4 Basic Taxes That Companies Setting Up in Singapore Need to Know

Singapore has long been known as one of the world's leading financial centers, attracting thousands of businesses to invest and do business. One of the important factors contributing to this attraction is the simple, transparent and stable tax system.

The business environment in Singapore is highly appreciated thanks to its preferential investment policies, modern infrastructure, and especially a clear legal system that protects the rights of investors. However, to operate legally here, companies need to understand and comply with tax regulations in Singapore.

This article will give you an overview of the taxes your company may face when operating in Singapore.

1. Corporate Income Tax (“CIT”)

Corporate Income Tax (CIT) in Singapore is a tax levied on the taxable income of businesses operating in Singapore. Taxable entities include all companies resident in Singapore and also foreign companies with income generated in Singapore.

Currently, the CIT rate in Singapore is 17%. However, the Singapore government offers many special tax incentives, such as 

• Tax exemption program for the first 3 years for companies established in Singapore.
• Partial Tax Exemption Scheme. 

Factors such as business type and annual revenue can affect your actual tax rate.

2. Goods and Services Tax (“GST”)

GST is a tax levied on the supply of goods and services within Singapore, as well as on the import of goods into Singapore. GST is designed to raise revenue for the government.

Level GST rate The current rate in Singapore is 9%. Certain transactions may be exempted from tax or subject to a 0% rate, such as exports of goods and international supply of services.

Transactions subject to GST:

• Sell ​​goods in Singapore.
• Providing services in Singapore.
• Import goods into Singapore.

Business obligations:

• Register for GST when annual turnover exceeds SGD 1 million or register voluntarily.
• Collect GST from customers and remit to the Singapore Revenue Authority. 

3. Withholding Tax

Singapore Withholding tax is applied to foreign individuals or organizations (non-tax residents in Singapore) when they have income from business activities, providing goods or services in this country.

Tax rates vary depending on the type of payment, typically ranging from 10% to 22%. Double tax agreements (DTAs) may affect tax rates.

4. Property tax and stamp duty

Property Tax: This is a tax imposed on the ownership and transfer of real estate in Singapore. The tax rate is determined based on the type of real estate, including residential (owner-occupied) and non-residential (non-owner-occupied).

For residential real estate, the tax rate is applied according to a progressive tax schedule. Other types of real estate are applied a flat tax rate of 10% based on the Annual Value (AV) of the real estate.

Stamp Duty: Stamp duty is a tax levied on legal documents relating to real estate in Singapore or the purchase and sale of stocks and shares.

5. Tax obligations of self-employed persons in Singapore

All self-employed individuals must report their business income as business income, not as wages. Business income is counted as part of total personal income and is taxed at personal income tax rates.

Self-employed persons are individuals who earn their living from their profession, business or professional activity. Generally, sole proprietors and partners in businesses registered with the Accounting and Corporate Regulatory Authority (ACRA) are considered self-employed.

For non-resident individuals (including partners in partnership in which 100% of the members are non-residents), if there is income of a specific nature in Singapore (such as interest, royalties, directors' fees, technical service fees, etc.), then such income may be subject to withholding tax in Singapore.

7. How does GLA support Singapore companies in tax filing? 

GLA is one of the leading consulting firms in Singapore for business formation and management. With extensive experience and in-depth understanding of Singapore’s complex tax system, GLA provides comprehensive business support services, including Singapore corporate tax filing, including: 

• Detailed advice on the taxes payable by the company (corporate income tax, GST, property tax, etc.), applicable tax rates, tax payment deadlines and allowable deductions.
• Assist in assessing the company's financial situation to determine accurate tax liabilities and provide recommendations on tax optimization.
• Assist the company in preparing complete and accurate tax documents required for submission to the Inland Revenue Authority of Singapore (IRAS).
• Represent the company in submitting tax returns and relevant financial statements to IRAS.
• Support to resolve problems arising during tax payment process.
• Regularly monitor changes in Singapore tax laws and notify Singapore companies to ensure legal compliance.
• Provide up-to-date advice to help companies take advantage of new tax reduction opportunities.

8. Frequently asked questions about Singapore corporate tax