Taxation

 

Singapore offers advantageous tax conditions, particularly favourable to companies.

 

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Direct business taxation:

 

1. Taxation for the first three years of activity

a. Until 31 December 2018

 

  • A 0% taxation for the first 100 000 SGD until 31 December 2018

Any new company recently registered in Singapore can benefit, for its first three years, from an exemption from corporate income tax on the first 100 000 SGD of taxable income (profits) and a tax relief of 50% on the next 200 000 SGD of income tax.

 

Taxable income amount (profits) Effective rate in Singapore
First 100,000 SGD 0%
100,001 - 300,000 SGD 8.5%
300,001 SGD and above 17%

 

b. From 1 January 2019

 

Taxable income amount (profits) Effective rate in Singapore
First 100,000 SGD 4.25%
100,001 - 200,000 SGD 8.5%
200,001 SGD and above 17%

 

Therefore, for an amount of taxable income of 300 000 SGD on one of the first three years of activity, the effective rate will be 9.92%: ((100 000 x 4.25% + 100 000 x 8.5% + 100 000 x 17%) / 300 000) x 100.

 

2. Taxation from the fourth year of activity

a. Until 31 December 2018

 

  • An 8,5% taxation up to 300 000 SGD until 31 December 2018

 

All resident companies set-up in Singapore can benefit from a partial tax reduction of 8,5% up to 300 000 SGD per year. Above the annual 300 000 SGD, the normal tax rate of 17% will be applied.

 

Taxable income amount (profits) Effective rate in Singapore
Premiers 10,000 SGD 4.25%
10,001 - 300,000 SGD 8.5%
300,001 SGD and above 17%

 

b. From 1 January 2019

 

Taxable income amount (profits) Effective rate in Singapore
Premiers 10,000 SGD 4.25%
10,001 - 200,000 SGD 8.5%
200,001 SGD and above 17%

 

Therefore, for an amount of taxable income of 300 000 SGD for companies set-up in Singapour, the effective rate will be 11.19%: ((10 000 x 4.25% + 190 000 x 8.5% + 100 000 x 17%) / 300 000) x 100.

 

3. Tax reliefs for specific activities of the company

 

To encourage overseas expansion, businesses (regardless of shareholder’s composition) may claim automatic Double Tax Deduction (DTD) on the first 150 000 SGD qualifying expenses incurred on these four activities below:

  • Overseas business development trips and missions
  • Overseas investment study trips and missions
  • Overseas trade fairs
  • Local trade fairs approved by Enterprise Singapore or Singapore Tourism Board (STB)

 

The DTD equals a tax relief of -200% on the first 150 000 SGD of qualifying expenses each year.

 

Example: A company which generates an income of 100 000 SGD spent 10 000 SGD under the DTD, deducts from its eligible expenses the double of the expenses’ amount under DTD and benefits then from a tax relief of 1 700 SGD.

 

 

Indirect business taxation:

The GST (Goods and Services Tax), equivalent of the French VAT (Value-Added Tax), is also really attractive:

 

  • Rate: 7%.
  • Characteristics:
  • Registration is voluntary for the companies of a turnover below one million SGD.
  • Transactions covered by a 0% GST: exports and international services (abroad services for an abroad company from an entity registered in Singapore are covered by a 0% GST).
  • When Singapore imported commodities are in transit and must be re-exported, they can be sent directly to a Free Trade Area or stocked in warehouses.

 

 

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