Singapore is often regarded as a ‘tax haven’ for a set of progressive policies and benefits that the nation’s tax system offers to its residents. The Inland Revenue Authority of Singapore (IRAS) has imposed relatively low headline tax rates for Singapore corporate income tax, personal tax, and Goods and Services Tax (GST) in the world context.
It is obvious fact that when you are paying less tax, you are likely to retain a higher portion of the income with you. As a result, Singapore has witnessed a major upsurge of foreign talents who visit the island country to take the plunge into its myriad tax benefits.
Singapore Corporate Tax:
The corporate tax system of Singapore is pro-business in nature. The headline tax rate has been reduced consistently over the years and currently, it has been fixed at 17%. It is a part of the government’s initiative to make the country a lucrative investment destination. Apart from having lower tax rates, the system has a host of tax incentives and allowance facilities that a business can opt for.
Single tier tax system:
In simple term, there is no double taxation for shareholders in Singapore. Corporate income tax paid by the company on its chargeable income is the final tax. Dividends paid to the shareholder by a company are not subject to tax. The absence of a tax on capital gains is another milestone that one can achieve in Singapore tax system. Profits on sales of fixed assets and foreign exchange are considered as capital gains.
General Tax incentives:
Full tax exemption for start-ups and partial tax exemptions for existing companies are the two main tax incentives that are meant for Singapore tax residents. Under the full exemptions scheme, a newly-incorporated company does not need to pay tax on the first S$100,000 taxable income for each of first three years. To enjoy this exemption benefits, the company should be incorporated in Singapore, a tax resident of Singapore, and the number of shareholders should not be more than 20.The existing company with less than S$300,000 annual revenue can pay only 8.5% tax. This comes under partial tax exemption benefits of Singapore taxation.
Double Taxation Agreements:
Singapore has a wide spanning network of tax treaties with various nations. Currently, the country has more than 60 comprehensive and 7 limited Double Taxation Agreements (DTAs) in force. The main objective of DTAs is to help businesses avoid double taxation of their income and gain access to a platform to settle tax disputes.
Annual Singapore Tax filing:
Singapore Tax filing due dates for corporate taxpayers are 30 November (Paper filing) and 15 December (e-filing) of every fiscal year . Every company has to submit a complete set of returns, including Form C, audited/unaudited accounts, and tax computation.
Personal Income Tax:
Personal income tax is taxable to the individual’s income earned in Singapore. The tax rates start from 0% to 20%. This tax is applicable for Singapore citizen, permanent resident and the foreigner (who is not a director of a company) who has stayed / worked in Singapore for 183 days or more in the previous year. 15 April (Paper filing) and 18 April (e-filing) of every fiscal year are the last dates for filing personal tax in Singapore. The tax amount is assessed based on a preceding year basis.
Singapore Property Tax:
The IRAS charges property tax based on the annual value of the property. The tax is applicable for all types of property owners including private properties, HDB (Housing Development Board) flats, offices and vacant lands. The property tax rates of the owner-occupied houses and non-owner occupied houses are calculated separately. The current rates of the owner-occupied property are in the range of 0% to 16% whereas the rates of non-owner occupied properties range between 0% to 20%.
Goods and Service Tax (GST):
The term GST stands for Goods and Services Tax and it is also referred as VAT (Value Added Tax) in many other countries. The current rate of GST is 7%, which is relatively lower than most of other jurisdictions. GST registration Singapore is mandatory to the companies whose expected annual revenue exceeds 1 million SGD.