Singapore Taxation

Business income is taxed at a flat corporate tax rate of 17 percent.
There are tax exemption schemes available for companies which help to lower the effective corporate tax rate at different tiers.
Tax Exemption Scheme for New Start-up Companies
Any newly incorporated company that meets the conditions (as stated below) will have the privilege to enjoy the tax exemption for new start-up companies for each of the first three years of tax assessment. The qualifying conditions are as follow:

• be incorporated in Singapore
• be tax resident in Singapore
• possesses not more than 20 shareholders with at least one of the shareholders being an individual shareholder holding at least 10% of ordinary shares.

The tax exemption is open to all new companies except these two types of companies:

• A company whose principal activity is that of investment holding; and
• A company which undertakes property development for sale, for investment, or for both investment and sale.

Partial Tax Exemption for Companies
Companies in their 4th tax assessment year onwards and all other companies will have the privilege to enjoy partial tax exemption indefinitely.

You may refer to tax exemption scheme for new start-up companies for more information. Capital gains are not subject to tax in Singapore. For instance, if a trading company sells office property, the profit on the sale is not subject to tax. Singapore-resident companies can issue exempt dividends, i.e. shareholders are not taxed on such dividend income. Double taxation agreements are agreements signed between countries. They help Singapore-resident companies avoid paying taxes twice on the same income.

You have to pay your taxes within one month of receiving a Notice of Assessment. For taxes arising from estimated chargeable income (ECI), you can either pay the taxes at once or by monthly installments using GIRO. You should pay your taxes promptly or you may have to pay penalty fees. If you disagree with the tax assessment, you can write to IRAS and state the reasons why you feel the tax assessment is incorrect. Please note that you must still pay your taxes within one month of the Notice of Assessment even if you object to the assessment.

Goods and Services Tax or GST is a broad-based consumption tax levied on the import of goods (collected by Singapore Customs), as well as nearly all supplies of goods and services in Singapore. In other countries, GST is known as the Value-Added Tax or VAT. The current GST rate is 7 percent in Singapore.
GST is a tax on goods and services purchased or consumed locally. It is compulsory for businesses to come forward to register for GST when their turnover exceeds $1mil per year. Businesses that do not exceed $1mil in turnover may register for GST voluntarily.Here is a quick overview of GST and how it affects your business. It is not meant to be an in-depth guide to GST:
GST is a tax charged on the goods and services produced in Singapore and on the importation of goods into Singapore. The current rate is 7 percent.
Your business must be registered to collect GST if your annual turnover exceeds or is likely to exceed S$1 million from the sale of taxable goods and services.
You can apply for exemption from GST registration if most of your goods or services are exported or supplied internationally (“zero-rated supplies”).

GST Registration
All Singapore companies must register for GST if their annual taxable revenue is more than S$1 million, or if their current taxable income and annual taxable revenue is expected to be more than S$1 million. The business must register for GST within thirty days from the time it is deemed liable.
You may also choose to voluntarily register for GST. Approval for voluntary registration is at the discretion of the IRAS Comptroller. Once approval is given, you must remain registered for at least two years.

Charging and Collecting GST
Once you have registered for GST, you must charge GST on your supplies at the prevailing rate. This GST that is charged and collected is known as output tax. Output tax must be paid to IRAS.
The GST that you incur on business purchases and expenses (including import of goods) is known as input tax. If your business satisfies the conditions for claiming input tax, you can claim the input tax on your business purchases and expenses.
This input tax credit mechanism ensures that only the value added is taxed at each stage of a supply chain

Should I registered GST for my Company in Singapore?
My Company’s revenue is less than $1 million, Should I registered GST for my Company? Please go through the article and you will get your answer.

GST is a broad-based consumption tax levied on the import of goods (collected by Singapore Customs), as well as nearly all supplies of goods and services in Singapore. The only exemptions are for the sales and leases of residential properties and the provision of most financial services. Export of goods and international services are zero-rated. In some countries, GST is known as the Value Added Tax (VAT).

It is compulsory for businesses setup to come forward to register for GST when their turnover exceeds $1mil per year. Businesses that do not exceed $1mil in turnover may register for GST voluntarily.
After registration, businesses must charge GST at the prevailing rate. This GST that they charge and collect is known as output tax, which has to be paid to IRAS. GST incurred on business purchases and expenses (including import of goods) are known as input tax. Businesses can claim input tax if conditions for claiming are satisfied. This credit mechanism ensures that only the value added is taxed at each stage of a supply chain.

A GST-registered business is required to submit GST return to IRAS at the end of each prescribed accounting period (usually on a quarterly basis). The business will report its output tax and input tax for that prescribed accounting period in the GST return. The difference between output tax and input tax is the net GST payable to or refundable from IRAS. If you are not a GST-registered business, you cannot claim the GST incurred on your purchases. However, you will not need to charge your customer for GST as well. You should consider the following before you register as GST:

1. Responsibilities of a GST-registered business – Once registered, you are a GST collecting agent of the government. This means that there are responsibilities that you need to fulfill. Complying with these responsibilities may increase your administrative costs.
2. Profile of your suppliers
3. Profile of your customers
4. Type of sales which you make
5. Your pricing decision after GST registration

Sole-proprietors are considered “self-employed”. The business income is treated as part of your total personal income and taxed at personal income tax rates.As your business income forms part of your personal income, the two are calculated together when you file your tax returns.

Your business income is reported separately (Form B or B1) and added to all your other personal income. The total is then subject to personal income taxes.Taxes are charged progressively (0 percent – 20 percent) on your chargeable income. Chargeable income is your business/trade income plus any other personal income, minus all deductions, reliefs and rebates. For non-resident individuals, your employment income is taxed at 15 percent or the resident rate, whichever gives rise to a higher tax amount.

Additionally, director’s fees, consultation fees and all other income that you received will be taxed at 20 percent from YA 2005 forward.From YA 2017, the tax rates for non-resident individuals (except certain reduced final withholding tax rates) will be raised to 22% from YA 2017. This is to maintain parity between the tax rates of non-resident individuals and the top marginal tax rate of resident individuals.

Stamp duty is a tax on documents relating to immovable properties, stocks or shares. Once the document is signed and dated, stamp duty needs to be paid:

• within 14 days after the date of the document if the document is signed in Singapore, or
• within 30 days after the date of its receipt in Singapore if the document is signed overseas.