Singapore imposes corporate income tax (CIT) at a flat rate of 17 percent, which is the lowest among ASEAN member states. The country practices a single-tier corporate tax system, which means businesses pay CIT only on chargeable income (profits), and all dividends are exempt from further taxation.
Tax rate
Businesses that have their income derived from Singapore or income remitted to the country are obligated to pay corporate taxes at a rate of 17 percent on its chargeable income regardless of whether it is a local or foreign .
The country will introduce a 15 percent minimum effective tax rate for large multinational enterprises (MNEs) based in Singapore that from January 1, 2025, in line with Singapore’s effort to align with BEPS 2.0.
Taxable income
Taxable incomes include:
- Profits from trade or business (the single-tier system this means Singapore-based companies will only pay taxes on profits and not on revenue);
- Royalties and premiums;
- Rental property income; and
- Income from investments such as interests.
Tax residency
The tax liability of companies and individuals in Singapore is dependent on their tax residency status.
Resident vs. non-resident companies
In Singapore, a company is either a resident or a non-resident. The Inland Revenue Authority of Singapore (IRAS) determines residency by where the company is controlled and managed, or in other words, where it makes decisions on strategic matters. This means that a company’s residency is not necessarily the location of where it is incorporated.
For example, a company might be incorporated in Singapore, but be considered a non-resident if decisions are de facto made in another jurisdiction, such as Hong Kong or London. One factor in determining residency – but not necessarily the only one – is where the company holds its Board of Directors meeting.
Benefits of being a tax resident
Qualifying as a tax resident will mean the company is eligible for the multitude of tax incentives the country offers that can lower the total effective CIT tax rate.
These incentives include being eligible for new startups to receive a tax exemption of 75 percent on the first S$100,00 (US$74,120) of chargeable income and a further 50 percent exemption on the next S$100,00 (US$74,120) of chargeable income (available for the first three years of operations).
All other companies will receive a tax exemption of 75 percent on the first S$10,000 (US$7,413) and a further 50 percent on the next S$190,000 (US$140,000) of chargeable income.
Tax residents can enjoy the benefits from the country’s more than 90 double tax avoidance (DTA) agreements, enabling businesses to eliminate instances of double taxation between treaty signatories. Moreover, tax residents have the advantage of gaining access to the wider Asian markets through the country’s comprehensive free trade agreements (FTA).
Tax Incentives
With one of the world’s most business-friendly tax regimes, Singapore has emerged as a major financial and economic hub in Asia. Investors are also drawn by the efficient and cost-effective process to incorporate a company and the country’s transparent legal system.
Singapore offers a range of tax incentives and schemes to encourage specific industries and activities. These incentives aim to foster economic growth and innovation. These incentives help reduce a company’s final corporate income tax rate.
- Progressive Wage Credit Scheme
- Start-Up Tax Exemption Scheme
- Double Tax Deduction for Internationalization
- The 100 percent investment allowance scheme
- Startup SG Tech
- Enterprise Development Grant
- Enterprise Innovation Scheme; among others.
Additionally, there are industry-specific incentives for sectors such as biotechnology, maritime, and tourism. It is essential for businesses to understand the eligibility criteria, compliance requirements, and application procedures to fully benefit from these tax incentives and contribute to their long-term growth and competitiveness.
Start-Up tax Exemption Scheme
The Start-Up Tax Exemption (SUTE) tax exemption scheme aims to support new businesses and entrepreneurs in the country.
|
Tax exemption |
Chargeable income |
|
75% |
On the first S$100,000 (US$73,770) |
|
50% |
On the next S$100,000 |
This scheme is only available for the first three-yearly assessments. After this period, companies can apply for the partial tax exemption scheme (PTE).
To qualify, businesses must:
- Be a tax resident in Singapore; or
- Owned by no more than 20 shareholders (where all the shareholders are individuals; or
- At least one shareholder controls 10 percent of the issued shares).
Businesses must not be:
- An investment holding company; or
- Engaged in the property development industry, either for investments or for sale.
Partial Tax Exemptions
Companies that do not qualify for SUTE may be eligible for the Partial Tax Exemption (PTE) scheme.
|
Tax exemption |
Chargeable income |
|
75% |
On the first S$10,000 (US$ 7,400) |
|
50% |
On the next S$190,000 (US$140,000). |
To know more about tax incentive schemes in Singapore, read our guide to incentives in Singapore.
Submitting Income Tax Returns
Companies are required to report their income tax returns to the Inland Revenue Authority of Singapore (IRAS) twice a year. This is completed by submitting the following two forms:
- The Estimated Chargeable Income (ECI), which must be submitted within three months of the end of the company’s financial year.
- Form C-S or Form C (CIT returns forms), which must be submitted by November 30 of each Year of Assessment (YA).
Companies with annual revenue of S$5 million (US$3.7 million) or less and an ECI of zero for the YA are exempted from submitting the ECI form. Some other institutes, such as foreign universities, are also exempt from submitting the ECI form.
Companies are required to fill out Form C-S or Form C even if they are making a loss. Form C-S is a simplified and streamlined version of Form C for smaller companies (those with annual revenue of under S$5 million (US$3.7 million)) and also exempts them from filing additional financial statements.
Dormant companies are also required to submit their income tax returns unless they meet the criteria for a waiver.
BEPS 2.0 effect on Singapore’s tax rate
Singapore’s Budget 2023 announced that the country will introduce a 15 percent minimum effective tax rate for large multinational enterprises (MNEs) based in Singapore from January 1, 2025.
These changes are part of the Base Erosion and Profit Shifting initiative, or BEPS 2.0, a global framework that aims to ensure a fairer distribution of tax rights on large MNEs through a set global minimum tax rate. Base erosion is a practice where companies use tax strategies to exploit gaps in tax rules and shift profits to artificial locations where the tax rates are low or non-existent.
BEPS 2.0 is the outcome of cooperation Organization for Economic Co-operation and Development (OECD) to tackle tax evasion. Singapore was among 130 jurisdictions to join this agreement in October 2021.
From 2025, MNEs with consolidated annual revenues of EUR 750 million (US$797 million) or more, must pay a tax rate of 15 percent on profits earned in the jurisdiction in which they operate.
FAQ: Corporate Income Taxes in Singapore
What is Singapore’s corporate tax rate?
Singapore imposes corporate income tax (CIT) at a flat rate of 17 percent for both foreign and domestic companies, the lowest among all ASEAN member states. The country practices a single-tier corporate tax system, which means businesses pay CIT only on chargeable income (profits).
Who is eligible to pay corporate tax in Singapore?
Businesses that have their income derived from Singapore or income remitted to the country are obligated to pay corporate taxes at a rate of 17 percent on its chargeable income, regardless of whether it is a local or foreign company.
The tax residency of a company is determined by where the business is managed and controlled. The location of the company’s board of directors meetings, in which strategic decisions are made, is a key factor in determining where the control and management are exercised.
What does taxable income include?
Taxable incomes include:
- Profits from trade or business;
- Royalties and premiums;
- Rental property income; and
- Income from investments such as interests.
What is the due date for filing corporate taxes?
Companies are required to report their income tax returns to the Inland Revenue Authority of Singapore (IRAS) twice a year.
The deadline for filing your Corporate Income Tax Return (Form C-S/ Form C-S (Lite)/ Form C) is November 30 of the year of assessment.
Your company will need to file tax return for the financial year that ended in the previous calendar year.
Further, a company is required to file an Estimated Tax Return within 3 months from the financial year end.
Does a company that did not generate profits in a year still need to file a tax return?
Yes.
All Singaporean companies must file a tax return annually.
