What is the tax rate and common tax reliefs?
The corporate tax rate is capped at 17% for the Year of Assessment (YA) 2020 onwards. In addition, companies may enjoy the following tax reliefs which helps to reduce the tax bills:
Partial Tax Exemption
All companies, including companies limited by guarantee, can enjoy partial tax exemption on normal chargeable income of up to S$200,000 for YA2020 onwards, unless they have already claimed the Tax Exemption Scheme for New Start-Up Companies. The partial tax exemption is 75% on the first S$10,000 of normal chargeable income and a further 50% tax exemption on the next S$190,000 of normal chargeable income.
Tax Exemption Scheme for New Start-Up Companies
If the company meets the qualifying conditions for the Tax Exemption Scheme for New Start-Up Companies, the tax exemption is 75% on the first S$100,000 of normal chargeable income and a further 50% tax exemption on the next S$100,000 of normal chargeable income for the first 3 consecutive YAs (where any YA of the first 3 YAs falls in or after YA 2020). The tax exemption scheme for new start-up companies will not be granted to investment holding companies and companies which undertakes property development for sale, investment, or for both investment and sale. These companies can still enjoy the partial tax exemption.
Corporate Income Tax (CIT) rebate
A CIT rebate of 25% of tax payable, capped at S$15,000, will be granted for YA 2020.
Who can be taxed at the corporate rate?
Companies, business trusts and branches of foreign companies are taxed at the corporate tax rate. There is no difference in income tax rates between local and foreign companies.
When is a company resident in Singapore?
A company is regarded as resident in Singapore for tax purposes if its control and management are exercised in Singapore. “Control and management” is the making of decisions on strategic matters, such as those on company policy and strategy. Where the control and management of a company is exercised is a question of fact. Typically, the location of the company’s Board of Directors meetings, during which strategic decisions are made, is a key factor in determining where the control and management is exercised. The residency status of a company may change from year to year.
What types of income is a company liable to be taxed on?
As Singapore adopts a territorial concept of taxation, companies are liable to pay tax on income accrued in or derived from Singapore, or income received in Singapore from outside Singapore in respect of gains or profits from any trade or business; income from investment such as dividends, interest and rental; royalties, premiums and any other profits from property; or other gains of an income nature. Receipts that are capital in nature are not taxable.
Can trading losses be offset?
Trading losses may be offset against all income received in the same accounting period, or carried forward indefinitely and offset against future trading profits, subject to the satisfaction of a substantial shareholding test. Trading losses may also be carried back to offset against the trading profits in the immediate preceding YA, subject to the capping of S$100,000 and satisfaction of the substantial shareholding test. For the YA2020, the maximum number of YAs which the trading losses may be carried back has been increased from one YA to three YAs under the enhanced carry back relief scheme, subject to the capping of S$100,000 and satisfaction of the substantial shareholding test.
What are the group reliefs available?
Group relief is a system available which enables companies to deduct unutilised capital allowances, trade losses or donations of one company from the assessable income of another company within the same group. A group must consist of a Singapore incorporated company and its Singapore incorporated group members (both having the same accounting year-end) with at least 75% of the total issued number of ordinary shares in one company beneficially held (directly or indirectly) by the other or at least 75% of the total number of issued ordinary shares in each of the two companies beneficially held (directly or indirectly) by a third Singapore incorporated company.
What happens if the company has not received a tax return?
Generally, IRAS will issue either a Form C-S or Form C notification letter based on IRAS’ records to the company’s registered address by 1 June of each year.
For new companies, IRAS will only issue the Form C-S/ C e-Filing notification letter two years after the year of incorporation, as most new companies do not close their first set of financial statements in the year of incorporation. However, if the new company has closed its first set of financial statements in the year of incorporation and has commenced business or was in receipt of any income, the new company is required to e-File an Income Tax Return for the YA immediately following the year of incorporation via the File Form C-S/ C e-Service. The Form C-S/ C e-Filing service for a given YA will be made available in June of that year.
For other companies that have not received a Form C / Form C-S filing package by end of June but are required to lodge an income tax returns for that YA (e.g. recommenced business or is in receipt of income), these companies can notify IRAS within one month from the date of commencement of business or earning/ receiving the income by sending an email to email@example.com to request for an Income Tax Return for that year.
When is the statutory deadline of tax filing of returns?
The statutory deadline for the filing of tax returns is by 30 November for paper filing or 15 December for e-filing. Beyond this, no extension of time will be granted by IRAS.
When must the amount of tax payable be paid?
A Notice of Assessment (NOA) based on estimated chargeable income furnished by the taxpayer or raised by the Comptroller of Income Tax (CIT) will be issued. The tax payable under the assessment must be paid within one month from the date of the NOA issued.
When the tax assessment is revised subsequently based on tax computations and returns filed, an amended or additional NOA will be issued by the CIT. Similarly, any additional tax payable under the assessment must be paid within one month from the date of the amended or additional NOA issued.
What happens if I disagree with the assessment?
Where the taxpayer disagrees with the assessment, an objection must be raised within two months from the date of the NOA issued. Regardless of any objection lodged against the tax assessments, any additional tax payable must be paid within one month from the date of the NOA.
What are the time limits for objections and appeals?
For a notice of objection against an assessment, it must be lodged with the Comptroller of Income Tax (CIT) within two months from the date of the NOA.
If there is no resolution with the CIT further to the lodgment of Notice of Objection, the CIT may issue a “Notice of Refusal to Amend the Tax Assessment”. Taxpayer may then appeal to the Income Tax Board of Review (ITBR) against the “Notice of Refusal to Amend the Tax Assessment”. For filing of notice of appeal to the ITBR, a written notice of appeal must be made in duplicate within 30 days from the date of “Notice of Refusal to Amend the Tax Assessment” raised by the IRAS. This must be followed, within a further 30 days, by lodgment of a petition of appeal, in quadruplicate, stating the grounds of appeal.
The ITBR’s decision is final where no question of law is involved. However, if the issue involves a question of law or a question of mixed law and fact and the disputed tax exceed S$200, a taxpayer may appeal to the High Court against the ITBR’s decision. If the High Court’s verdict is still contested, taxpayer may appeal to the Court of Appeal against a decision of the High Court. For notices of appeals to the High Court against the ITBR’s decision, the time limits are as laid down in procedures governing appeals to the High Court in civil matters.
This information was last updated on 29 April 2020.
Please note that there may be changes to the law subsequent to the date of update indicated above. We shall not be responsible or held accountable in any way for any damage, loss or expense whatsoever, arising directly or indirectly from any inaccuracy or incompleteness in the contents of the write-up herein. We shall not be responsible or held accountable in any way for any decision made or action taken by you or any third party in reliance upon the contents herein. This information aims to provide a better general understanding of taxpayers’ tax obligations and is not intended to comprehensively address all possible tax issues that may arise.