Quick Updates On Corporate Tax Rates in Singapore

To operate your company in Singapore, let’s visit Singapore’s corporate tax rates updated in Sep 2018.

Because of regular changes, it is difficult for businesses to pay taxes or find out the exemptions that the company is eligible for. As such, Global Link Asia Consulting has listed some of the most important updated Singapore corporate tax pointers in this article. If you want to lessen the headache, speak to our consultant, or engage our tax and accounting services now! 

General Singapore corporate tax rules

Well, in case you are new to the Singapore tax system, some basic rules to know are listed below. 

1. A company is taxed on the income earned in the preceding financial year. This fact means that income earned in the financial year 2019 will be taxed in 2020. The Year of Assessment (YA) is the year in which your income is assessed tax.
2. Within three months of the company’s financial year-end, the Estimated Chargeable Income document must be filed and submitted with the IRAS.
3. Taxes can be paid via internet banking, SAM, AXS station, Cash/NETS, or GIRO.
4. The corporate tax rate in 2019 still 17%.

Updated Singapore Corporate Tax Rates

1. Taxes on Singapore corporate income

Corporate Income Tax (CIT) Rebate YA 2020

There is an extension of the rebate to the year of assessment 2020 at 20% of tax payable, capped at SGD 10,000.

Year of Assessment (YA)	Corporate Income Tax Rebate	Capped at
2019	20%	$10,000
2018	40%	$15,000

2. Goods and services tax (GST)

GST is still charged at 7% in the year 2020.

3. Branch income

Tax rates on branch profits are the same as in corporate profits.

4. Foreign income

A corporation, whether resident in Singapore or not, is taxed on foreign income when it is received in Singapore. Where income is earned from treaty countries, double taxation is avoided because of the Avoidance of Double Taxation Agreements (DTA).

Foreign dividends, foreign branch profits, and foreign service fees income remitted in Singapore may be exempt from tax if they fulfill certain conditions.

5. Tax exemption in Singapore 

We all know that Singapore is an economic haven with tax exemptions. With these exemptions, the government makes it easier on the cash flows of startups for at least a few years. Check this out! 

• Tax Exemptions for Start-ups

From YA 2020, start-up companies enjoy a 75% tax exemption for the first $100,000 of chargeable income for 3 years. Another 50% exemption can be exercised on the next $100,000 which effectively means that the tax rate is 8.5%.

Years of assessment 2018 to 2019			Year of assessment 2020 onwards
Chargeable Income (SGD)	Exempt from tax	Exempt Income (SGD)	Chargeable Income (SGD)	Exempt from tax	Exempt Income (SGD)
First 100,000	75%	100,000	First 100,000	75%	75,000
Next 100,000	50%	100,000	Next 100,000	50%	50,000

• Partial Tax Exemption:

From YA 2020, Partial tax exemption will be changed (income taxable at the normal rate):

Years of assessment 2018 to 2019			Year of assessment 2020 onwards
Chargeable Income (SGD)	Exempt from tax	Exempt Income (SGD)	Chargeable Income (SGD)	Exempt from tax	Exempt Income (SGD)
First 10,000	75%	7,500	First 10,000	75%	7,500
Next 290,000	50%	145,000	Next 190,000	50%	95,000

6. An example of the corporate tax calculation in Singapore

Before ending this article, here is a sample of how taxes are calculated.

* Accounting period ended 31 December 2017 (YA 2018) 

Listed details	SGD	SGD
Net profit before tax per accounts		5,857,500
Less:
Singapore dividend (exempt)	1,500
Foreign-sourced dividend (exempt)	2,200
Foreign-sourced interest (unremitted)	1,600
Profit on sale of fixed assets	34,000
Capital exchange gain	6,750	(46,050)
		5,811,450
Add:
Depreciation	650,485
Foreign pension contribution	100,000
Medical expenses (non-deductible)	500
Legal fees (capital in nature)	15,500
Automobile expenses	33,500
Donations	9,000
Penalties and fines	2,000	810,985
Adjusted profit before capital allowances		6,622,435
Less:
Unutilized capital allowances brought forward	1,152,000
Capital allowances (current year)	3,000,000
Balancing charge	(7,700)	(4,144,300)
Adjusted profit after capital allowances		2,478,135
Less: Unutilised losses brought forward		(67,500)
Adjusted profit after capital allowances and unutilized losses brought forward		2,410,635
Less: Approved donations (250% deduction)		(22,500)
Chargeable income before the partial exemption		2,388,135
Less: Partial exemption
75% of first SGD 10,000	7,500
50% of the next SGD 290,000	145,000	(152,500)
Chargeable income after partial exemption		2,235,635
Tax at 17%		380,057.95
Corporate tax rebate (capped at SGD 15,000)		(15,000.00)
Tax payable after tax rebate		365,057.95

If you would like to know more advanced knowledge, kindly contact us!