Corporate tax refers to a tax levied by various jurisdictions on the profits made by companies or associations. It is a tax on the value of the corporation’s profits. Corporate Tax in Singapore is at a flat rate on its chargeable income regardless of whether it is a local or foreign company.
Corporate Tax in Singapore is imposed on the income of all corporate bodies in Singapore. A company generating income in Singapore is subject to corporate tax. If a company generates income overseas but receives it in Singapore, such income would also be taxed.
The Singapore government has adopted a one tier corporate tax system. Under one tier corporate tax system, the company needs to pay tax on its normal taxable income and in that case, it would be treated as a final tax, while the shareholders need not pay taxes on dividend income.
Corporate Tax Rates
Any start up in Singapore would not have to pay tax up till $ 100K yearly profits for the first three years. Any other company in Singapore needs to pay 9% corporate tax rate for profits up to $ 300K.
A company in Singapore would be eligible for tax exemption on its normal taxable income up to $1000000 for each of the first 3 successive years of tax filing.
Full Corporate Tax Exemption
A company wanting to get full corporate tax exemption must fulfill the following criteria:
- The company must be incorporated in Singapore.
- The company has to be a tax resident in Singapore for a particular year of assessment.
- The company must have less than 21 shareholders throughout the basis period of assessment.
Partial Tax Exemption
Any company in Singapore having a taxable income up to $300,000 is eligible for partial tax exemption.
- Chargeable income for first $10,000: Tax rate is 4.5%
- Chargeable income for next $290,000: Tax rate is 9.0%