Accounting

Singapore Taxation System

Singapore has one of the most attractive taxation systems in the world. As a pro-business nation, its taxation system is designed to encourage local and foreign entrepreneurs and companies to invest in the country. Additionally, the Singapore government has introduced various schemes and incentives for startups, such as Productivity and Innovation Credit Scheme (PIC) and full tax exemption on the first SGD100,000 of their taxable income for the first three filing years.

Here's a look at the different types of tax in Singapore.

001 Singapore Taxation System

Singapore Corporation Tax

The country adopts a one-tier corporate tax system. This means that the tax paid by a company on its chargeable income is the final tax. All dividends paid by a company are exempt from tax in the hands of the shareholders.

Since 2010, Singapore's corporate income tax rate has been pegged at a flat rate of 17%. However, there are various tax incentives, subsidies and schemes granted by the government for startups, which could lower the effective tax payable considerably. These include:

  • A Singapore-incorporated company does not have to pay any tax on the first SGD100,000 taxable income for the first three tax filing years, provided that it
    • Is incorporated in Singapore;
    • Is a tax resident in Singapore for that YA;
    • Does not have more than 20 shareholders throughout the basis period for that YA where:
      • All of the shareholders are individuals "beneficially and directly" holding the shares in their own names; or
      • At least one shareholder is an individual "beneficially and directly" holding at least 10% of the issued ordinary shares of the company
  • Qualifying companies are also eligible for partial tax exemption of 50% of the next SGD200,000 of its taxable income.

There is no tax on capital gain. Similarly, capital losses are not tax deductible in Singapore.

The income tax filing due date for Singapore companies is November 30. All taxes need to be paid within one month of receiving a Notice of Assessment.

Taxes for Sole Proprietorship and Partnership in Singapore

Sole-proprietors and individual partners (including partners in Partnership, Limited Partnership and Limited Liability Partnership) in Singapore are taxed on his share of the income from the partnership based on his personal income tax rate. Where the partner is a company, its share of income from the partnership will be taxed at the corporate tax rate.

Singapore Goods & Services Tax

Introduced in 1994, the Goods & Services Tax (GST) is a tax on goods and services produced in Singapore or imported into Singapore, and are purchased and consumed locally.

Basic information on GST:

  • The prevailing GST rate is 7%.
  • If your company's annual turnover exceeds or is likely to exceed SGD1 million, it is mandatory to be registered to collect GST.
  • If your company's annual turnover does not exceed SGD1 million, your company may also register for GST voluntarily.
  • Application for exemption from GST registration can be made if most of your goods or services are exported overseas (zero-rated supplies).

Singapore Personal Income Tax

 A tax resident is:

  • a Singapore citizen or a PR residing in Singapore except for temporary absences; or
  • a foreigner who has stayed/worked in Singapore (excludes director of a company) for 183 days or more in the year before the year-of-assessment.

The prevailing rates for a tax resident are as follows:

Personal Income Tax in Singapore
IncomeTax Rate (2016)Tax Rate (2017)
Tax rate on first $20,000 0% 0%
Tax rate on next $10,000 2% 2%
Tax rate on next $10,000 3.5% 3.5%
Tax rate on next $40,000 7% 7%
Tax rate on next $40,000 11.5% 11.5%
Tax rate on next $40,000 15% 15%
Tax rate on next $40,000 17% 18%
Tax rate on next $40,000 18% 19%
Tax rate on next $40,000 18% 19.5%
Tax rate on next $40,000 18% 20%
Tax rate on above $320,000 20% 22%

Capital gains, income earned overseas and dividends received from a Singapore company is not subject to personal tax in Singapore.

Other Types of Taxes

  • Property Tax is a wealth tax imposed on owners of properties regardless of whether the property is occupied, vacant or rented out. A progressive property tax rates apply, depending on the types of property and whether it is owner-occupied or rented out.
  • Motor Vehicle Taxes are taxes, other than import duties, that are imposed on motor vehicles.
  • Customs & Excise Duties are imposed on relatively few products, as Singapore is known to be a free port. These products include tobacco, petroleum products and liquors.
  • Betting Taxes are duties imposed on private lottery, betting and sweepstakes.
  • Stamp Duties are imposed on commercial and legal documents concerning stocks and shares, and immovable property.
  • Foreign Worker Levy is imposed on Singapore companies that hire foreign workers. The levy amount varies, depending on the skills of the workers, and ranges from SGD315 to SGD550.
002 Singapore Taxation System

Note

Be sure to pay the right amount of tax for your company or your personal income tax! Contact us for a consultation today.