Singapore’s single-tier corporate income tax system was adopted in 2003, effectively ending double-taxation for stakeholders and exempting shareholders of a company from paying tax on dividends paid out. In short, tax paid by a company on its chargeable income is the final tax. Under Singapore’s territorial tax system, taxable income includes:
- Gains or profits from any trade or business
- Income from an investment such as interest and rental property income
- Royalties, premiums and any other profits from property and
- Other gains that are considered revenue
There is no tax on capital gains in Singapore, examples of which include gains on sale of fixed assets, gains on foreign exchange on capital transactions and others. The tax rate of profits of a company in Singapore, local or foreign, is a flat 17%, without taking into consideration the many tax incentives and exemptions made available by the Singapore government’s various agencies. For example, tax exemptions for newly incorporated companies, starting from YA2020, in the first three consecutive YAs is as the following:
- 75% exemption on the first $100,000 of normal chargeable income
- Newly incorporated companies will be exempted from 75% corporate income tax rate on the first S$100,000 taxable income for each of the first three tax filing years if they meet the following conditions:
- incorporated in Singapore
- a tax resident in Singapore
- has no more than 20 shareholders of which at least one is an individual shareholder holding at least 10% of shares.
- Further 50% tax exemption on taxable income of up to S$100,000
- Newly incorporated companies are also eligible for a further partial tax exemption, which effectively translates to about 8.5% tax rate on taxable income of up to S$100,000 per annum. The taxable income above S$100,000 will be charged at the normal headline corporate tax rate of 17%.
Singapore Tax Filing
To stay compliant with the Inland Revenue Authority of Singapore (IRAS), every company incorporated in Singapore is required to file:
- Its Annual Corporate Tax Return, using Form C-S/C
- Its Estimated Chargeable Income (ECI), if the company’s annual revenue exceeds S$1 million
Filing Form C-S/C
A company that meets the following criteria qualifies to file Form C-S, an abridged version of Form C:
- Is incorporated in Singapore
- Has an Annual Revenue of S$5 million or below
- Derives income taxable at 17%
- Is not claiming any of the following in the Assessment Year:
- Carry-back of Current Year Capital Allowances/ Losses
- Group Relief
- Investment Allowance
- Foreign Tax Credit and Tax Deducted at Source
Documents to prepare for filing Form C-S
- Audited/unaudited financial statements
- Tax computation and supporting schedules
- Other documents such as claim forms for claiming tax deductions/benefits
Additional documents to prepare for filing Form C
- Form IRIN 301 (Additional Information on Income and Deduction)
- Detailed Profit and Loss Statement
- Form GR-A and Form GR-B (Group Relief Forms)
- Research & Development Claim Form
- Declaration Form for the Purpose of Claiming Writing-Down Allowances for Intellectual Property Rights (IPRs)
- Capital Contribution Form and others
The annual filing due date for Form C-S/ C is 30th of November for Paper File, 15th December for e-File.
Latest Update from IRAS: Filing of corporate taxes for YA2020 will become easier via a new simplified Form C-s Lite. IRAS will launch the Form C-s lite in July 2020 and it’s possible for companies with simple structure (minimal transaction or simple MA) to file taxes by filing out 6 essential fields. Companies filing Form C-s lite are not required to submit their financial statements and tax computations. However these companies will still need to prepare these documents and are ready to submit in the event that IRAS requested for them.
The requirements for the simplified filing are:
- Company has an annual revenue of $200,000 or below
- Excluding separate source income like interest
- Company only derives income taxable at prevailing corporate tax rate ot 17% and
- Company not claiming the following in the YA:
- Carry-back of current year capital allowances or losses
- Group relief
- Investment allowance
- Foreign tax credit and tax deducted at source
Also from this year there will be no more physical filing and e-filing is compulsory. The extended tax filing due date of 15 Dec will not be available from YA 2021 and companies will require to e-file their YA2021 by 30 November 2021.
More information on Form C-S (Lite) can be found on IRAS.
Filing an Estimated Chargeable Income (ECI) Form
ECI is an estimate of a company’s annual taxable income, after deducting tax-allowable expenses. Every incorporated company in Singapore is required to submit an ECI to IRAS within 3 months after the financial year ends.
A waiver to file ECI is granted to a company that meets both of the following criteria:
- Annual revenue does not exceed S$5 million
- ECI is nil for the Assessment Year
After its ECI submission has been processed by IRAS, a company will be issued a Notice of Assessment (NOA), in which the amount of tax to be paid is stipulated. Unless payment via installment has been arranged, the amount must be paid in full within one month from the date of issue.
Some key Singapore Tax Filing changes for YA2020 are:
– A Corporate Income Tax Rebate of 25% of tax payable, capped at $15,000, will be granted for YA 2020; and
– The Loss Carry-Back Relief has been enhanced for YA 2020. Companies may elect for either the current carry-back relief system or enhanced carry-back relief system for YA 2020.
Form C-S (Lite)
– From YA 2020, companies that qualify to file Form C-S and have an annual revenue of $200,000 or below have the option to file Form C-S (Lite), a simplified version of Form C-S. Click here to find out more about Form C-S (Lite).
IRAS provides an updated overview of the Corporate Tax Rates, Corporate Income Tax Rebates and Tax Exemption Schemes on its website.
Most Singapore Company Registration Services also provide useful information and assistance with preparing and filing taxes in Singapore.