Singapore: Domestic Corporate Taxes

On this Page:

- Singapore: Scope of Corporation Tax
- Singapore: Corporation Tax Rates
- Singapore: Branch or Subsidiary
- Singapore: Calculation of Taxable Base
- Singapore: Filing Requirements and Payment of Tax
- Singapore: Withholding Tax
- Singapore: Goods and Services Tax

Singapore Scope of Corporation Tax

A company is resident in Singapore if its central management and control of the business is exercised there. Singapore-resident companies are generally taxed on their worldwide income; non-resident companies are taxed on their Singapore-source income only, which can prove attractive to international holding and trading companies.

Non-resident companies do not benefit from double tax treaties signed by the Singapore government.

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Singapore Corporation Tax Rates

The corporate income tax rate is 17% (decreased from 18% prior to 2010).

There is a partial tax exemption on normal chargeable income (excluding Singapore franked dividends) of up to SGD300,000, as follows:

which gives a total exemption of SGD152,500.

New start-up companies benefit from full tax exemption on the first SGD100,000 of normal chargeable income for the first three consecutive years of assessment, plus a further 50% exemption (from tax year 2008) on the next SGD200,000 of normal chargeable income (in both cases, excluding Singapore franked dividends). Therefore, a new start-up company can qualify for a total exemption of up to SGD200,000 in each of the first three years of business.

International and regional headquarters can benefit from reduced corporate income tax rates of 10% and 15% respectively (see Singapore Investments by Foreigners). There are also reduced corporate income tax rates and exemptions available to companies involved in shipping and maritime activities (see Singapore Ship Management and Maritime Operations).

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Singapore Branch or Subsidiary?

There are distinct tax and other advantages to establishing a Subsidiary in Singapore, compared to a Branch.

A Subsidiary must be registered as a private company limited by shares, with the parent company as the majority or sole shareholder. This means the Subsidiary operates as a legal entity in its own right, and that the parent as shareholder is not liable for the debts and obligations of the Subsidiary. Moreover, as a Singapore-registered business, the Subsidiary can benefit from the same tax exemptions and incentives as exist for other local businesses.

In the case of a Branch, on the other hand, the parent is liable for the debts and obligations of the Branch, and the Branch cannot qualify for local tax exemptions and incentives.

Singapore Calculation of Taxable Base

Taxable income includes:

Deductible expenses must have been wholly and exclusively incurred in the production of income, and must also be revenue in nature and not prohibited under the Income Tax Act. Capital expenditure is not allowable as a tax deduction. Non-deductible expenses include amortisation and depreciation (although capital allowances are allowed), bad debts, the write-off or acquisition costs of fixed assets, legal and professional fees, medical and motor vehicle expenses, and penalties and fines.

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Singapore Filing Requirements and Payment of Tax

Companies are required to furnish Estimated Chargeable Income within three months of the end of their financial year to the Inland Revenue Authority of Singapore (IRAS). Income tax due can be paid either in one lump sum or over a maximum of 12 interest-free monthly instalments via the GIRO facility. Penalties for late or non-payment are 5% of the tax due, plus an additional 1% if the tax remains unpaid 60 days from the imposition of the 5% penalty.

Additionally, a company must file a tax return (Form C), along with audited or unaudited accounts and tax computation, with IRAS by end-November each year. Form C may be filed electronically. Note that these documents may also need to be filed with the Accounting and Corporate Regulatory Authority. The penalties for late filing or failure to file are a composition fee of up to SGD1,000, followed by a summons to attend court for continued non-compliance. Failure to file the relevant documents for any year of assessment for two years or more will result in a penalty of double the corporate income tax owed, and a fine of up to SGD1,000.

Singapore Withholding Tax

In the case of payments to non-residents or non-resident companies, tax must generally be withheld as follows:

Tax rate	Nature of income
15%	– Interest, commission, fee or other payment in connection with any loan or indebtedness; – Rent or other payments for use of movable properties – Proceeds from sale of any real property by a non-resident property trader
10%	– Royalty or other lump sum payments for use of movable properties – Payment for use of or right to use scientific, technical, industrial or commercial knowledge or information – Distribution made by REIT to unitholder who is a non-resident other than an individual
17% (standard corporate income tax rate)	– Technical assistance and service fees – Management fees
0% - 3%	– Time charter and voyage charter fees – Bareboat charter fees

Withholding taxes may be reduced or eliminated where a double tax treaty is in place. Such taxes must be paid to the IRAS by the 15th of the month following the date of the payment to the non-resident.

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Singapore Goods and Services Tax

Companies must register for goods and services tax (GST) if their turnover for the previous 12 months exceeds SGD1m, or if the business reasonably expects its turnover will exceed SGD1m over the following 12 months. Voluntary registration is permitted, for example where the company intends to make taxable supplies, only supplies goods outside Singapore, or makes exempt supplies of financial services that are also deemed to be international services. A foreign company registering for GST must appoint a Singapore agent to act on its behalf on all its GST matters, including the accounting and payment of GST.

The standard rate of GST is 7%, and applies to most sales of goods and services made in Singapore. Exports and related international services are zero-rated. Financial services and the sale or lease of residential properties are exempt from GST.

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