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.
Chargeable
Income
|
Tax
Rate
|
Additional
Rebate
|
First
$100,000
|
0.0%
|
|
Next
$200,000 (i.e. upto $300,000)
|
8.5%
|
30%
of payable tax (see Note 1)
|
Above
$300,000
|
17.0%
|
30%
of payable tax (see Note 1)
|
Unlike
several other countries, Singapore does not charge corporate taxes for the
following:
Type
of Corporate Tax
|
Rate
|
Tax
rate on Capital gains by the company
|
0.0%
|
Tax
rate on dividends distributed to shareholders
|
0.0%
|
Tax
rate on foreign-sourced income not repatriated to Singapore
|
0.0%
|
Tax
rate on foreign-sourced income repatriated to Singapore
|
0.0-17%
(see Note 2)
|