How to File Corporate Tax in Singapore?
Singapore is one of the global business destinations preferred by most people due to the friendly tax policies which have been put in place in the country. The tax system in Singapore ensures that taxis imposed on all the income derived from Singapore as well as income sourced from the foreign countries and remitted to Singapore. Tax on capital gains and dividends is not incurred in Singapore making it a business-friendly country. There are also no restrictions on the foreign exchange and the capital movements further ensuring that the funds can flow easily in and out of Singapore. In this article, we will discuss the Singapore company tax and how you can easily carry it out.
Understanding the Rates of Corporate Tax
The rate of the corporate tax in Singapore is actually 17% and it is often calculated on the chargeable income generated by the company. It refers to the taxable revenues without the inclusion of the expenses and allowances. This is the lowest rate in the world and in some cases, it can be further lower if the company takes advantage of the subsidies and the business incentives which are provided by the government.
Understanding the Residency of Corporate Tax
As a way of determining Residency Corporate Tax, IRAS will have a look at the location of the particular company and how the company is managed. It will also involve the decision-making strategies of a particular company. The information obtained will help IRA in determining the rate of the residency corporate tax and it helps the IRA to offer exemption in case of foreign income sourced by the company.
Determination of the Fiscal Year
Every company in Singapore can easily determine their financial year and it is not necessary it becomes 31st December. However, it is advisable that the company keeps its 365 days in the financial year in order so that they can enjoy the tax exemptions in the case of start-up companies.
Every company in Singapore is usually required to file the annual returns to the relevant authorities. This should be carried out within one month after the Annual General Meeting of the Company. Every company is required to file their returns separately since consolidated returns are not allowed.
It is important for one to understand the taxable income to avoid making any mistake. In Singapore, taxable income means the following.
» Any gain or profit from a trading activity or a business
» Income obtained from the interest, capital, dividends and other investment activities
» Profits obtained from the properties in the form of royalty, premium, etc.
» Any other gains
There are also deductible expenses incurred in the course of production or the business transactions and they must meet the following.
» The expenses must be incurred in the course of the production process
» They should be revenue in nature and not capital
When carrying out the tax filings for your company, it is important for you to review Singapore company tax regulations to know how you can take advantage of the tax incentives offered by the government.