No doubt, Singapore is a hub for start-ups and regular businesses. Why? Because it has accommodating and less strict taxation policies.
Unlike other parts of the world that use tax rates to discourage the creation of new businesses, Singapore opens itself up to foreign investors. One of the most favorable taxes is related to setting up a company is the corporate income tax.
This article has all the essential details about the corporate income tax levied on companies you need to know, including how to file corporate income tax in Singapore.
What is the Singapore Corporate Tax Rate?
In simple terms, the corporate income tax in Singapore is a direct tax that is levied on the net chargeable income of business entities within the borders of the country. Corporate income tax is also referred to as corporation tax or company tax.
Singapore operates a territorial tax system. This system allows local authorities to earn directly from treaty countries. However, double taxation is avoided through a foreign tax credit for companies covered by such treaties.
Companies that operate from non-treaty countries are given a unilateral tax credit. Singapore currently has tax treaties with around 100 countries to avoid double taxation.
The Singapore corporate tax rate is 17% for local and foreign companies. This means that all companies (local and foreign based) operating in Singapore are expected to remit a particular percentage of their earnings to the Singaporean authorities.
It’s essential to note that the corporate income tax is charged on net chargeable income rather than revenue when figuring out how to file corporate income tax in Singapore for your business.
Also, new start-ups companies can enjoy exemptions of up to 75% on their normal chargeable income.
This amount is deducted from the first $100,000 of normal chargeable income. There are also partial tax exemptions of up to 75% on the first $10,000 normal chargeable income.
In addition, tax concessions are available to companies in certain sectors of the economy. Furthermore, there is no capital gain tax for corporations in Singapore.
Singapore also offers lucrative incentives and tax breaks to those interested in investing in high-potential companies that offer innovative services and corporations that develop new technology.
There are also certain types of foreign income that are exempt from Singapore taxation.
What is Taxable Income?
When learning how to file corporate income tax in Singapore, it is important to note that not all types of income generated by companies operating in Singapore can be taxed. Income is split into two categories – Taxable and Non-Taxable income.
Under Singapore’s territorial tax system, the following are classified as taxable income:
- Income gains or profit from business activities or operations
- Income gained from investment, including interest and rental property income
- Royalties, premiums, or any profit made from properties
- Any other gains that are classified as revenue
How To File Corporate Income Tax in Singapore?
One of the most common taxation issues faced by first-time business owners is the uncertainty surrounding how to file corporate income tax in Singapore. However, filing corporate income tax in Singapore is fairly straightforward.
All Singapore companies must file their Corporate Income Tax Returns by November 30. Businesses are also expected to file their tax return forms electronically.
Taxes can be filed via the IRAS website. To do so, you must be authorized to act on behalf of the company regarding its corporate income tax matters.
Which Corporate Income Tax Return Should I File?
The first thing to note about how to file corporate income tax in Singapore is that all businesses are required to file any related documents electronically.
There are two filing options for companies that intend to report their corporate income tax:
- Corporate Income Tax Filing Waiver
- File Form C-S, Form C-S (Lite), and Form C
This article will go into detail about what is the difference between the two options to help you figure out how to file corporate income tax in Singapore depending on your business needs.
Corporate Income Tax Filing Waiver
The corporate income tax filing waiver is issued to dormant companies. A dormant company is an organization that is not in operation and has not earned any revenue during the entire Year of Assessment.
Companies that file this waiver are exempt from filing Corporate Income Tax Returns (Form C-S/C). To be exempt from the Corporate Income Tax Returns (Form C-S/C), you need to fall under the following categories:
- Must have been dormant and must have filed tax returns, financial statements, and tax computation up to the cessation date.
- Must not have any running investment. And if it has an investment, it must not generate any profit.
- It must have been delisted from GST if it was previously a GST-registered entity.
- Must not have plans to restart operations for the next two years
You need to note that the application processing time for the waiver form is between 2 – 3 months. Therefore, companies are advised to submit their e-application at least 3 months before the due date.
Form C-S, Form C-S (Lite), and Form C
Companies with the following characteristics are expected to file their tax returns with Form C-S;
- Must be a Singapore incorporated company
- Must have generated annual revenue with $5 million or below
- Not required to submit financial statements and tax computations
- Only generated income taxable at 17%
- Not claiming Carry-back of current year capital allowances/losses, group relief, investment allowance, foreign tax credit and tax deducted at source
Certain companies cannot meet the requirements essential for file Form C-S. In this scenario, they can either file Form C-S (Lite) or Form C.
The Form C-S (Lite) is a simplified version of Form C-S. Companies that use the Form C-S (Lite) have an annual revenue of less than $200,000.
On the other hand, Form C is designed for companies than cannot file Form C-S or Form C-S (Lite). To file a Form C, the company must have submitted tax computations, financial statements, etc.
Now that you understand the difference between the two, you can confidently go forward with the knowledge of how to file corporate income tax in Singapore.
How Can We Help?
Even though understanding how to file corporate income tax in Singapore is fairly straightforward, many companies struggle to handle this process because they have to focus on other daily business operations. This is where we come in.
At SJH Advisory, we can help you file your income tax returns on the behalf of your business. Taking the hassle off your in-house teams ensures that your business runs smoothly, and submission deadlines are not missed.
We are a top-rated business consultancy firm that knows how to handle specialized business processes best. At SJH Advisory, we have a team of chartered secretaries and accountants that can handle your tax filing effectively. Contact us for a FREE consultation on how to file corporate income tax in Singapore or any other taxation inquiries you have today!
How To File Corporate Income Tax in Singapore - Frequently Asked Questions
If you have a self-run business, you can figure out how to file corporate income tax in Singapore yourself. But if you work in a large company, you’ll need the permission of the management to do so.
The standard corporate tax charged in Singapore is 17% of net chargeable income. However, tax exemptions and partial tax exemptions depend on the type of organization. Understanding how to file corporate income tax in Singapore is essential to running a business here.