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Business Taxation for Expats in Singapore

Submitted: February 2014

The authority responsible for Singapore Tax is the Inland Revenue Authority of Singapore (IRAS). Their website is here.

Registration

The most common forms of business structure for small businesses in Singapore are the company limited by shares (company), and the limited liability partnership (LLP). A company must have a minimum of one registered ordinary share as its share capital. There must be at least one director who is a resident of Singapore, and generally there must also be a company secretary. Companies have annual reporting requirements. Forming a company means that your liabilities are limited to your equity in the corporation. The business income is taxed at the corporate tax rate.

An LLP is quicker and cheaper to set up. Itrequires a minimum of two partner and; there must be a Singapore resident manager. An LLP does not require directors and only needs to provide an annual declaration of solvency; though if its turnover is greater than S$500,000 it must also submit a certified statement of accounts. Each partner is taxed on the basis of individual income tax rate on their share of the net income, and is jointly liable for any debts.

There is a useful guide to the different types of business, which can be downloaded here.   

Corporations must be registered with the Accounting and Corporate Regulatory Authority (CIPC); their website is here. In addition it may be necessary to apply for a licence, depending on the nature of the business. There is a dedicated website for licence applications here.

Another possible choice is a sole proprietorship: however with these your liability extends to your own personal assets, and the business income is subject to personal income tax.

Corporate Income Tax

The Singaporean tax year runs from 1 January to 31 December. Corporate income tax is charged on a previous year basis. This means that the income for any given year (the basis year) is assessed for tax in the following year, which is known as the year of assessment (YA). Singaporean resident and non resident companies are liable for corporate income tax on income arising or accruing in Singapore. Following the end of the tax year, a company must file an estimate of corporate tax payable using Estimated Chargeable Income form (ECI). If the ECI is filed within three months of the year end, the estimated tax can be paid in up to 10 instalments.   

The general rate of corporate income tax is 17%. There are some concessionary rates of tax varying between 0% and 15% for certain businesses. The law regarding this with some links to specific definitions of the types of business is here.

For the 2014 tax year (YA 2015) there is a rebate of 30% applicable to all final corporate income tax bills, up to a maximum rebate of S$30,000.

Corporate investment income is taxed at normal corporate tax rates.

There is no capital gains tax in Singapore. However capital gains, made on a disposal of shares by a company, can become taxable as income if the IRAS deems it to be so. Each disposal is assessed on a case by case basis.

Companies must file their Singaporean corporate income tax returns by 30 November of the year following the end of their tax year. For certain small companies using form C-S and filing electronically, the deadline is extended to 31 December. Once the IRAS has issued an assessment for the actual tax payable, the amount must be paid within 30 days.

 

 

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