What Is Singapore Corporate Tax

By Author: Billy Edwards
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It has been widely known that Singapore is a top example of countries offering reasonable corporate income tax rates. In an effort to convince and maintain foreign investments, the country continues to reduce Singapore corporate tax rates and offers several tax incentives. There are two essential factors to the growing economy of Singapore and they are effective tax rates and pro-business status worldwide.

In this portion, we will be giving you a preview of the appealing tax schemes and benefits outlined for Singapore businesses.

In order to prevent double-taxation for shareholders, on January 1, 2003, Singapore has implemented a single-tier corporate tax system. Since the dividends shared among the shareholders of the company are exempted from additional taxation the tax paid by a company on its chargeable income is the final tax. Also in Singapore, capital gains such as the sale of fixed assets and gains on foreign exchange on capital transaction are not taxed.

The tax benefits regarded as a tax resident by the Inland Revenue Authority of Singapore (IRAS) are as follows. Being a tax resident, a Singapore ...
... company:

1. Is eligible for tax exemption scheme available for new start-up companies.

2. Can enjoy tax exemption on foreign-sourced dividends, foreign branch profits, and foreign-sourced service income.

3. Is qualified to enjoy the benefits as stipulated under the Avoidance of Double Taxation Agreements (DTA) that Singapore has concluded with treaty countries.

4. Is taxed only on source income and foreign income sent to Singapore.

A company is considered as resident in Singapore if the control and management of the business is exercised in Singapore. Even though the term "control and management" is not being explicitly defined by authorities, generally it refers to the policy level decision making at the level of Board of Directors and not the mundane decision making and operations.

New companies are granted 100% tax exemption on the first S$100,000 of Chargeable Income for the first three consecutive years of assessment.

Requirements for one to be qualifed for tax exemptions are the following:

1. The incorporation is done in Singapore;

2. For that Year of Assessment, it is a tax resident of Singapore;

3. Throughout the basis period relating to that Year of Assessment, it has at most 20 shareholders;

4. All its shareholders are individuals throughout the basis period relating to that Year of Assessment; or

5. Having at least one individual shareholder with a minimum of 10% shareholding.

Those were just main information on corporate tax in Singapore, if you have inquiries and need assistance, just don't be reluctant to approach business registration firms in Singapore for professional assistance.

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