Corporate Income Tax computation and submission

Any income that is “accrued” or received in Singapore by a company will be subjected to tax. The company may be incorporated or registered in Singapore or elsewhere.

Since January 1, 2003, Singapore has adopted a single-tier corporate income tax system, which means there is no double-taxation for stakeholders. Companies will be taxed at 17% from YA 2010 onwards. Tax paid by a company on its chargeable income is the final tax and all dividends paid by a company to its shareholders are exempt from further taxation. There is no tax on capital gains in Singapore. Examples of capitals gains include gains on sale of fixed assets, gains on foreign exchange on capital transactions, etc.

There are three tax exemptions to help companies tide through economic downturns, encourage entrepreneurship and position Singapore as a business hub:

  • Partial Tax Exemption
  • Full Tax Exemption For New Companies
  • Tax Exemption For Foreign-Sourced Income

Personal income tax computation and submission

Personal income tax rates in Singapore are one of the lowest in the world. In order to determine the Singapore income tax liability of an individual, you need to first determine the tax residency and amount of chargeable income and then apply the progressive tax rate to it.

Some useful information to note:

  • Singapore follows a progressive tax rate starting at 0% and ending at 20% above S$320,000.
  • There is no capital gain or inheritance tax.
  • Individuals are taxed only on the income earned in Singapore. The income earned by individuals while working overseas is not subject to taxation barring few exceptions.
  • Tax rules differ based on the tax residency of the individual.
  • Tax filing due date for individuals is April 15 of each year. Income tax is assessed based on a preceding year basis.

Individual residents in Singapore are taxed on a progressive tax rate as listed below. Filing of personal tax return is mandatory if your annual income is S$22,000 or more. You do not need to pay tax if your annual income is less than S$22,000. However, you may still need to file a tax return if you have been informed by Singapore tax department to submit your tax return.

Goods and Services Tax (GST) registration and submission

GST is a broad-based consumption tax levied on the import of goods (collected by Singapore Customs), as well as nearly all supplies of goods and services in Singapore. The only exemptions are for the sale and lease of residential properties, the importation and local supply of investment precious metals and the provision of most financial services. Export of goods and international services are zero-rated.

It is compulsory for businesses to come forward to register for GST when their taxable turnover exceeds $1mil per year. Businesses that do not exceed $1mil in taxable turnover may register for GST voluntarily.

Tax planning

Despite the fact that Singapore taxation is well regulated, competitive and comes with a slew of tax incentives, it is imperative to make tax planning in Singapore for business and investment planning. Tax is an ever present cost of the businesses that needs to be minimized in order to maximize the level of business profits. Nevertheless, Singapore tax planning must not be seen as an attempt towards tax evasion. A proper tax planning helps businesses reduce its tax obligation and enjoy maximum business profits.