For foreigners who are interested to set up companies in Singapore, one of the major draws is the competitive corporate tax rate. Political stability coupled with the ease of doing business make Singapore one of the most sought after destination for foreigners to set up companies away from their home country.

 

Who needs to pay corporate tax?

All companies are required to declare and pay tax on income derived from Singapore or foreign income remitted into Singapore.

 

When do I have to pay corporate tax?

A company is taxed on income earned in the preceding financial year. This means your company will be paying tax in 2020 for income earned in 2019.

 

What is the corporate tax rate in Singapore?

A company is taxed at a flat rate of 17% on its chargeable income regardless of whether it is a local or foreign company. There are sector-specific tax incentives that your company can utilize depending on eligibility.

 

New start-up companies in Singapore can be eligible for tax reliefs and incentives. 

 

By when do I have to file corporate tax?

You need to submit your filing by 15th December (online) or 30th November (by mail).

 

Do I need to pay tax if my company makes a loss?

If the company makes a loss in any financial year, the losses can be carried forward to the next year and be offset against future income. This is provided that there are no substantial changes in shareholdings as well as the principal activities of the company.

 

Can business expenses by deducted from the taxable income of the company?

Yes, as long as the expenses are revenue in nature and are incurred in relation to the generation of income for the company. The allowed deductible expenses are governed by the Singapore Income Tax Act.

 

Are there penalties for late payment or non-payment of corporate tax in Singapore?

If the tax isn’t paid by the due date, a 5% penalty is assessed. Subsequently, an additional 1% penalty will be imposed for every completed month; the 1% penalty will be imposed per each terminated month that the tax is still unpaid, up to a maximum of 12% of the tax overdue. Subsequently, a company may confront further enforcement actions including legal actions by IRAS.

 

Do I need to hire a tax agent to file corporate tax in Singapore?

It is not a must for companies to hire a tax agent. However, engaging the assistance of a professional tax agent who is well versed in the corporate tax in Singapore will ensure maximum compliance as well as optimizing the tax filing for your company.

Our qualified tax consultants can help ensure your accounts and tax filings are done properly. Talk to us today to understand more!