Filing Corporate Tax in Singapore
Singapore is among the most tax-friendly countries around the globe. With a low tax rate as well as ample tax exemptions and incentives, businesses that operate in Singapore can significantly cut down on taxes. Additionally, the tax exemption on dividends and capital gains make sure that shareholders get more from their investments when they establish a business in Singapore.
However, the country has ample opportunities for SMEs as well as corporate clients seeking a safe and secure place that has low corporate tax burdens to increase their offerings.
The city-state has become the centre of attention for both companies and businesses due to the favourable business climate as well as the stable leadership of the government as well as a business-friendly legal system.
In this article, we will be discussing the detailed process of filing corporate tax in Singapore & how to calculate corporate taxes in Singapore. along with that, we will also discuss tips on filing corporate tax in Singapore.
Types of Singapore Corporate Taxes
Here are a few types of corporate Tax in Singapore which imposes on a business operating under its territories. Let’s see what they are.
1. General Corporate Tax in Singapore
This tax is imposed by the IRAS on all businesses that are registered with Singapore. The residence status of the person will be used in determining whether the corporate tax will be assessed or not. If the company is within the definition of tax-resident the tax is imposed on the company’s earnings.
There is however no double taxation imposed on the profits of the company. Smaller companies or start-up firms can claim a variety of exemptions. If they qualify to apply, they will need to apply for the exemption.
2. Singapore Personal Tax
Personal Tax is imposed upon an individual. This is a kind of tax for individuals that is in effect. The tax is assigned to entrepreneurs as well as workers who amass taxable revenue.
3. Singapore Goods and Services Tax
Singapore Goods and Services Tax (Singapore GST) is a kind of value-added tax imposed on imports of goods and services into Singapore. The tax is also imposed within the boundaries of Singapore as well as the tax that is levied on the sale of services and goods.
In taxation, there are raw material producers, suppliers, and consumers. A GST tax is imposed on all taxation processes in the chain up to the final consumer. The rate currently for GST in Singapore is 8%.
4. Singapore Property Tax
Taxes that are imposed when you purchase a property are referred to as property tax. Property tax is part of the Singapore Corporate Tax regime. Property tax is imposed on all commercial and industrial properties. The property tax rate for non-residential properties, such as commercial and industrial buildings and land, is set at 10 percent. The tax on capital gains which is derived through the sale of a home is not a charge in Singapore.
5. Withholding Tax
Withholding tax can be described as an aspect of the Singapore Corporate tax imposed on the proportion of the revenue, I.e. earned. Such types of taxes are paid to IRAS.
The tax is only valid and is imposed on non-resident corporations as well as individuals. If a non-residential entity receives funds or performs services for a Singaporean company and earns revenue, that source of income should be deducted.
• The source of income has to be the Singaporean source.
• The services have to be performed for a Singaporean Client.
• The business must be classified as a non-resident to be able to pay this tax.
• A person is evaluated to be a non-native of Singapore if he’s stayed longer than 183 days in a time utmost of Singapore.
6. Bilateral and Multilateral Taxes in Singapore
Singapore’s Government of Singapore has entered into multilateral and bilateral agreements with various nations to ensure there isn’t any double taxation system in place.
This is advantageous for both the governments of their respective nations. The elimination of double taxation is one of the advantages of this type of taxation.
Process of Filing Corporate Tax in Singapore
To reimburse Singapore’s corporate rate, the commodity or firm should be categorized as a tax native in Singapore for the year of assessment.
The detailed process of filing corporate tax in Singapore without any errors is hassle-free.
The following conditions miust be kept in mind:
- The business must determine whether there are any forms of exemptions that apply to it as part of the Singapore Corporate Tax Regime.
- If there aren’t any exemptions, then the business must follow the tax filing process for corporate entities. The tax price at which a corporation must file corporate tax is 17%.
- Taxation for a commodity is documented using the amount of tax-deductible revenue lesser than the number of debited. Thus these debuted expenditures are defined as expenses utilized in the creation of the product or service. This exemption is allowed through the IRAS as an expense deduction.
- A company must disclose the number of deductible expenses it has when making its tax filings for corporate tax returns.
- The company can be entitled to a certain number of allowances. These allowances are referred to in the field of capital allowances. They will cover the expense of writing off assets of the business.
- Corporate tax needs to be submitted within the stipulated deadline for the IRAS. There are various deadlines for offline and online methods. These are the dates.
A) Online- 15 December.
B) Offline: 30 November (Documentation form).
Your Corporate Income Tax Return must be submitted by 30 November 2023 for the Year of Assessment (YA) 2023.
The Inland Revenue Authority of Singapore (IRAS) e-Filing platform in Singapore allows for the electronic filing of company tax. You must fill out Form C and submit it with the necessary documentation to the relevant authority via the IRAS website.
Tips on Filing the Corporate Tax in Singapore
If you are running a successful business in Singapore, you must consider these tips for filing corporate tax in Singapore.
- Learn more about if your firm is authorized to receive tax incentives
- Apply to become tax residents in Singapore. It reduces taxes on income over time.
- Keep track of all expenses incurred in the course of your business
- Add the depreciation cost of your company’s assets (i.e. the value of machines that are used in the company decreases over time, smaller manufacturing firms can make use of this and reduce their taxable income)
- Take the tax deduction at the source (i.e. transfer your taxes paid to the government directly to the purchaser, customer, or user of your products and services)
- Claim indexation of the possession of the firm
- Place your profits in funds, bonds, and securities. Your business will pay fewer taxes since Singapore does not have a capital gain tax Singapore.
Read More: Capital Gain
Calculating taxable income in Singapore
While filing corporate tax in Singapore, it is essential to understand the value of the tax-deductible income, to avoid errors in filing.
To be used for Singapore tax purposes tax-free income is:
- The revenues or gains from any firm or trade;
- Investment earnings, such as bonuses, interests, and tenant
- Royalties, commissions, or any other gains from property royalty, premiums, or other gains from property
- Other gains that generate revenues in nature.
Generally speaking, deductible business expenses are those that are ‘wholly and solely that are incurred to produce income.
Also, they must meet the following conditions:
- Expenses are only incurred for the generation of income
- Costs are not a contingent obligation, i.e. they do not depend on an event which may or might not happen shortly.
- The expenditures are income and not wealth in nature.
- Expenses are not exempt from being deducted in the Income Tax Act
While non-deductible business costs are personal expenses like entertainment or travel that are not directly related to the operations of the company, and capital expenses like those associated with incorporating a business and the purchase from fixed assets.
Additionally, take note that repair and renovation costs can be claimed for only three consecutive years, and the maximum amount is set at $300,000 for every three years.
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Beginning your company in Singapore is the dream of entrepreneurs and business leaders who are seeking an innovative setting to start their venture & filing corporate tax in Singapore is one of the crucial tasks to do. The Inland Revenue Authority of Singapore (IRAS) e-Filing system allows you to submit corporate tax in Singapore. If you want to avoid fines, you must file your corporate tax before the specified time.
Odint Consultancy’s professional experts can help you in properly filing corporate tax in Singapore. Contact us for any queries you may have.
The firm should be registered in Singapore & the firm must earn a yearly income of $5 million or less.
Tax returns for partnerships and S corporations are up to $700 to $1,000 & the entire price sole proprietary & business tax returns are up to $1,000 to $1,500
The firm has to list an entire bunch of returns containing Form C, audited unaudited summaries, and tax tally.
All companies are expected to file a corporate tax return, even if they do not possess any earnings.
Reshma Ali has great expertise in mergers & acquisitions, Financial planning, and international company formation and offers advice and knowledge to help businesses achieve their objectives.