Income Tax for Companies
Companies are subject to "corporate taxes". The current corporate tax rate for
all companies is a flat rate of 20%.
This guide is not meant to be a comprehensive guide on income tax. It only covers
the tax obligations for companies.
The Basics
Tax Rates And Exemptions
Deductions And Reliefs
Double Taxation Agreements
Filing Your Estimated Chargeable Income
Filing Your Tax Return
Payment Of Taxes
Where Can I Get Help?
Taxable Income
• Any income that is "accrued" or received in Singapore by a company is
liable to tax.
• The company may be incorporated or registered in Singapore or elsewhere.
Capital Gains
• Capital gains are not subject to tax. For instance, if a manufacturing
company sells the factory that it has been using to manufacture its goods,
the profit on sale of the factory is not subject to tax.
One-Tier Corporate Tax System
• The one-tier corporate tax system, which took effect from 1 January 2003,
was introduced to replace the old imputation system.
• Under the one-tier corporate tax system, Singapore resident companies
can issue one-tier exempt dividends, i.e. shareholders will not be taxed on
such dividend income.
See: What income is taxable?
The One-Tier Corporate Tax System
• From Year of Assessment 2005, companies are taxed at a flat rate of 20%
on their chargeable income.
• There are three tax exemptions to help companies tide through economic
downturns, encourage entrepreneurship and position Singapore as a
business hub.
Partial Tax Exemption*
• From the year of assessment (YA) 2002, a partial tax exemption is given
on the company's chargeable income ( excluding Singapore franked
dividends ) of up to S$100,000, which is subject to tax at the normal
corporate tax rate as follows:
o 75% tax exemption for the first S$10,000 chargeable income
o 50% tax exemption for the next S$90,000 chargeable income
Full Tax Exemption For New Companies*
• With effect from YA 2005, full tax exemption can be granted on up to
S$100,000 of the normal chargeable income ( excluding Singapore
franked dividends ), for any of its first three consecutive YAs that fall
within YA 2005 to YA 2009.
• There are conditions and criteria you need to satisfy in order to make use
of this tax exemption.
Please refer to our write-up on Tax Exemption For Start-ups.
Tax Exemption For Foreign-Sourced Income*
• Foreign-sourced dividends, foreign branch profits and foreign-sourced
service income remitted into Singapore on or after 1 June 2003 by a
Singapore resident company will be tax exempt if:
o the headline tax rate of the foreign country from which income is
received from is at least 15% in the year the income is received; and
o the foreign income had been subjected to tax in the foreign country
from which they were received.
See: Latest table of tax rates and exemptions
Exemption of foreign-sourced income
or your tax accountant to fully understand how and when the exemptions apply.
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Your chargeable income ( the portion that is subject to taxes ) is your total
income minus away any deductions and reliefs. To lower your taxes, you
should make use of all available deductions and reliefs.
Deductible Expenses
• You can deduct expenses that are wholly and exclusively incurred in
the production of the company's income.
• Items such as rent, wages paid to employees, accounting fees,
director's fees and director's salary are all considered "deductible
expenses".
• You need to pay particular attention to these expenses as different
rules apply to them:
o medical expenses
o life insurance premium
o motor vehicle expenses
o research & development expenses
o interest expenses relating to non-income producing assets
See: What expenses are tax-deductible?
Capital Allowances
• You may claim capital allowances when you purchase fixed assets
for your company, e.g. machinery and furniture and fittings.
See: What is capital allowance and how to claim it?
Unutilised Losses And Capital Allowances
• Losses and capital allowance can be used to offset against
adjusted profit. Any part of the losses or capital allowance not fully
used to offset income in the financial year is termed as "unutilised"
or "unabsorbed".
• You can also carry forward unutilised losses and capital
allowances to offset income made in the next financial year.
• With effect from Year of Assessment 2006, you can also carry
back unutilised losses and capital allowances of up to S$100,000
in the current year to offset the income made in the preceding year.
See: How to claim unutilised capital allowances?
How to claim unutilised losses?
One-Year Loss Carry-Back System
Donations
• You can claim deductions for donations made to certain charitable
organisations.
Group Relief
• With effect from YA 2003, a company may transfer its loss items
to another company belonging to the same group.
• The loss items that can be transferred are:
o current year unabsorbed capital allowances
o current year unabsorbed trade losses, and
o current year unabsorbed donations
See: Group Relief
What Are Double Taxation Agreements (DTAs)?
• DTAs are agreements signed between countries. They help
Singapore-resident companies to avoid paying taxes twice
on the same income.
• For instance, your foreign subsidiary in Australia pays corporate
taxes in Australia. When the money is remitted / received by you
in Singapore, it is taxed again.
• Under DTA, you can claim for relief for taxes paid overseas.
• DTA also sets out clearly the taxing rights of each country for
different types of income that arise from cross-border activities.
Who Benefits From Double Tax Agreements?
• Singapore-resident companies can tap into the benefits of
Double Taxation Agreements (DTA).
• A company is resident in Singapore if the control and
management of its business are exercised in Singapore.
• To prove that you are a Singapore-resident company you can
apply for a Certificate of Residence from IRAS.
Filing For Claims Under DTA
• You can make a claim for Double Tax Relief (DTR) under the DTA
when you file your annual income tax return.
• You will also need to give documentary proof (e.g. letter from the
tax authority or dividend vouchers) to show that the remitted
income has been subject to tax in the treaty country before DTR
claims can be considered.
See: Tax residency and Double Taxation Agreements
List of countries who have tax treaties with Singapore
Filing Your Estimated Chargeable Income
Compulsory Filing
• All companies carrying on a trade or business are required
to file an estimate of their chargeable income (ECI) within 3 months
after the end of its accounting period. You have to file ECI even if
you estimate the income to be "zero".
• Otherwise, the Inland Revenue Authority of Singapore (IRAS) may
estimate your chargeable income and send you a Notice of
Assessment.
See: When to report your Estimated Chargeable Income
• If your company is an investment holding company deriving only
non-trade income (e.g. interest, dividend or rental income), you
do not need to file ECI, unless you wish to have your non-trade
income taxed on an accounting year basis.
See: Simplification of income tax rules and procedures
[ Assessment of non-trade income and deduction of approved donations
on an accounting year basis (PDF) ]
Benefits Of Filing Your ECI Online
• All companies are required to file their tax return by 31 July using
Form C.
• The deadline for filing your ECI is 3 months after the end of your
accounting period.
• However, if you file your ECI on time using the Internet, the
deadline for filing Form C is automatically extended to 31
December.
• You will not enjoy the automatic extension if you file your ECI late
using the Internet. Remember to file on time and online to get the
automatic extension for filing Form C.
How Do I File ECI?
• You need to submit the ECI form. You can do this online via
myTaxPortal or download the form and mail / fax it to IRAS.
See: Filing ECI over the internet
Download the ECI form and submit via fax/mail
Download Form C and ECI forms
Learn how to access myTaxPortal e-Services
How Do I Pay Taxes?
• You need to file a tax return (Form C). IRAS will send you Form
C every year in March. If you do not receive Form C by end
April of the year, please request for the form from IRAS.
• Based on your tax return, IRAS will assess how much tax you
need to pay. IRAS will then send you a Notice of Assessment
and Statement of Account.
See: Filing the Income Tax Return (Form C)
Obtaining Form C for an existing company
Tax rates
When Do I File My Tax Return?
• You need to file your tax return by 31 July every year unless
auto-extension to 31 December is given when you file ECI
online. You should be filing your company’s income for the
previous year.
• Example: In 2005, you should be filing a return on business
income for year 2004. 2005 is the Year of Assessment.
New Companies
• If you incorporated your company in 2004, IRAS will send you
Form C in 2006. YA 2006 is your first Year of Assessment if
the accounting period from the date of incorporation to the
closing of the accounts in 2005 is no more than 12 months.
• However, if you received income in 2004 and closed your
accounts in 2004, you should request for Form C and file your
taxes in 2005. YA 2005 is your first Year of Assessment.
See: Obtain Form C for a newly incorporated company
When will the company's income be taxed?
How Do I Report My Company's Income?
• You report your company's income using Form C. You need to
attach your audited accounts and tax computation with Form C.
• Dormant companies and private exempt companies ( less than
20 individual shareholders ) whose revenue for the financial
year is less than S$5 million are not required to have their
accounts audited for the financial year beginning on or after 1
June 2004.
• Companies that qualify for this audit exemption and choose not
to audit their accounts, can submit unaudited accounts.
See: Review of Companies' Income Tax Filing Requirement
[ in view of Audit Exemption under the Companies Act (PDF) ]
• Many companies who qualify for audit exemption still prefer to
audit their accounts as they are required by banks when
applying for loans.
See: Preparing your tax computation
Download sample tax computation (WORD)
Download Form C (EXCEL)
How to complete Form C
How to submit Form C
Frequently Asked Questions on submitting Form C
Frequently Asked Questions on completing Form C
Special Rules For Certain Types Of Companies
• When reporting your company's income, there are certain
rules that you should be aware of if your company is:
o a dormant company
o undergoing strike-off/liquidation/judicial management
o an investment holding company
o a service company
o a property developer
See: Filing the income tax return (Form C)
back to topWhen Do I Pay My Taxes
• You have to pay your taxes within 1 month of receiving the
Notice of Assessment. For taxes arising from the Estimated
Chargeable Income ( ECI ), you can either pay the taxes at
one go or by monthly instalments using GIRO. You should
pay your taxes promptly or you may have to pay penalty fees.
See: Making Payments
What If I Do Not Agree With The Tax Assessment?
• If you disagree with the tax assessment, you can write to
IRAS and state the reasons why you feel the tax assessment
is incorrect. Please note that you must still pay your taxes
within 1 month of the Notice of Assessment even if you object
to the assessment.
See: Receiving the Notice of Assessment
• Visit these websites and web resources for more in-depth
information on corporate tax or consult with your accountant.
o IRAS website on corporate tax
o Frequently Asked Questions on corporate tax
• You can also contact IRAS:
o Local Toll-Free: 1800 356 8622
o International: (65) 6356 8622
o Fax: (65) 6351 4360
o Email addresses of IRAS officers in charge
This article is a simplified write-up of taxation in Singapore and is
not intended to replace advice from a tax professional. You should
speak to your accountant or contact the Inland Revenue Authority
of Singapore (IRAS) for more information.
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