Taxation

The fair and sustainable tax system is one of the factors that make Singapore an attractive country to invest in. Singapore’s corporate income tax rate of 17% is low compared to the average tax rate among other developed countries.

While Singapore’s tax rate is considered low, you can still further decrease your legal tax liability if you have effective tax-savings strategies and broad knowledge about tax policies.

A company is responsible to file and pay its taxes accurately and timely every year. Voluntary compliance and awareness of different tax policies are very important to avoid penalties, enforcement, and investigations, thus, it is important to consult with qualified tax professionals to administer your tax filings.

All income earned in or derived from Singapore is taxable. Tax resident individuals are entitled to certain personal allowances and are subject to graduated tax rates ranging from 0% to 22%. After set off of personal allowances, a tax resident’s taxable income is subject to income tax at progressive rates.

Taxpayers must file an income tax return annually to determine their tax obligations. Though all income earned is generally taxable, you can reduce your tax liability if you qualify for various tax reliefs, rebates and deductions. Moreover, you must understand the tax treatment of every gain and profit you derived as an employee; whether these are taxable, exempt from income tax, or are covered by an existing administrative concession.

A business must register for GST when the taxable turnover exceeds $1 million.

A GST-registered company is responsible for accurate charging and accounting of GST, filing GST returns on time, keeping proper records, and adhering to all conditions imposed by Inland Revenue Authority Singapore (IRAS).

Failure to file or late submission of a GST return is an offense punishable with a fine or imprisonment. Therefore, the preparer of a GST return must have complete knowledge of the obligations of a GST-registered company.

Know when your business is required to register for GST and how GST works to ensure that you comply with the GST system.

A person must withhold and pay the withheld tax to IRAS when certain types of payment (e.g. interest, royalty, services, etc.) are made to a non-resident.

The rates of withholding tax differ depending on the nature of the payment.

As a payer, you must file and pay withholding tax (WHT) to IRAS by the 15th of the second month from the date of payment to the non-resident.

WHT must be filed even if the payment to a non-resident is exempted under the Avoidance of Double Taxation Agreement (DTA) or Approved Royalties Incentive (ARI).