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Singapore Tax
Navigating taxes in Singapore can be intimidating. Our team of experts is here to help you through. Our deep understanding of the local tax regulatory landscape, will help you benefit from Singapore’s business-friendly taxation policies. The low corporate tax rate is one of the biggest benefits of open a company in Singapore. The tax is imposed on all income accrued in or derived from Singapore, as well as on all foreign-sourced income remitted to Singapore, with certain qualifying exemptions.
Corporate Income Tax
All companies in Singapore must submit annual corporate income tax returns to the Inland Revenue Authority of Singapore (IRAS).
Personal Income Tax
Generally, an individual in Singapore is required to submit an Income Tax Return. Singapore, like many other countries, embrace a progressive personal income tax rates, relative to an individual’s income.
Goods and Services Tax (GST)
GST is a broad-based consumption tax levied on the import of goods (collected by Singapore Customs), as well as nearly all supplies of goods and services in Singapore. In other countries, GST is known as the Value-Added Tax (VAT).
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Tax System in Singapore
The Singapore economy is based on free enterprise, with no restrictions on foreign ownership of a business. The repatriation of profits and the import of capital are also freely allowed. Since the year 2009, Singapore has had a corporate tax rate of 17%, lower compared to other leading economies in the world. A company is taxed at a flat rate on its chargeable income and capital gains are not taxable. The tax system consists of 3 main types of tax, namely, Corporate Income Tax, Personal Income Tax, and Goods and Services Tax.
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Corporate Income Tax in Singapore
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Tax rate on corporate profits for up to 200,000 SGD (Tax Scheme for start-up companies) up to 6.4%
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Tax rate on corporate profits for up to 200,000 SGD (Tax Scheme for existing companies) up to 8.3%
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Tax rate on corporate profits above 200,000 SGD 17%
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Tax rate on capital gains accrued by the company 0%
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Tax rate on dividend distribution to shareholders 0%
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Tax rate on foreign-sourced income not brought into Singapore 0%
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Tax rate on foreign-sourced income brought into Singapore 0-17%
The Singapore tax system is territorial. Income tax is levied on the net income of companies from sources within Singapore and on foreign source income if remitted into Singapore. Non-resident Singapore companies and businesses are taxed on the same basis.
Singapore employs a one-tier corporate tax system which means that the corporate tax levied on the chargeable income of a company is final and will not apply to dividends paid to shareholders.
Additionally, Singapore has tax treaties for the avoidance of double taxation with more than 80 countries.
- General Corporate Tax Rate is a flat 17%.
- Tax Exemption Scheme for new start-up companies (for three consecutive years).
- Partial Tax exemption scheme for existing companies.
- Corporate Income Tax (CIT) Rebate (According to Yearly Budget Announcement from Singapore Government).
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Individual Income Tax in Singapore
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Tax rate on first 20,000 0%
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Tax rate on next 10,000 2%
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Tax rate on next 10,000 3.5%
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Tax rate on next 40,000 7%
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Tax rate on next 40,000 11.5%
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Tax rate on next 40,000 15%
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Tax rate on next 40,000 18%
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Tax rate on next 40,000 19%
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Tax rate on next 40,000 19.5%
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Tax rate on next 40,000 20%
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Tax rate on above 320,000 22%
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Tax rate on capital gains 0%
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Tax rate on income earned overseas 0%
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Tax rate on dividends received from Singapore company 0%
All income derived from Singapore is liable to tax. Generally, overseas income received in Singapore by an individual is not taxable and need not be declared in his/her Income Tax Return. This includes overseas income paid into a Singapore bank account. However, overseas income is taxable in Singapore if:
- It is received through partnerships in Singapore.
- Individuals’ overseas employment is incidental to Singapore employment, meaning, as part of the work in Singapore, the individual is required to travel overseas.
- Individuals are employed outside Singapore on behalf of the Government of Singapore.
- Individuals have a trade/business in Singapore and are carrying on a trade/ business overseas which is incidental to their Singapore trade.
The income of tax residents, after deducting expenses, donations and tax reliefs, are subject to income tax at progressive rates ranging from 0% to 22%. The chargeable income of the first S$20,000 is exempted from tax. A non-resident may claim expenses and donations to save on tax. However, non-residents are not eligible to claim tax reliefs.
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GST is a broad-based consumption tax levied on the import of goods, as well as supplies of goods and services in Singapore (In other countries, GST is known as the Value-Added Tax or VAT).
GST exemptions apply to the provision of most financial services, the sale and lease of residential properties, and the importation and local supply of investment precious metals. Exported goods and international services are zero-rated.
GST is currently charged and accounted at a rate of 7% on the value of supplies. All Singapore companies with an annual turnover exceeding S$1 million are required by law to register for GST. Companies with an annual turnover of less than S$1 million may choose to register for GST voluntarily. Companies need to apply for GST registration within 30 days of the date from which their registration liability arises.
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