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
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)
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
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!

Leave a comment

Your email address will not be published.