Entrepreneurs do business in Singapore and need to have an in-depth understanding of the country's investment environment, legal, accounting and tax framework before setting up a company. This Singapore tax overview will give you a general understanding of the country's taxes.
Singapore is well-known worldwide for its competitive tax structure. The 17% Singapore Corporate Income Tax (CIT) is the lowest corporate income tax in the ASEAN region. In addition, Singapore implements a unified tax rate for domestic and foreign-funded enterprises to enable enterprises to save compliance costs; Singapore companies are exempt from capital gains tax, allowing all Singapore shareholders to enjoy dividend income tax exemption; Singapore corporate tax is declared once per financial year, not monthly; corporate tax payment is based on the company's pre-tax profits, not turnover.
Singapore Startup Tax Exemption Scheme
Startup Tax Exemption (SUTE) Scheme is designed to encourage entrepreneurship in Singapore and provide some exemptions for startups to their taxable profits during the first three years of their operations. Eligible Singapore startups can obtain a 75% exemption of S$100,000 for the first income tax due to S$100,000 for three consecutive years of initial establishment, and the next 50% exemption of S$100,000 for the income tax due to S$100,000. It must be noted that companies engaged in real estate sales and investments and companies participating in investment do not meet the SUTE qualifications. Those who meet the SUTE conditions must meet the following conditions:
- company must be registered and established in Singapore;
- company must be a Singapore resident enterprise in the tax assessment year;
- company must not exceed 20 shareholders during the tax assessment year, of which all shareholders are individual beneficiaries and directly hold shares in their own name; or at least one shareholder is an individual shareholder holding at least 10% of common shares.
Singapore Double Tax Avoidance Agreement
Singapore has signed more than 20 free trade agreements (FTAs), as well as 74 comprehensive and 8 limited Double Tax Avoidance Agreements (DTAs). These agreements aim to promote cross-border trade and reduce the cost of Singaporean companies' overseas expansion. Companies can offset the fees incurred overseas based on Singapore taxes, such as specific market expansion and investment expenses, and also include the labor expenses of Singaporean companies when they expand overseas.
Foreign income tax regulations for Singapore companies
Generally speaking, the income earned by a company will be taxed only if it is derived from Singapore or directly collected overseas income in Singapore. So whether the company's income is generated in Singapore or received foreign remittance is worth considering. The Singapore Taxation Bureau will evaluate it based on many conditions. If the company's income is from overseas and is not transferred to Singapore, it will not be taxed in Singapore. If the following situations occur, the foreign dividends, foreign branch profits and overseas service income remitted by Singapore residents' companies will be tax-free:
- The total tax rate of foreign income received in that year is at least 15%
- The foreign income has been taxed (it has been taxed in the country where the income received)
- The Singapore Inland Revenue Agency needs to be sure that tax exemption is beneficial to Singaporean people or companies.
If you want to know whether your company is eligible for a tax exemption plan, or calculate how much tax the company needs to pay, you can click the link to view it.
https://www.3ecpa.com.sg/fu-wu/shui-wu/gong-si-suo-de-shui/?lang=zh-hans
https://www.3ecpa.com.sg/resources/tools/singapore-corporate-income-tax-calculator-for-ya-2019/
