Singapore is widely regarded as a leading example of a nation that consistently lowers corporate income tax rates and introduces various tax incentives to attract and retain global investments. With its straightforward, efficient, and appealing tax system, Lion City has become a favored destination for investors seeking to establish their operations. In this guide, we will provide a comprehensive overview of:
- Key features of Singapore tax’s system
- Income Taxes as Applied to Business Entities
- Introducing RBA online Singapore tax calculator
I. Key features of Singapore tax system
Entrepreneurs and companies established in Singapore enjoy numerous advantages that are often not accessible in other countries. These benefits include:
- Single-tier tax: This system taxes corporate profits exclusively at the corporate level, while dividends distributed to shareholders remain tax-free
- Zero tax: Singapore imposes no taxes on capital gains, dividends, or income derived from oversea sources. Furthermore, assets obtained through inheritance or as gifts are exempt from taxation.
- Low tax rates: Both corporate and personal tax rates are kept low, complemented by various tax incentives aimed at reducing the effective tax burden.
- No double tax: Through an extensive network of Double Taxation Avoidance treaties, individuals and companies with income and assets abroad are only taxed once, eliminating the possibility of double taxation
Types of taxes in Singapore:
Singapore’s taxation framework includes a range of tax categories aimed at upholding fiscal stability while fostering economic development. Here are the types of taxes in Singapore:
- Income Tax: chargeable on the income of individuals and companies.
- Goods & Services Tax (GST): paid when money is spent on goods or services, including imports.
- Property Tax: imposed on owners of properties based on the expected rental values of the properties.
- Stamp Duty: imposed on commercial and legal documents relating to stock & shares and immovable property.
- Gambling Duties: these are duties on betting, lotteries, sweepstakes, and gaming machines in any non-casino premises.
- Casino Tax: levied on the casinos’ gross gaming revenue.
- Estate Duty (Removed for deaths occurring on or after 15 Feb 2008): levied on the value of a deceased’s net assets in excess of a threshold amount.
Other taxes imposed by the government and administered by other government agencies include:
- Customs, Excise, and Carbon Taxes
- Motor Vehicle Taxes
- Vehicle Quota Premiums
- Fees and Charges (Excluding Vehicle Quota Premiums)
II. Income taxes as applied to business entities
Businesses generating income within Singapore or remitting income to the country must pay corporate taxes at a rate of 17% on their chargeable income, regardless of whether it originates domestically or internationally.
| Corporate tax types | Tax rate |
| Tax on corporate revenues | 17% (highest rate; different tax incentives and exemptions to lower the eventual tax rate) |
| Tax rate on capital gains by corporate | 0% |
| Tax rate on dividends paid to shareholders | 0% |
| Tax rate on eligible income from foreign sources | 0% |
The information provided in the table originates from Inland Revenue Authority of Singapore (IRAS)
Start-up tax exemption scheme
The Start-Up Tax Exemption (SUTE) scheme is designed to help new businesses and entrepreneurs within the nation. From YA2020 onwards, tax exemptions for newly incorporated companies are as follows:
| Chargeable Income | % Tax Exempted |
| First $100,000 | 75% |
| Next $100,000 | 50% |
The information provided in the table originates from IRAS
This initiative is applicable for the initial three assessment years. Subsequently, companies are eligible to seek enrollment in the Partial Tax Exemption (PTE) scheme.
To be eligible, businesses must fulfill the following criteria:
- Incorporated in Singapore
- Recognized as a tax resident in Singapore
- Have no more than 20 shareholders with at least one individual shareholder holding a minimum of 10% of shares.
Partial tax exemptions
Companies that do not qualify for SUTE may be eligible for the Partial Tax Exemption (PTE) scheme.
| Chargeable income (S$) | Exemption |
| First 10,000 | 75% |
| Next 190,000 | 50% |
The information provided in the table originates from IRAS
Effective corporate tax rate
- Income tax filings for newly incorporated companies in the first three years:
| Taxable income (S$) | Tax rate |
| First 100,000 | 4.25% |
| From 100,001 to 200,000 | 8.50% |
| Above 200,000 | 17% |
- Income tax filings after the first three years:
| Taxable income (S$) | Tax rate |
| First 10,000 | 4.25% |
| From 10,001 to 200,000 | 8.50% |
| Above 200,000 | 17% |
III. Looking for assistance with your Singapore tax calculations?
We hope that this guide streamlines the Singapore tax system and assists you in understanding potential tax obligations in the region. For an estimation of your Singapore taxes and a comparison with taxes in your home country, utilize the RBA online Singapore Tax Calculator.
If you require additional tax assistance or information for your Singapore company, please do not hesitate to contact us. Startups have to manage numerous company accounts and tax filings over the years, and our professionals are highly skilled in taxation and auditing. Reach out to RBA today for expert support!
