Singapore – Taxation

CORPORATE TAX

Singapore follows a territorial basis for corporate taxation. This means that only the income that is sourced from or received in Singapore is taxed. A company is required to file for income tax return on earnings derived from, accrued from or received in Singapore. A person or company’s income in other countries is not taxed by Singapore. Companies are charged a flat tax rate of 17% on its chargeable income.

Singapore offers several incentive schemes that reduce the effective tax rate for most companies to well below the headline rate of 17%. For example, startup companies enjoys tax exemptions for the first three years whereby they pay no tax on the first $100,000 of chargeable income and only 50% of the tax on the next $200,000 of chargeable income. Furthermore, the government has extended Corporate Income tax Rebate for all resident companies until 2017 wherein they are given a rebate of 30% on their corporate income tax, capped at SG$ 20,000 per year. In addition, Singapore has special tax regimes for specific industries or sectors wherein it provides tax exemptions or reduced tax rates; these sectors include Banking, Fund Management, Shipping, and Leasing. As a result of these schemes, the effective tax rate for a company is often well below 17%.

One of the most attractive features of Singapore’s corporate tax policy is that there is no tax on capital gains, dividend distributions, or foreign-sourced income.

The table below summarizes the current corporate taxes that a new company will pay for its first three years.

 Unlike several other countries, Singapore does not charge corporate taxes for the following: