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We will help small companies /non-profit entities estimate if they must pay or defer corporate taxes and perform the necessary lodgements to IRAS punctually
Corporate Tax Singapore
Companies which are domiciled or incorporated in Singapore must pay taxes or defer taxes on their profits and losses respectively.
As per the Inland Revenue Authority of Singapore (IRAS), a Company is defined as follows:
- A business entity incorporated under the Singapore Company Act;
- A foreign company registered in Singapore such as a branch of a foreign company;
- A foreign company incorporated or registered outside Singapore.
In Singapore, companies are taxed on the profits earned in the previous financial period, usually, it is 12 months. In tax terms, it is called the basis period.
Year of Assessment
This means that profits earned in 2022 will be taxed in 2023. In tax terms, 2023 is the Year of Assessment (YA).
To assess the amount of tax, IRAS looks at the income, expenses, and other supporting schedules. Companies are taxed at a flat rate of 17% of their chargeable income.
Chargeable income means the company’s taxable income less allowable expenses for a year of assessment. All companies must lodge 2 Corporate Income Tax Returns with IRAS every year. Estimated Chargeable Income (ECI) and Form C-S or Form C-S(Lite) or Form C.
All companies must declare to IRAS an estimate of the company’s taxable income within 3 months from the close of the accounting financial year-end.
There are exceptions to this rule which are:
- The annual revenue of the company must be $5 million or less; and
- ECI is ZERO.
If the company meets the above requirements, there is no need to lodge ECI.
Type of forms
Each year from 1st June onwards, the IRAS tax portal window will be open for companies to file their tax returns. The last day to file their tax returns will be 30th Nov of each year. All companies have about 5 months to lodge their submissions with IRAS. Companies can choose to submit their tax returns by choosing Form C-S or Form C-S(Lite) or Form C. The following paragraphs will help you in selecting the right Form.
If your company is incorporated in Singapore and the relevant revenue is $200,000 or less choose Form C-S(Lite).
If your company is incorporated in Singapore and the relevant revenue is $5,000,000 or less choose Form C-S. In addition, the company must fulfil the following condition:
- The company derives income taxable at the prevailing Corporate Income Tax rate of 17%
- The company is not claiming any of the following in the YA;
- Carry-back of Current Year Capital Allowances/Losses;
- Group Relief;
- Investment allowance;
- Foreign Tax Credit and Tax deducted at source.
Form C applies to all companies which do not satisfy the above guidelines
Non-submission of Tax returns / late payment or non-payment of taxes
Should the Company miss the deadline to lodge the tax returns by 30th November, or overlook paying the taxes, the consequences include the following:
- IRAS will issue a notice of assessment which will be based on the estimate of the company’s income;
- A 5% late payment penalty will be imposed on the unpaid tax if full payment is not received by the due date;
- IRAS may appoint agents like bank, tenant, lawyer, or other third parties to recover the taxes owed;
- Take legal action
Tax service provider
Not all companies have a dedicated tax department to handle the tax compliance work. In such circumstances, it is better to outsource and engage the services of professionals like chartered accountants or tax consultants to perform the tax calculations and lodgement. They are professionals who are current on Singapore’s Corporate Income Tax and other relevant legislations.