between countries. They help Singapore-resident companies to avoid paying taxes twice on the same income.
- For instance, your foreign subsidiary in Australia pays corporate taxes in Australia. When the money is remitted/received by you in Singapore, it is taxed again.
- Under DTA, you can claim for relief for taxes paid overseas.
- DTA also sets out clearly the taxing rights of each country for different types of income that arise from cross-border activities.
Who Benefits From Double Tax Agreements?
- Singapore-resident companies can tap into the benefits of Double Taxation Agreements (DTA).
- A company is resident in Singapore if the control and management of its business are exercised in Singapore.
- To prove that you are a Singapore-resident company you can apply for a Certificate of Residence from IRAS.
Filing For Claims Under DTA
- You can make a claim for Double Tax Relief (DTR) under the DTA when you file your annual income tax return.
- You will also need to give documentary proof (e.g. letter from the tax authority or dividend vouchers) to show that the remitted income has been subject to tax in the treaty country before DTR claims can be considered.
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Filing Your Estimated Chargeable Income
Compulsory Filing
- All companies carrying on a trade or business are required to file an estimate of their chargeable income (ECI) within 3 months after the end of its accounting period. You have to file ECI even if you estimate the income to be "zero".
- Otherwise, the Inland Revenue Authority of Singapore (IRAS) may estimate your chargeable income and send you a Notice of Assessment.
Benefits Of Filing Your ECI Online
- With effect from the Year of Assessment 2008, companies who file their ECI using the Internet will enjoy longer instalment periods to pay their estimated tax compared to companies who paper-file using the physical ECI form.
- The number of instalments granted would be as follows:
- You will not enjoy instalments if you file your ECI late (i.e. later than 3 months after your company's accounting year end). Remember to file on time and online to get longer instalment periods for paying your ECI.
How Do I File ECI?
- You need to submit the ECI form. You can do this online via myTaxPortal or download the form and mail / fax it to IRAS.
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Filing Your Tax Return
How Do I Pay Taxes?
- You need to file a tax return (Form C). IRAS will send you Form C every year in March. If you do not receive Form C by end April of the year, please request for the form from IRAS.
- Based on your tax return, IRAS will assess how much tax you need to pay. IRAS will then send you a Notice of Assessment and Statement of Account.
When Do I File My Tax Return?
- You need to file your tax return by 30 November of each year from Year of Assessment 2009.
- You should be filing your company’s income for the previous year.
- Example: In 2009, you should be filing a return on business income for year 2008. 2009 is the Year of Assessment.
New Companies
- If you incorporated your company in 2007, IRAS will send you Form C in 2009. YA 2009 is your first Year of Assessment if the accounting period from the date of incorporation to the closing of the accounts in 2008 is no more than 12 months.
- However, if you received income in 2007 and closed your accounts in 2007, you should request for Form C and file your taxes in 2008. YA 2008 is your first Year of Assessment.
How Do I Report My Company's Income?
- You report your company’s income using Form C. You need to attach your audited accounts and tax computation with Form C.
- Dormant companies and private exempt companies (less than 20 individual shareholders) whose revenue for the financial year is less than S$5 million are not required to have their accounts audited for the financial year beginning on or after 1 June 2004.
- Companies that qualify for this audit exemption and choose not to audit their accounts, can submit unaudited accounts.
- Many companies who qualify for audit exemption still prefer to audit their accounts as they are required by banks when applying for loans.
Special Rules For Certain Types Of Companies
- When reporting your company's income, there are certain rules that you should be aware of if your company is:
- a dormant company
- undergoing strike-off/liquidation/judicial management
- an investment holding company
- a service company
- a property developer
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Payment Of Taxes
When Do I Pay My Taxes
- You have to pay your taxes within 1 month of receiving the Notice of Assessment. For taxes arising from the Estimated Chargeable Income (ECI), you can either pay the taxes at one go or by monthly instalments using GIRO. You should pay your taxes promptly or you may have to pay penalty fees.
What If I Do Not Agree With The Tax Assessment?
- If you disagree with the tax assessment, you can write to IRAS and state the reasons why you feel the tax assessment is incorrect. Please note that you must still pay your taxes within 1 month of the Notice of Assessment even if you object to the assessment.
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Where Can I Get Help?
- Visit these websites and web resources for more in-depth information on corporate tax or consult with your accountant.
- You can also contact IRAS:
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