The Singapore Corporate Tax Rate for Businesses in 2018

The Singapore Corporate Tax Rate is at an All-Time Low

There are many reasons for Singapore being one of the most ideal places for a company to build its business, and the effective tax scheme is one of them. The Singapore corporate tax rate is only 17% on taxable income, which is already one of the lowest rates in the world, and still, with many government schemes and incentives, there are ways for a business to save on that as well. So, if you are looking to set up a company in Singapore, you should know about most of these schemes, and this is what we look in depth today.

Here are some of the tax schemes for corporates in Singapore and their conditions:

 

Effective Corporate Tax Rate for New Companies (YA 2018)

For this rate, companies should be Eligible for the Start-up Tax Exemption (SUTE) scheme. For this, here are the conditions that a business should fulfill:

• There should be no more than 20 individual shareholders.
• Among the corporate shareholders, at least one individual should have more than 10% claim of the shares.
• This tax rate is not for the property or investment holding companies.

 

Taxable Income	Tax Rate
100000	0%
200000	2.55%
300000	3.40%
400000	5.10%
1000000	7.20%
2000000	12.10%
3000000	14.55%
4000000	15.37%
5000000	16.02%
10000000	16.51%

*All the rates are in S$.

(After 40% corporate tax rebate)

 

Partial Tax Exemptions (YA 2018)

For every other company which is not eligible for the previous scheme, they are eligible for the partial tax exemptions.

 

Taxable Income	Tax Rate
100000	4.85%
200000	4.97%
300000	5.02%
400000	6.77%
1000000	8.82%
2000000	12.91%
3000000	14.95%
4000000	15.64%
5000000	16.18%
10000000	16.59%

*All the rates are in S$.

(After 40% corporate tax rebate)

 

Corporate Tax Rebate

If a company is subjected to an annual cap of 30%, the Singapore government guarantees a rebate of 30% on the income tax paid. This rebate is valid for every registered business trusts and even on-tax resident companies. However, it doesn’t apply to a resident company subject to final withholding tax.

 

Foreign Sourced Income Exemption Scheme (FSIE)

For the Singapore based business doing business overseas, they are to pay taxes in remittance. Anyway, there are clauses which could let them free of this tax and for this, they will need to apply for the Foreign Sourced Income Exemption Scheme (FSIE). This exemption is subject to every category of the income made foreign, which are:

1.    Foreign-sourced dividend
2.    Foreign branch profits
3.    Foreign-sourced service income

To qualify for the FSIE, these conditions are to be met:

• The headline tax rate of the foreign country from where the income is made has to be at least 15% at the time the profit us received in Singapore.
• The foreign income a company makes outside the borders is already subjected to taxes in the country the profit is made.
• Also, it is to be proved to the comptroller that the tax exemption done is beneficial to the person residing in Singapore.

To benefit from the tax exemption, one must provide the following information in their income tax return.

• Nature and amount of the profit
• Country from where the income is made
• The Tax rate of the foreign country

And the confirmation that the tax has already been paid in the foreign nation if subject.

 

Avoiding Double Taxation in Singapore

If your income has already been subjected to the taxes in the foreign soil, then with the foreign tax credit (FTC) scheme, your company can claim a credit for the tax paid in the foreign country against the Singapore tax payable on the same income.

There are two types of reliefs that you can claim under this.

 

Double Tax Relief (DTR)

It is provided under DTAs.  The city-state has signed over 20 Free Trade Agreements (FTAs), and 74 comprehensive and eight limited Avoidance of Double Tax Agreements (DTAs), facilitating trans-border trade and eventually making it easier for the corporates in Singapore to expand their business worldwide.

 

Unilateral Tax Credit (UTC)

It’s a scheme for foreign tax paid in countries with which Singapore has no DTA.

The UTC is only valid for the companies, whose incomes are as follows:

• Revenue from professional, consultancy and other services
• Dividends income
• Royalty income
• Employment income
• Branch profits

Well, this was all for the corporate tax rate in Singapore. I hope this helped you.