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Taxation Matters
Businesses and companies pay taxes. Fortunately, the Singapore government constantly monitors its tax regime to ensure that it keeps pace with the global economy. This helps ensure a favourable business climate for Singapore entrepreneurs. To acquaint yourself with the current Singapore tax regime, please refer to the Inland Revenue Authority’s Singapore’s Tax System and Tax Guides and the latest government budget.
Types of Tax
Different types of taxes are imposed on business enterprises in Singapore, affecting sole proprietors, partnerships and companies.
Sole Proprietorship/ Partnership Tax
Sole-proprietors are required to report their business income in the individual Income Tax Return. (There is no separate form to report the sole-proprietor business as the sole proprietor is only required to report his income in his individual Income Tax Return.) For a partnership business, the precedent partner will be responsible for reporting the partnership income.
In addition, all partners should report their share of the partnership income in their individual Income Tax Return. However, if entrepreneurs and spouse are the only partners in the business (i.e., a Husband and Wife partnership), partners are not required to reporting partnership income. Instead, entrepreneurs and spouse have to report the share of partnership income in the individual Income Tax Return.
Corporate Tax
Corporate tax are levied on the income derived by any company accruing in or derived from Singapore or received in Singapore from outside Singapore. A company is defined as one incorporated or registered under any law in force in Singapore or elsewhere. Companies have to file an estimate of their chargeable income with IRAS within 3 months after the end of their accounting period and to file their tax return with IRAS by 31 July of the year.
Property Tax
This is a tax on immovable properties, which is payable yearly in advance in the month of January. The property tax payable per year is based on a percentage (tax rate) of the annual value of the property.
Goods and Services Tax (GST)
GST is paid by GST-registered businesses for their purchase of goods and services in Singapore. These businesses in turn have to charge GST on the supply of goods and services in Singapore. At the end of an accounting period, GST paid is deducted from the GST collected. If the net amount is positive, the business has to account the amount to the Comptroller of GST. If the net amount is negative, a refund can be expected from the Comptroller.
Businesses and companies have up to one month after the end of the accounting period to submit GST Return and for the payment of tax (if any). Penalties will be imposed for late submission and payment.
Types of individuals
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Tax resident
Anyone in Singapore for 183 days or more will be taxed at resident rate.
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Tax Non-resident
Anyone in Singapore less than 183 days will be taxed at non-resident rate.
Tax Rates
Individual rates for tax resident
| Chargeable Income | Rate(%) | Gross Tax Payable (S$) |
|---|---|---|
|
First S$20,000 Next $$10,000 |
0 3.5 |
0 350 |
|
First S$30,000 Next S$10,000 |
- 5.5 |
350 550 |
|
First S$40,000 Next S$40,000 |
- 8.5 |
900 3,400 |
|
First S$80,000 Next S$80,000 |
- 14 |
4,300 11,200 |
|
First S$160,000 Next S$160,000 |
- 17 |
15,500 27,200 |
|
First S$320,000 Above S$320,000 |
- 20 |
42, 700 |
Individual rates for tax non-residentnon
Employment income
Employment income is taxed at 15% or resident rate, whichever gives rise to a higher tax amount.
Director's fees, consultation fees & all other income
The director's fees, consultation fees and all other income that you received will be taxed at 20%
Corporate rates
| Tax rate(%) | Tax exemption / rebate | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 17 |
Partial tax exemption for companies
Effective from YA 2008, a partial tax exemption is given to companies on normal chargeable income* (excluding Singapore franked dividends) of up to $300,000 as follows:
Tax exemption scheme for new start-up companies
The tax exemption for qualified new start-up companie's first three consecutive year on chargeable income of up to $300,000 is as follows:
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GST
7%
Appendies
New start up company tax exemption qualification
- be incorporated in Singapore (including a company limited by guarantee**);
- be a tax resident* in Singapore for that YA; and
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have no more than 20 shareholders throughout the basis period for that YA where:
i) all of the shareholders are individuals beneficially and directly holding the shares in their own names; OR
ii)at least one shareholder is an individual beneficially and directly holding at least 10% of the issued ordinary shares of the company.