All about Singapore's Corporate Taxation

Benefits of Hiring Professionals for Incorporation of Company in Singapore

Benefits of Hiring Professionals for Incorporation of Company in Singapore

Steps to be Followed While Incorporation of Company in Singapore

People often have doubts regarding the taxation system of

Singapore. In this article all the major points, updates and

benefits have been listed. For further help you should take

accounting services in Singapore.

ingapore has evolved as an

investment destination for

foreign companies over the

last few decades. Two major factors

contributing to this is the ease of

doing business in Singapore and the

friendly corporate taxation of the

country. But if you want to conduct

business you will need a competent

accounting service’s in Singapore for

a hassle free experience.

As global boundaries are losing its

relevance, companies are choosing to

locate their business base in a

country that offers the best possible

tax structure that can positively

impact the profit margins. Singapore

has thus become a favorable spot for

foreign investors and hosts about

7,000 foreign companies on its land.

Here are all the important

points that a company needs to

know about corporate taxation

and accounting services in

Singapore.

Singapore Tax Rates,

incentives and computation

Singapore’s tax rates have seen a

consistent decline since 1997-2000

when it used to be 26%. It then

moved on to be 22% in 2003-04

which further reduced to various

levels and attained a flat tax rate @

17% which is currently prevailing.

This is by far one of the lowest tax

rate in the world attracting many

foreign investors.

Much to investors delight, Singapore

had also adopted a slat single tier

corporate taxation since January

2003 making the structure very

simple and straight forward.

Many incentives and exemptions are

also provided to start-up companies

to encourage them incorporate

business in Singapore. This brings

down the effect rate considerably.

The exemptions for start-up are

as below:-

S

Besides the above, a 30% tax rebate

can be availed by every Singapore

Company on corporate income tax

payable for YA 2016 & YA 2017. This

is subject to a maximum rebate of

$20,000. Such exemption was

declared recently in the Budget of

2015. For all the updates and changes

in the tax structure you should always

go for the best accounting services in

Singapore.

Tax benefits to resident

companies

Certain tax benefits only accrue to

Singapore resident companies. The

resident companies are eligible to the

tax benefits that accrue to start-up

companies making their effective tax

rates quite low. Section 13(8) of the

Income Tax Act also favors resident

companies by giving them special tax

exemptions on the incomes sourced

from foreign-sourced dividends,

foreign branch profits, and foreign-

sourced service income. Singapore

has signed certain tax treaties with

various countries and the benefits

conferred under the Avoidance of

Double Taxation Agreements can also

be availed by Singapore resident

company.

A company can be called a

“Singapore resident company”

provided the control and

management of the company is

exercised in Singapore itself.

The “Tax Treaties” of

Singapore

Singapore has gone ahead and

finalized tax treaties with over 50

countries and the exercise to add

more countries is continuously

ongoing.

These tax treaties allow the

companies operating both in

Singapore and any of the 50 countries

avoid the losses caused by “Double

Taxation” on their income. The

treaties also encourage companies to

Income level

Tax rate Conditions

Up to $ 1,00,000 0%

Company should be incorporated and tax resident in Singapore and shareholders should not exceed 20. The exemption of no tax up to $ 1,00,000 income gets over at the end of 3 years of operation and such income is also charged @ 8.5 % tax post that

$1,00,000 - $3,00,000 8.50%

Above $3,00,000 17%

operate globally and Trans border

without the fear of having the same

income taxed twice in dual countries.

Difference in net income and

taxable income

Two kinds of incomes are taxable in

Singapore:-

Income that is generated in

Singapore

Income derived from other

countries but repatriated to

Singapore

However not the entire income

mentioned above might incur

taxation. Many exemptions

pertaining to specific trades , foreign

sourced incomes and other

exemptions as defined by the

Singapore Income Tax Act are

excluded from taxable income.

Thus the net income is a combination

of business profits, dividends,

interests, premiums or any other

income while taxable income is net

income minus exemptions stated

under Income Tax Act. Taxable

income is the final income on which

tax is levied.

How are losses taxed?

Singapore laws allow the losses

incurred in a company to be carried

forward indefinitely subject to certain

conditions. Such losses can be

adjusted with the income earned in

any year (It is compulsory to adjust

losses against the first income

available in the company). Tax shall

be levied on such adjusted income

only. For further details it is best to

consult an agent or seek accounting

services in Singapore.

Income Tax Filing period and

due date

The assessment period for computing

taxation shall be the preceding year

of filing tax. For example, if a

company is filing tax on 30th

November 2015, the assessment

period shall be 1st January 2014 to

31st December 2014.

The due date for filing Corporate Tax

in Singapore is 30th November since

2009. While filing this tax, the

company has to submit the following

documents:-

Form C – This declares the total

income generated within the

company

Audited/Unaudited accounts –

The accounts to be submitted

shall be audited or not shall

depend upon parameters laid

down as per statutory bodies

of Singapore.

Tax computation – This shows

the calculation of net taxable

income. It contains details

showing the adjustments of

net profits or losses of the

company.

Withholding tax law

This law is applicable to certain kind

of income generated by non-resident

companies only. While making

payments to the non-resident

companies for some specific purpose,

a certain percentage of the payment

is withheld and paid to Income Tax

authorities. This withheld income is

known as “Withholding tax.”

Entrepreneurs who want to start a

business would have got a good

insight on the tax structure of

Singapore. If there is a need for

further clarification, it is best to seek

the best accounting services in

Singapore. The consultancies have all

the information you need and they

can help you run a seamless business.

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