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Singapore Corporate Tax Review by SBS Consulting

Last modified: July 6, 2018
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Corporate TaxSingapore is a rapidly growing business nation in South East Asia. Tax system of Singapore is well regulated and less than any other developed nation in the world. Singapore corporate tax is the most enticing feature for global foreign investors and business entrepreneurs, which stimulate them to set up their overseas office or start-up business over there. With an aim to extent support and encouragement to business owners, its government has designed the tax structure of the nation in a very business-friendly manner. Its honest and supportive government has implemented fair and competitive tax rates for individual and corporate sector. For all these positive factors, Singapore has taken the forefront as globally recognized business hub from last few decades.

 Inland Revenue Authority of Singapore (IRAS) is the concern authority who administers, assess, and collect the taxes in Singapore. The source of income is determined by the place at which the services are furnished. The Singapore corporate tax structure includes some attractive stimulus such as income exemptions, good amount of capital allowance, incentives, and a wide-ranging network of double taxation avoidance agreements. At corporate level, companies are normally taxed a flat rate of 17% and it gradually reduced to as low as 8.5% for small and medium sized companies with less than S$300,00 as chargeable income, due to partial Exemption Scheme.

 One of the fascinating features of the tax system in Singapore is that it follows a Single Tier Tax system. In which, profit earned by the company is taxed only once and dividends received by the business shareholder are exempted from tax. It is one of those countries that who follows such pro-business tax system. For new startup companies, government has lent support and encouragement by implementing tax exemption scheme. Under this scheme, they are free from paying any tax on profit for initial three consecutive years. Nevertheless, they need to meet some prerequisite conditions set by the government to avail the laid down benefit.

Key advantages of Singapore Corporate Tax Structure:

  • Competitive Tax Rates- for corporate: 17% GST: 7% and Individual: 20%
  • 1 Tier Tax system with no dividend for shareholder
  • No tax rule on capital gain
  • Open and liberal rules for losses and unused capital allowances
  • Availability of wide spanning tax treaty network
  • No restriction for foreign currency
  • Tax exemption scheme for new startup companies
  • There is no rules of thin capitalization
  • Many types of tax incentives are available
  • Policy of foreign tax exemption and tax credit for foreign sourced income are available

Singapore provides an environment that is extremely favorable for business set up. Competitive tax system and supportive government are the main forte of the business nation. It takes pride in being a superior business nation that runs an effective economy with a low corporate tax rate system. In Singapore, business owners can take assistance of professional firm that provides taxation services, offshore investing, and other Singapore company formation requirements.

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