Guide to Singapore Corporate Tax Filing Procedure That You Should Know
Singapore corporate tax regimes are considered one of the most efficient and transparent systems in Asia. Companies are required to handle tax matters while complying with certain procedures and failure to do so may incur penalties from the Inland Revenue Authority of Singapore (IRAS).
We have hence used our professional experience to prepare a simple guide to corporate tax in Singapore.
What You Need to Know?
Under Singapore’s Income Tax Act, all companies must pay Singapore corporate tax on chargeable income made from Singapore or foreign income remitted into Singapore.
However, tax-resident companies in Singapore enjoy special benefits such as:
- Avoiding double taxation: If a company has been taxed on income in a foreign country that is under any Avoidance of Double Taxation Agreements (DTAs) signed with Singapore, they are eligible for tax exemption or reduction. Alternatively, if the company has been taxed on income in Singapore, they may claim tax exemption or reduction in the foreign country.
- Tax-exemptions on foreign dividends: This applies to any foreign dividends, foreign branch profits, service incomes which have already been subject to corporate tax in a foreign country that has at least 15% corporate tax rate. Additionally, the IRAS must consider the tax-exemptions to be beneficial to the company.
- Start-Up Tax Exemption Scheme: The first three years of assessment (YA) for a newly-incorporated company qualify for tax exemptions under this scheme. The scheme provides 100% tax exemption on the first chargeable income of SGD$100,000 and a further 50% tax exemption on the next SGD$200,000. (With effect from YA 2020, the rate is reduced to 75% tax exemption on the first chargeable income of SGD$100,000 and 50% tax exemption on the next SGD$100,000)
The year of assessment (YA) refers to a 12-month period whereby the company’s income will be assessed. To become a tax-resident company, your company must have exercised its control and management in Singapore for the preceding year of assessment (YA). This condition may be satisfied if a company’s strategic decisions, such as the location of company board meetings, are in Singapore.
Deadline for Filing Corporate Tax
The deadline that companies must follow when filing Singapore corporate tax are:
- 15 December: if filing online
- 30 November: if physically filing the Income Tax Return
However from YA 2020 onwards, physical filing will be completely phased out and all companies must file their corporate tax documents online.
Failure to meet the deadlines for filing Singapore corporate tax are an offense and late filing may be subject to fines of up to SGD$10,000. The company’s officers and directors may also be prosecuted in court.
How Much is Singapore’s Corporate Tax Rate?
Singapore corporate tax rate is levied on a flat rate of 17% for chargeable income.
Chargeable income can be calculated by taking a company’s taxable revenues and subtracting deductible expenses which refer to expenses that are “wholly and exclusively incurred … in the production of income”. The company must be able to explain why the expenditure was necessary to earn the income. For more information on deductible expenses and other detailed tax information, it is advised to visit the IRAS website.
A company may receive capital allowances (tax relief on physical or tangible capital assets the company acquires) in the form of additional tax deductions to cover the cost of paying off machinery or plant purchased for its business purposes.
Procedures for Filing Singapore Corporate Tax
- File Estimated Chargeable Income (ECI) form online
All Singaporean companies are required to file the ECI form which will help provide estimates of the company’s chargeable income to the IRAS. This has to be done through myTax Portal on IRAS’ website within 3 months of the financial year-end. However, companies are exempted from this procedure if their annual revenue is less than S$5 million and no estimated chargeable income for that YA can be provided.
- File annual Income Tax Return
This is also done via myTax Portal and all companies, even those making losses, under liquidation, or waiting to be struck off, must file their annual Income Tax Return. The Income Tax Return provides a report of the company’s actual income rather than the ECI which is an estimate. Most Income Tax Return is filed using Form C and will require the submission of paperwork such as financial statements, tax computations, and supporting schedules. A company may submit a simplified Form C-S if they meet the following requirements:
- Is incorporated in Singapore.
- Has an annual revenue of S$5 million or less.
- Income is taxed at the standard corporate tax rate of 17% and not reduced tax rates.
- Not claiming under special schemes (e.g. investment allowances, foreign tax credits).
Dormant companies may also submit a simplified Form C-S/C for Dormant Company instead of the standard Income Tax Return form.
- Wait and receive IRAS’ Notice of Assessment (NoA)
After the IRAS is done reviewing the forms submitted, they will issue a Notice of Assessment (NoA) to the company the following year by 31 May. The NoA contains a detailed statement of the company’s tax liabilities and represents an opportunity for the company to raise an objection to IRAS’ tax assessment.
- Pay the assessed corporate tax
If there are no issues with the tax assessment, the company is required to pay the assessed Singapore corporate tax amount within 30 days from the date the NoA is issued. Payment can be made through most financial payment methods such as interbank GIRO, internet banking, cheque or telegraphic transfer.
Contact Us Today
Interested in Singapore corporate tax filing services?
3E Accounting is the wise choice for you. Singapore has been our base for a long time and we have the experience and necessary know-how to ensure your success.
Contact us today to benefit from our effective and high-quality work.