What Is Singapore Corporate Tax

By: Shayne | Posted: 29th November 2010

Singapore has been widely regarded as a top example of countries that offers reasonable corporate income tax rates. The country continues to reduce Singapore corporate tax rates and offers various tax incentives to convince and maintain foreign investments. Two major contributors to the growing economy of Singapore are its effective tax rates and pro-business status worldwide.

On this part, we will be giving you an overview of the attractive tax schemes and benefits outlined for businesses in Singapore.

On January 1, 2003, Singapore has applied a single-tier corporate tax system that assures no double-taxation for shareholders. As a result, tax paid by a company on its chargeable income is the final tax and the dividends provided by a company to its shareholders are exempted from additional taxation. There is also no tax applied on capital gains including sale of fixed assets and gains on foreign exchange on capital transaction in Singapore.

Below are the tax benefits to be considered a tax resident by the Inland Revenue Authority of Singapore (IRAS). As a tax resident, a Singapore company:
1. Is eligible for tax exemption scheme available for new start-up companies.
2. Can enjoy tax exemption on foreign-sourced dividends, foreign branch profits, and foreign-sourced service income.
3. Is entitled to benefits conferred under the Avoidance of Double Taxation Agreements (DTA) that Singapore has concluded with treaty countries.
4. Is only taxed on Singapore source income and foreign income, which is remitted to Singapore.

A company is considered as resident in Singapore if the control and management of the business is exercised in Singapore. Although the term "control and management" is not defined explicitly by authorities, a generally accepted consensus is that it refers to the policy level decision making at the level of Board of Directors and not the day-to-day decision making and operations.

Full tax exemption is granted on the first S$100,000 of Chargeable Income for qualifying new companies for the first three years of assessment consecutively.

Below are the requirements to qualify for tax exemptions:
1. It is incorporated in Singapore;
2. It is a tax resident of Singapore for that Year of Assessment;
3. It has no more than 20 shareholders throughout the basis period relating to that Year of Assessment;
4. All its shareholders are individuals throughout the basis period relating to that Year of Assessment; or
5. There is at least one individual shareholder with a minimum of 10% shareholding.

These are just basic information on Singapore corporate tax, if you think you will need further information and assistance, please proceed by asking a professional assistance from business registration firms in Singapore.


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Tags: tax incentives, fixed assets, income tax rates, foreign investments, singapore company