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Singapore Taxation Guide for Small and Medium Enterprises (SMEs)

Last modified: June 2, 2016
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Small and Medium Enterprises, also known as SMEs constitute a considerable part of the Singapore economy, without which, its economy may face challenges to survive and retain its robust nature. According to a report compiled by IRAS in 2007, there are about 148,000 SMEs in Singapore, making up 99% of all Singapore companies. They indeed contribute 46% of the nation’s GDP and employ 63% of the workforce. This blog will highlight the Singapore taxation aspect of the SMEs of the nation.

Inland Revenue Authority of Singapore (IRAS) governs the rules and regulations of taxation Singapore of Individuals and enterprises. IRAS has implemented fair and liberal tax policies for SMEs so as to ensure that tax laws implemented by the authority encourage the growth of the small and medium enterprises. The tax laws for Singapore companies are comprised of some incentives such as partial tax exemption schemes, full tax exemption schemes, high exemption threshold for GST registration, etc.

SMEs in Singapore are formed in different legal forms such as sole proprietorships, partnerships and private limited companies. Generally, they are subject to following taxes:

  • Income Tax either in the form of corporate income tax Singapore or Singapore personal income tax on income derived from Singapore or received in Singapore from outside Singapore.
  • Goods and Service Tax Singapore (GST) levied on supplies of goods and services made in Singapore and importation of goods into Singapore.

IRAS has been continuously making various efforts to implement more simplified tax policies for SMEs. As a part of this initiative, the authority has encouraged SMEs to use the tax return Form C-S to file their income with effect from the 2013 YA.

All Singapore companies required to file an estimated chargeable income (ECI Singapore) within three months after the financial year-end on Form C. However, as per the new return filing law for SMEs, there is no requirement to submit financial account, tax computation and supporting schedules with the tax return. The documents must be prepared, but have to send to IRAS only if requested.

Form C-S is available for a company if a business is incorporated in Singapore and has an annual turnover less than S$1 million, has only income taxed at 17% and does not claim any group relief, carry-back relief of capital allowances, investment allowance, etc. Additionally, an e-filer of a Form C-S will receive an extension of their filing due date to December 15, 2013, instead of November 15.

On the international front, Singapore ranked 5th in the world for ease of paying tax , in the 2013 report of “Doing Business” by World Bank where the nation positioned as the best place for doing business in the world 2013.

To get in touch about Singapore taxation for SMEs, you can directly call us on +65 6536 0036 or mail us on info@sbsgroup.com.sg .

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