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Running a company is challenging. Oftentimes, business owners prioritize increasing sales and improving customer relationships. While it is of great importance to focus on business growth, it is of equal importance to pay attention to administrative tasks like filing income tax returns. Incorrect returns or late submission may equate to penalties and can cause a lot of unnecessary costs to a company.

Outsourcing tax services gives a lot of benefits, from risk mitigation to cutting costs and time spent. By bringing a third party, your company’s compliance may improve by having someone to provide fair standards of checks and balances.

Accmaster is a group of Accredited Tax Advisers (ATA) and Accredited Tax Practitioners (ATP) who can help you maximize the benefits of business-friendly taxation policies in Singapore. You will have access to our skilled experts who are experienced in your specific industry and up-to-date on various tax and regulatory changes.

 

Overview

A corporate income tax (CIT) is levied by the government on business profits which in turn are used to fund government expenditure. Tax regulation is one of the determinants for a global entrepreneur to start a business in a country.

Singapore has a favorable tax environment making the country more attractive to foreign investors. The corporate tax rate is considered relatively low. Rebates, tax exemption schemes, and incentives can be enjoyed by eligible start-ups and businesses.

Singapore’s Income Tax Act established in 1947, is the Act to impose a tax upon incomes and regulate its collection. The country employed a territorial tax system which means that companies and individuals pay taxes based on income derived in Singapore. Foreign-sourced income (dividends, branch profits, service income) is generally taxable when it is remitted to and received in Singapore which may, in many cases, result in foreign income being taxed twice. However, there are available tax reliefs to Singapore tax residents to mitigate the possible double taxation of foreign-sourced income.

Singapore has signed Avoidance of Double Taxation Agreements (“DTAs”), limited DTAs, and Exchange of Information Arrangements (“EOI Arrangements”) with around 100 jurisdictions encouraging foreign investments by providing certainty of the tax treatment of cross-border transactions.

 

Corporate Income Tax Filing Obligations

All companies in Singapore (local and foreign) are required to file corporate income tax returns with the Inland Revenue Authority of Singapore (IRAS) every year. The company is taxed at a flat rate of 17% of its chargeable income and applicable to both local and foreign companies.

The Company is taxed on the income earned in the preceding financial year, generally based on a 12-month period.

An illustrative example of a timeline on CIT tax filing for a Company with a financial year end of 31 Dec

Company’s Financial Year End (FYE): 31 December 2022  

 

Estimated Chargeable Income (ECI)?

Estimated Chargeable Income (ECI) is an estimate of your company's taxable profits (after deducting tax-allowable expenses) for a Year of Assessment (YA) which must be filed to IRAS within 3 months from the end of the financial year-end.

The Company qualifies for ECI waiver filing when both criteria are met:

• Annual revenue is $5 million or below for the financial year; and
• ECI is nil for the YA. The ECI should be the amount before deducting the exempt amount under the partial tax exemption scheme or the tax exemption scheme for new start-up companies.

 

Form C-S / Form C-S(Lite) / Form C

To declare the annual income, the company must prepare and submit the corporate income tax return in Form C-S/Form C-S(Lite)/Form C

Generally, Form C is used by all qualifying companies to submit CIT returns together with financial statements and tax computations. Form C-S is for Singapore-incorporated companies with annual revenue of S$5 million or below and Form C-S(Lite) is for Singapore-incorporated companies with annual revenue of S$200,000 or below. While Form C requires to submit the supporting documents (i.e. financial statements and tax computations), Form C-S and Form C-S(Lite) do not.

These forms are to be submitted to IRAS on or before 30 November of each year. The Company is required to file Form C-S/Form C-S(Lite)/Form C within deadline even if it did not receive income or is making losses.

 

Tax exemption scheme for new start-up companies

Tax exemption is introduced by the Singapore government to support entrepreneurship and to grow local enterprises. It applies to qualifying companies for their first 3 consecutive Years of Assessment (YAs). From the fourth YA onwards, companies can enjoy the partial exemption.

The tax exemptions for qualifying companies for their first 3 consecutive YAs are as follows:  

Chargeable income	% Exempted from Tax	Amount Exempted from Tax
First S$100,000	75%	S$75,000
Next S$100,000	50%	S$50,000

 

 

 

 

Who is eligible for tax exemption schemes?

All new start-up companies are eligible for the tax exemption scheme, except:

• Companies whose principal activity is that of investment holding
• Companies that undertake property development for sale, investment, or both

 

The new start-up company must also:

• Be incorporated in Singapore
• Be a tax resident of Singapore for that YA
• Have its total share capital beneficially held directly by no more than 20 shareholders throughout the basis period for that YA where:
  • All the shareholders are individuals; or
  • At least 1 shareholder is an individual holding at least 10% of the issued ordinary shares of the company

 

Tax residents and Non-tax residents

Tax resident and non-tax resident companies are generally taxed in the same manner, however, tax resident companies enjoy benefits as follows:

• Exemption or reduction in the tax imposed on specified foreign income that is derived in a jurisdiction that has an Avoidance of Double Taxation Agreement (DTA) with Singapore;
• Tax exemption on specified foreign income such as foreign-sourced dividends, foreign branch profits, and foreign-sourced service income under Section 13(8) of the Income Tax Act 1947
• Foreign tax credit for the taxes paid in the foreign jurisdiction against the Singapore tax payable on the same income
• Tax exemption for new start-up companies

 

Who are the tax residents?

Under Singapore tax law, the tax residency of a company is determined by where the business is controlled and managed. The place of incorporation of a company is not necessarily indicative of the tax residency of a company. A company is considered a tax resident if the control and management of its business are exercised in Singapore.

On the other hand, a company is a non-resident when the control and management of its business are not exercised in Singapore.

 

Accmaster As Your Tax Agent

Accmaster is a group of Accredited Tax Advisers (ATA) and Accredited Tax Practitioners (ATP) who can help you maximize the benefits of business-friendly taxation policies in Singapore. You will have access to our skilled experts who are experienced in your specific industry and up-to-date on various tax and regulatory changes. Our tax services include tax optimization strategy advice and implementation and tax planning and filing.

 

Our Corporate tax services and tax plan include:

• Preparing and filing company’s income tax computation and tax returns
• Assisting clients with withholding tax compliance
• Assisting clients in responding to queries raised by the IRAS
• Reviewing corporate tax matters for due diligence purposes
• Assisting clients with corporate tax planning locally and internationally to maximise tax efficiency
• Applying for local tax incentives
• Assisting client with advance tax rulings
• Representing clients on tax objections and disputes
• Assisting clients to voluntarily disclose errors / negligence to the IRAS
• Assisting clients with tax investigation and/or tax audit issues
• International tax planning