A Guide to Corporate Tax in Singapore

Did you know Singapore has one of the lowest corporate income tax rates in Emerging markets? Moreover, the country offers several incentives and exemptions to promote foreign business development. In this guide, we’ll explore Singapore corporate tax regulations and explain how your company can benefit from potential incentives.

Overview of Corporate Tax Regulations in Singapore

Who is required to pay corporate tax in Singapore?

Corporate income tax applies to all companies registered in Singapore, including foreign firms operating a branch or subsidiary. In other words, if your business involves trading, service provision, or generates income, you are liable to corporate income tax in Singapore. 

For those with corporate accounts, there are three types of businesses required to comply with corporate tax regulations in Singapore: 

• Companies based in Singapore
• Foreign companies that have a permanent establishment in Singapore
• Foreign companies that do not have a permanent establishment in Singapore but conduct business activities through services or rental income.

How is Singapore’s tax system set up for foreign companies?

Through the single-tier corporate tax system, businesses only pay corporate income tax (CIT) on chargeable income (profits), and all dividends are exempt from further taxation. 

The exemption simplifies the tax process for both companies and investors as it lets them pay corporate income tax only on their chargeable income. Furthermore, it encourages businesses to reinvest their profits and distribute dividends to shareholders without the burden of extra tax liabilities.

Ensuring compliance with corporate income tax laws is an essential part of running a business in Singapore. Inaccurate or missing reports can lead to severe fines and penalties.  Emerhub can help you ensure regulatory compliance for your company in Singapore through our local team of accounting experts. 

Current Tax Rates and Structure

Singapore applies a corporate tax rate of 17% on businesses’ chargeable income regardless of whether it is local or foreign. Starting January 1, 2025, Singapore implemented a new minimum effective tax rate for large multinational enterprises (MNEs). The new minimum effective tax rate in Singapore is 15%.

This move aligns with the country’s commitment to the Base Erosion and Profit Shifting (BEPS) 2.0 initiative. The initiative is a project produced by the OECD to combat tax avoidance by multinational enterprises (MNEs) and ensure that they contribute a fair share of taxes.

If you are unsure how this initiative affects your business’ upcoming income tax reports, Emerhub’s financial experts can help. We will prepare your reports and submit timely tax returns to ensure compliance and maximize exemptions.

Tax Incentives and Exemptions for companies in Singapore

Corporate tax in Singapore includes a range of incentives and schemes designed to encourage foreign investment in specific industries. These are typically administered by Singapore’s economic agencies. Additionally, partial exemptions and rebates are available for companies to help reduce their corporate income tax:

• Start-up Tax Exemption Scheme (SUTE): New start-up companies can save 75% on the first SGD 100,000 of taxable income. They can receive an additional 50% exemption on the next SGD 100,000. This tax exemption scheme only applies to companies not involved in property development and investment holding. 
• Partial tax exemption (PTE) scheme: If a company does not qualify for SUTE, they may qualify for the PTE scheme. Similar to SUTE, the PTE scheme offers a 75% exemption on the first SGD 10,000 of taxable income. The difference is that it offers a 50% tax break on the next SGD 190,000.
• Double Tax Deduction (DTD) for Internationalization Scheme: Companies can incur this tax scheme if they are planning to expand overseas. Additionally, the double tax deduction only applies to expenses incurred from 1 Apr 2012 to 31 Dec 2025 for international market expansion and investment development activities.

Ensuring Compliance with Corporate Tax Filing in Singapore

All companies in Singapore must file their corporate income tax with the Inland Revenue Authority of Singapore (IRAS) in two key stages every year: once as an estimate and once as a final declaration. Emerhub can help you stay on top of these deadlines to avoid costly penalties up to S$5,000 or estimated assessments issued by IRAS.

1. The Estimated Chargeable Income (ECI): Within 3 months after the end of your financial year (FYE), we’ll submit your company’s Estimated Chargeable Income (ECI), a forecast of your taxable income for that year. You’re exempt only if your annual revenue is S$5 million or less, and ECI is zero for that Year of Assessment (YA).
2. Corporate Income Tax Returns (Form C-S/ C-S Lite/ Form C): Your final corporate income tax return entails a detailed report of your company’s actual income and allowable deductions. This must be filed by 30 November of the Year of Assessment (YA) and is required even if the company operates at a loss.
   • Form C-S (Lite): For small companies with straightforward tax matters and annual revenue of SGD 200,000 or below.
   • Form C-S: For companies with simple tax affairs and annual revenue of SGD 5 million or below.
   • Form C: For companies with more complex tax situations, typically those above S$5 million annual revenue or with claimable tax reliefs that go beyond the scope of Form C-S.

Paying the Fees Before the Deadline

Once all necessary documents are submitted, IRAS will determine how much corporate income tax you owe and send you a Notice of Assessment (NOA). You have one month to make the payment from the date of issue. Late payments will result in penalties and potential additional costs.

Emerhub’s team of local experts can help you ensure compliance when setting up a foreign-owned company in Singapore. Our accounting advisors will also help identify potential tax reduction opportunities that may apply to your specific industry. 

Want help in ensuring financial compliance for your company in Singapore? Contact us via the form below to get in touch with our experts!