According to the World Bank, Singapore has been ranked consistently as one of the top 10 countries for ease of doing business due to its business-friendly policies. It also continues to reduce corporate income tax rates and introduce various incentives to attract and keep global investments.
Singapore has a single-tier territorial based flat-rate corporate income tax system. Effective tax rates as one of the lowest in the world, combined with its business-friendly policies, are the two most important factors contributing to the economic growth and foreign investment into the city-state.
#1 INCOME TAX
Income accruing in or derived from Singapore or received in Singapore from overseas is subject to tax.
For corporate tax, with effect from YA 2010, a company is taxed at a flat rate of 17% on its chargeable income regardless of whether it is a local or foreign company. Remittance of foreign-sourced dividends, foreign-sourced branch profits and foreign-sourced service income into Singapore are exempt if prescribed conditions are met. A company is taxed on the income earned in the preceding financial year. This means that income earned in the financial year 2020 will be taxed in 2021.
For individual tax, remittance of all foreign-source income is exempt and income tax rates depend on an individual’s tax residency status.
#2 GOODS AND SERVICES TAX (GST)
GST is a broad-based consumption tax levied on the import of goods, as well as nearly all supplies of goods and services in Singapore. The only exemptions are for the sales and leases of residential properties and the provision of most financial services. Export of goods and international services are zero-rated.
#3 TAX RATES IN A NUTSHELL
|CORPORATE INCOME||TAX RATE|
|Corporate profits for up to 300,000 SGD||8.5%|
|Corporate profits above 300,000 SGD||17%|
|Foreign-sourced income brought into Singapore||0 – 17% subject to conditions|
|PERSONAL INCOME||TAX RATE|
|Dividends received from Singapore company||0%|
- Dividends – Exempt
- Interest – 15%
- Royalties from Patents, Know-How, etc – 10%
- Branch remittance – Exempt
#4 INCOME TAX FILING DEADLINE
The deadline for corporate tax filing for Singapore companies is 30 November (for hard copy forms) and 15 December (for e-filing).
The company has to file a complete set of returns including Form C, audited/ unaudited accounts, and tax computation. The Form C is a declaration form for a company to declare its income whereas computation is a statement showing the adjustments to the net profit/ loss as per the accounts of a company to arrive at the amount of income that is chargeable to tax.
For more details, please visit www.iras.gov.sg