Corporate income tax in Singapore: A complete guide (XNUMX)

As a global financial hub, Singapore is well-known for its clear and business-friendly tax system. This makes it a top choice for investors around the world. 

Understanding Singapore company tax is important for businesses and investors, as it helps you follow the rules and make the most of tax benefits to increase profits. 

In this article, we’ll explain the corporate tax system and incentives in Singapore. You’ll learn key information to help your business succeed in Singapore’s competitive market.

1. Overview of corporate income tax in Singapore

Corporate Income Tax (CIT) is a mandatory tax that companies in Singapore must pay to the government based on the company's taxable profits.

The current corporate income tax rate in Singapore is 17%, applicable to both domestic and foreign companies.

Although the rate is 17%, businesses often pay less due to government tax incentives designed to attract investment and support businesses. This tax incentives is available for companies which are considered "Tax residents" of Singapore.

1.1 Tax resident and non-tax resident businesses in Singapore

1.2 Comparison of corporate income tax rates in Singapore with other Southeast Asian countries

Singapore’s corporate income tax rate of 17% is among the lowest in Southeast Asia, making it an attractive destination for businesses and investors.

Below are the tax rates of some other countries in the region:

For mor information about corporate incomes tax rated between countries click here.

2. Types of corporate income tax in Singapore

3. Tax exemptions for your Singapore companies

Singapore's corporate income tax incentives.

3.1 Popular tax exemptions policies for companies incorporated in Singapore

Here are the offers/ General tax exemption for Singapore companiesOnce these tax incentives are applied to taxable income, the income tax rate that small and medium-sized Singapore companies have to pay is significantly reduced.

• During the first 3 years after establishment, a qualified Singapore company will enjoy the following tax incentives:  
  • The first 100,000 SGD will be 75% tax-free.
  • The next 100,000 SGD will be 50% tax exempt.
  • From SGD 201,000 of taxable income onwards, the average corporate income tax rate is 17%.
• Conditions to enjoy the above preferential tax rate:
  • The company was established in Singapore.
  • Tax resident company in Singapore.
  • Income generated is subject to 17% tax in Singapore.
  • There are a maximum of 20 shareholders, of which: all shareholders are individuals and at least 1 individual owns at least 10% of the company's shares.
• From the fourth year onwards, eligible Singapore companies will enjoy post-tax incentives.

To better understand Singapore corporate income tax as well as tax incentives from the fourth year onwards, please contact GLA to receive the best support and advice.

3.2 Corporate tax rebates for YA 2024

As announced in Budget 2024 To help companies manage rising costs, a corporate income tax rebate of 50% of the corporate tax payable will be granted to all tax-paying companies, whether tax residents or not, in Year of Assessment (YA) 2024, according to the Inland Revenue Authority of Singapore (IRAS).

Companies that have hired at least one local employee in 2023 (known as “local employee eligibility”) will receive a cash payment of $2,000 (known as the “CIT Relief Cash Grant”). The total Singapore corporate income tax refund and corporate income tax relief cash grant that a Singapore company can receive is $40,000. 

Conditions for receiving cash subsidies to reduce corporate income tax

• The company must have made CPF contributions for at least one local employee (Singapore citizen or permanent resident) in 2023, excluding shareholders who are also directors.
• The subsidy will be received before Q3 2024.

3.3 Tax reduction on foreign-sourced income

Foreign income is income earned from outside Singapore. Generally, such income taxable in Singaporewhen remitted to and received in Singapore. f the foreign income arises from business activities carried out in Singapore, it will be taxed in Singapore, regardless of whether the income is received within Singapore.

In many cases, foreign income is taxed twice: once in the foreign jurisdiction and again in Singapore.

To reduce the impact of double taxation, Singapore offers tax relief for tax residents, including: Double Taxation Agreements (DTA), exemptions on foreign-sourced income, tax exemptions for newly established companies.

4. How to file corporate tax income returns for your Singapore companies?

5. How can GLA help you file your corporate income tax returns with ease?

As a 10-year expert helping hundreds of international entrepreneurs succeed overseas with Singapore company registration, Singapore tax accounting, we can help you succeed with the following support.

• Guide you on tax compliance (corporate tax rates, deductible expenses, and available incentives).
• Prepare and submit tax returns accurately and efficiently.
• Handle tax authority inquiries and ensure compliance with IRAS regulations.
• Advise you on tax optimization strategies
• Perform detailed tax audits on you behalf.
• Update you on real-time tax changes:

6. Frequently asked questions about the corporate income tax system in Singapore

Highlights

• The current corporate income tax rate in Singapore is 17% and there are many tax incentives for companies, especially start-ups.
• The Company is required to file estimated tax returns and annual tax returns as required by IRAS.
• The consequences of late tax payment are that Singapore companies may be subject to fines, late payment interest and other penalties.