Singapore – Tax and Accounting Regulations
A coherent offshore tax planning strategy is essential to maximize the effectiveness of offshore companies. Eltoma can assist by structuring the most tax efficient strategy to satisfy your requirements. Eltoma will guide you as to which jurisdictions offer the best tax structure by identifying the types of tax payable as well as applicable exemptions and incentives. Eltoma will provide tax planning advice that will identify which is the most favourable tax efficient jurisdiction in which to incorporate.
All private limited companies must comply with the statutory regulations set out by ACRA (Accounting and Corporate Regulatory Authority) and the IRAS (Inland Revenue Authority of Singapore)
- Corporate income tax rate in Singapore is 18% for 2009 and 17% for 2010.
- Singapore operates a territorial taxation principle therefore income derived in Singapore is subject to tax.
- Sales proceeds originating from outside Singapore but received in Singapore are subject to tax. Prior approval must be obtained by the Singapore Inland Revenue Authority before profit can be classified as non-Singapore Income (i.e. not derived from Singapore) and therefore be exempt from Singapore Income Tax.
Difference of tax treatment for income from different sources – Foreign source income is exempt from income tax if it is not remitted into Singapore. Income is not considered to be derived from Singapore if:>
- A contract is concluded and signed outside of Singapore
- Services rendered are outside of Singapore
- Capital is employed outside of Singapore
- If the title of goods is passed outside of Singapore
- Receipt of sales proceeds are outside of Singapore
- Payment of expenses incurred in the provision of services or delivery of goods done outside of Singapore
- Place where goods are stored and maintained is outside of Singapore
Capital Gain Tax (CGT):
- There is no capital gains tax in Singapore.
- Stamp duty on transactions with securities is 0.2% Stamp duty exemption applies to offshore loan agreements and some other documents.
- Interest received is subject to Income Tax. The tax system of Singapore does not have a separate tax treatment for foreign or Singapore source interest income.
- Interest paid to non-residents of Singapore is subject to withholding tax of 15% unless it is regulated under a Double Tax Treaty.
- Royalty income received is subject to income tax.
- Foreign source royalty income is exempt from income tax unless remitted to Singapore.
- Royalty paid to non-residents of Singapore is subject to withholding tax of 15% unless it is regulated a Double Tax Treaty.
- Foreign dividend income is exempt from income tax.
The tax incentives outlined below can ensure that the effective income tax rate for small to mid-sized companies is significantly reduced.>
- 0% tax on S$100,000 taxable income – For the first three tax years after incorporation the corporate income tax rate is 0% providing the company meets the following criteria; be incorporated in Singapore, be tax resident in Singapore, has no more than 20 shareholders at least one of which must be an individual and must hold at least 10% of shares.
- 8.5% tax on taxable income up to S$300,000 – All Singapore companies are eligible for a partial tax exemption which translates to 8.5% tax rate on taxable income up to S$300,000. Above S$300,000 the normal tax rate of 17% will apply.
First 3 years of Income Tax Filing:
|Taxable Income (S$)
||Tax Rate (%)
|>0 – 100,000
|>100,001 – 300,000
|>300,001 – 2,000,000
After the First 3 Years of Income Tax Filing:
|Taxable Income (S$)
||Tax Rate (%)
|>0 – 300,000
|>300,001 – 2,000,000
Annual Reporting Requirements:>
- Submission of Annual Return – All Singapore Private Companies are required to file an Annual Return with ACRA which contains all information regarding the company and its financial accounts reports.
- Submission of Income Tax Return – The deadline for submission is the 31st October.
- For companies with an annual turnover of over S$5 million annual audited accounts are required to be filed and must have been audited by a qualified Singaporean accountant.
- Exempt Companies are not required to have their accounts audited and annual accounts can be filed without audit. The following conditions are required to be met: number of shareholders must not exceed 20, members of the company should be individuals and not a corporation, annual turnover should be less than S$5 million.
Double Taxation Agreements:
Singapore’s comprehensive avoidance of double taxation agreements includes provisions for the exchange of information for tax purposes. Treaty partners may make a request for information for tax purposes to the Controller of Income Tax. Comprehensive Agreements have been signed with the following countries:
Australia, Austria, Bahrain, Bangladesh, Belgium, Brunei, Bulgaria, Canada, China, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Fiji, Finland, France, Georgia, Germany, Hungary, India, Indonesia, Israel, Italy, Japan, Kazakhstan, South Korea, Kuwait, Latvia, Lithuania, Luxembourg, Malaysia, Malta, Mauritius, Mexico, Mongolia, Myanmar, Netherlands, New Zealand, Norway, Oman, Pakistan, Papua New Guinea, Philippines, Poland, Portugal, Qatar, Romania, Russian Federation, Slovak Republic, South Africa, Sri Lanka, Sweden, Switzerland, Taiwan, Thailand, Turkey, Ukraine, UAE, UK, Uzbekistan, Vietnam
If you require a copy of the Double Taxation Agreements between Singapore and any of the above countries please do not hesitate to contact us.