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. Its 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.
As Singapore is a former British colony, its legal and financial structures are built similarly to the US and the UK. Major international banks, multinational corporations and financial institutions all over the world have established their branches in Singapore, often making the country the location of their branch office or headquarters in Asia.
#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.
Other than its huge network of free trade and tax treaties, Singapore also offers one of the most attractive corporate tax structures in the world. For the first three years, the taxable income of non-resident corporations are exempted from taxes where it is considered a “zero tax” jurisdiction.
Avoidance of Double Tax Agreements (DTAs) are also upheld by the Singapore government with other international jurisdictions in order to ensure the country’ financial success and prosperity.
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, and nearly all supplies of goods as well as services in Singapore. In other countries, GST is known as the Value-Added Tax or VAT. 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% |
| Capital gains | Exempt |
| Foreign-sourced income brought into Singapore | 0 – 17% subject to conditions |
| PERSONAL INCOME | TAX RATE |
| First 20,000 | 0% |
| Next 10,000 | 2% |
| Next 10,000 | 3.5% |
| Next 40,000 | 7% |
| Next 40,000 | 11.5% |
| Next 40,000 | 15% |
| Next 40,000 | 18% |
| Next 40,000 | 19% |
| Next 40,000 | 19.5% |
| Next 40,000 | 20% |
| Above 320,000 | 22% |
| Capital gains | 0% |
| Dividends received from Singapore company | 0% |
Withholding tax
- 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 information, please visit www.iras.gov.sg
