Singapore Corporate Tax System Presented by Tax Accountants Pte Ltd

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Singapore Corporate Tax System Presented by Tax Accountants Pte Ltd Powered By Docstoc

Tax Accountants is dedicated to assisting our clients. We provide our assistance to clients
ranging from sole-proprietors to SMEs. Just as there is no average tax return, there is no
average client.

We have drawn the following information relating to corporate taxation that many
companies find useful. If you are interested in any area that is not covered, please contact
us. Just email us at

     Key features of Singapore Corporate Tax Regime
     Singapore Corporate Tax Rate and Tax Exemption Scheme
     Singapore 1-Tier Corporate Tax System
     Singapore Tax Deductions
     Singapore Capital Allowances
     Unutilised Tax Losses, Capital Allowances and Donations

Key features of Singapore Corporate Tax Regime

     Low tax rates (corporate tax - 17%, individual tax - 20%, GST - 7%)
     No capital gains taxes
     1-Tier tax system with no dividend withholding tax
     Liberal rules for unutilised capital allowances / losses / donations set-offs
     Availability of group relief and carry-back tax mechanisms
     No thin capitalisation rules
     No foreign currency restrictions
     Availability of foreign tax credit / tax exemption for foreign-sourced income
     Availability of many types of tax incentives
     Wide tax treaty network

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Singapore Corporate Tax Rate and Tax Exemption Scheme

Singapore only taxes income (not capital gains) on a territorial basis. Currently, companies
are subject to income tax in Singapore at the prevailing corporate tax rate of 17% in respect
of their income accrued in or derived from Singapore, or received in Singapore from outside
Singapore. Newly incorporated companies and start-ups may enjoy a full tax exemption on
their first S$300,000 income chargeable to tax at 17%, subject to qualifying conditions (See
Example A below).

Example A: Company A has S$300,000 taxable profits in Year 1 (year of incorporation) and
qualifies for the tax exemption scheme.
Taxable profits                              $300,000
Less:       100% of 1st 100,000              ($100,000)
            50% of next 200,000              ($100,000)
Taxable profits for Year 1:                  $100,000
Estimated Singapore tax payable in Year 1:   $17,000

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Singapore 1-Tier Corporate Tax System

With effect from 1 January 2008, all dividends paid by any Singapore tax resident company
in Singapore are tax exempt (1-tier) dividends and such dividends are not subject to further
tax in the hands of the shareholders. This 1-tier tax system benefits all Singapore Tax
resident companies since they can now pay dividends out of its retained profits without the
need to account for franking credits.

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Singapore Tax Deductions

Generally, you may claim tax deduction for expenses that are incurred for business. To
qualify for tax deduction, these conditions must be met:

   The expenses must be revenue in nature, (generally refers to the normal day-to-day
    operating expenses). Capital expenditure is not allowed as a tax deduction but certain
    expenditure may qualify for capital allowances (see below).
   The deduction must not be prohibited under the Singapore Income Tax Act (eg.
    domestic and private expenses).
   The expenses must be incurred. Contingent liability is not allowable as a tax deduction.

Currently, companies are allowed to deduct up to 400% of certain expenses such as
qualifying R&D and staff training expenses under the Productivity and Innovation Credit (PIC)

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Singapore Capital Allowances

In Singapore, capital allowances are available on most classes of capital expenditure with
some important exceptions. For example, capital allowances are not granted for capital
expenditure on the acquisition of shares and other forms of securities, nor on land, goodwill,
nor on the construction of office or residential property.

There are 2 categories of capital allowance available on plant and machinery - the
"accelerated allowances" and the "normal allowances".

Under the system of accelerated allowances, tax relief for the full cost of an asset is given
over three years, at a rate of 33 1/3% per annum, or in the case of computers and
prescribed automation equipment over 1 year at 100% in the year of claim. As announced in
the Singapore 2009 Budget Statement, capital expenditure incurred on plant and machinery
acquired in the basis periods for the Years of Assessment 2010 and 2011 can be allowed an
accelerated write-down over 2 years instead of 3 years.

Normal allowances consist of an "initial" allowance of 20% available for the Year of
Assessment in the basis period for which the expenditure is incurred together with annual
allowances in the first and subsequent years calculated on a straight line basis based on the
economic life of the asset. The initial and annual allowances together give tax relief for no
more than the full cost of the asset.

Currently, companies are allowed to deduct up to 400% of qualifying capital expenditure
such as prescribed automation equipment (eg. laptops, desktop computers and printers)
under the Productivity and Innovation Credit (PIC) Scheme.

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Unutilised Tax Losses, Capital Allowances and Donations

Capital allowance, trade loss or donation in excess of a company's income from all sources
(i.e. unabsorbed capital allowance, unabsorbed loss or unabsorbed donation) for a current
year may be carried forward to future years and/or transferred to another company within
the same group for set-off against the income of the other company, subject to conditions.

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Help and Advice

Tax Accountants Pte Ltd provides reliable and affordable services in Singapore which include
accounting, bookkeeping, payroll and tax services. Our work processes are designed to be
efficient and cost-effective. Our aim is to relieve you of the burdens of statutory compliance
and enable you to focus on running and growing your business. Contact us now so we can
discuss your requirements; Email us today at

For more information, visit:
Tax Accountants Pte Ltd
10 Anson Road, #26-04 International Plaza, Singapore 079903
Fax : (65) 6725 8438
Email :
6725 8438
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Description: Learn about Singapore corporate / company income tax - provided and presented by Tax Accountants Pte Ltd. Find out about key features of the Tax Regime, Tax Rate, Tax Exemption Scheme, Productivity and Innovation Credit (PIC) Scheme, 1-Tier Corporate Tax System, Tax Deductions, Unutilised Tax Losses, Capital Allowances and Donations for companies.