Corporate Income Tax In Singapore
The corporate tax rate is at 17% currently. Tax will only be imposed at the corporate level and Singapore dividends in the hands of the company’s shareholders are tax exempt.
General Rule of Corporate Income Tax for All Companies
A company is taxed on the income earned in the preceding financial year. This means that income earned in the financial year 2018 will be taxed in 2019.
Corporate Income Tax Filing Obligations to all Companies
All companies are required to submit two corporate income tax forms to IRAS every year:
|Name of Taxation Form||Due Date|
Basis Period and Year of Assessment
In tax terms, using the same example as above, 2019 is the Year of Assessment (YA). In other words, the YA is the year in which your income is assessed to tax.
To assess the amount of tax, IRAS looks at the income, expenses, etc. during the financial year. This financial year is known as the “basis period”.
The basis period is generally a 12-month period preceding the YA.
Examples Based on Different Financial Year Ends
|Financial Year End||Basis Period||YA|
|31st March of each year||01-Apr-2017 To 31-Mar-2018||2019|
|30th June of each year||01-Jul-2017 To 30-Jun-2018||2019|
|31st December of each year||01-Jan-2018 To 31-Dec-2018||2019|
|Note: The same rule applies to new companies.|
Corporate Income Tax Rate
With effect from YA 2010, a company is taxed at a flat rate of 17% on its chargeable income regardless of whether it is a local or foreign company.
The Net Profit up to SGD100,000/- each year for the first three consecutive years are 100% exempted and a further 50% exemption on the next SGD200,000 of normal chargeable income which translates into a huge savings of SGD51,000/- in the first 3 years while establishing the businesses in Singapore till the Year of Assessment 2019 i.e., till the date 31-December-2018.
From the Year of Assessment 2020: Exemption at 75% on the first SGD100,000 of normal chargeable income; and a further 50% exemption on the next SGD100,000 of normal chargeable income for the first three years from the date of incorporation.
After completion of first three years, from the fourth year onward, the company is entitled with partial tax exemption.
1) Tax Exemption Scheme for New Start-Up Companies:
|Under the scheme, qualifying new companies are given the following tax exemption for the first three consecutive YAs (Year of Assessment) where the YA falls in|
|Year of Assessment (YA)||Exemption on normal chargeable income|
2) Partial Tax Exemption for all companies:
|All companies including companies limited by guarantee can enjoy the following tax exemption:|
|Year of Assessment (YA)||Exemption on normal chargeable income|
Corporate Income Tax (CIT) Rebate for YAs 2013 to 2019 by IRAS in Singapore
Corporate income tax rebate in Singapore is given to all companies to ease business costs and support restructuring by companies and is applicable for YA (Year of Assessment) 2013 to YA 2019.
|Year of Assessment (YA)||Corporate Income Tax Rebate||Capped at|
- The rebate will not apply to income derived by a non-resident company that is subject to final withholding tax.
- Companies need not factor in the Corporate Income Tax Rebate when filing the Estimated Chargeable Income and the Income Tax Return (Form C-S/ C) as IRAS will compute it and allow the Rebate automatically.
- Companies including Registered Business Trusts, non-resident companies that are not subject to a final withholding tax and companies that receive income taxed at a concessionary tax rate.
Attribution of Profits / Losses for New Companies
For details on how to attribute the profits/ losses of new companies where the first set of accounts cover more than 12 months. please refer to below Basic Guide for New Companies.
Filing of Estimated Chargeable Income (ECI)
New companies incorporated in 2017 are required to file the ECI within three months from the company’s first financial year end.
If your company is incorporated in 2017 and closes its first set of accounts in 2017, no ECI filing notification will be sent to you in 2017 as most companies do not close their first set of accounts in the year of incorporation. However, you are still required to file the ECI within three months from your company’s first financial year end, unless the company qualifies for the administrative concession and does not need to file the ECI.
As most companies have their financial year end on 31 Dec, a new company is required to inform IRAS if its financial year end is not 31 Dec.
Otherwise, you will receive the ECI notification from IRAS in Dec, starting from the year after the year of incorporation. If your company is incorporated in 2017 and closes its first set of accounts in Dec 2018, you will receive a ECI notification from IRAS in Dec 2018 reminding you to e-File your ECI by Mar 2019.
|First financial period||ECI notification by IRAS||File ECI for||File first ECI by|
|YA 2018||YA 2019|
|15-Jul-2017 To 31-Dec-2017||No notification is sent in 2017|
15-Jul-2017 To 31-Dec-2018
(Refer to below Notes)
Notification sent in 2018
As the company’s first set of accounts covers a period of more than 12 months from the date of incorporation, its profit/losses must be attributed and declared under two Years of Assessment (YAs) as follows:
- YA 2018 covering the basis period from 15 Jul 2017 to 31 Dec 2017; and
- YA 2019 covering the basis period from 1 Jan 2018 to 31 Dec 2018.
Time apportionment basis may be used if the company is not able to directly identify income and expenses to the two periods.
Companies That Do Not Need to Submit ECI
To reduce the compliance cost on businesses, IRAS has increased the annual revenue threshold for ECI waiver from $1 million to $5 million. Your company does not need to file its ECI for the particular YA if it meets the following criteria:
|Company’s Financial Year End (FYE)||Criteria for ECI waiver|
|In or before Jun 2017|
|In or after Jun 2017|
|Notes: * The ECI should be the amount before deducting the exempt amount under the partial tax exemption or the tax exemption scheme for new start-up companies.|
|There is no need to inform IRAS if the company meets the conditions and does not need to file its ECI.|
Expenses Incurred before Commencement of Business (or) Revenue
Generally, expenses incurred before a business starts its operations are not tax-deductible as these are incurred for the purpose of setting up the operations and not ‘wholly and exclusively’ for the production of income.
IRAS allows deductible for tax purposes for business in enterprise development, revenue expenses incurred one year prior to the deemed date of commencement of business.
When you encounter with any of the following issues with your Book-Keeping &/or Accounting staff then we strongly suggest you to consider for outsourcing to ACHI BIZ as our costs are fixed basis per annum:
- To maintain the integrity of your financial positions & reports
- Tired of too many absenteeism
- Availing even unpaid leave for frequently for holidaying
- Demanding regular increment
- If there is no increment then working with unhappiness & with no target
- Demanding Thirteenth month salary & bonus even while your business is on negative
- Hard to retain for long run
- Negative feedback about your management to the new employees or online