Singapore has long boasted a resilient and dynamic business environment, supported by robust legal framework, talented workforce, competitive tax regime, strategic location, and outstanding connectivity. These render the country an attractive destination for entrepreneurs. However, while starting a business in Singapore is straightforward and seamless, post-incorporation duties might be more demanding and intricate.
This article will provide you with a brief guideline for running a business in Singapore.
- Annual Filing Requirements in Singapore
- Accounting requirements in Singapore
- Business taxation in Singapore
Annual Filing Requirements in Singapore
The Companies Act requires all companies to complete annual filing and other formalities.
Annual General Meeting
A Singapore company must hold an Annual General Meeting (AGM) once every calendar year. The following general rules apply to AGMs:
- Listed companies are required to conduct an Annual General Meeting (AGM) within four months of their financial year-end and submit the annual return within five months of the financial year-end
- For non-listed companies, the AGM must be held within six months after the financial year-end, and the annual return filed within seven months after the financial year-end.
- Private companies can dispense with AGM if approved in a general meeting by all members with voting rights.
- A company officer or a professional firm on behalf of the company can apply for an Extension of Time to hold an AGM (EOT) of up to 60 days, with $200.
- Failure to hold an AGM as required may lead to prosecution, disqualification, or debarment from being a director. Companies may also be subject to composition fines.
Filing of Annual Return with ACRA
All Singapore companies must lodge Annual Returns with ACRA within 1 month of its AGM. Particulars of the company officers, company type, registered charges, registered address, auditors (if applicable), shares details, financial statements (if applicable), and date of AGM (if applicable) must be included in the AR. The attachment of company’s accounts is governed by the applicable rules here.
Filing of Estimated Chargeable Income (ECI)
Singapore companies are required to declare the revenue amount and Estimated Chargeable Income (ECI) by filing the ECI form with the Inland Revenue Authority of Singapore (IRAS) within 3 months of the company’s Financial Year End. Your company is not required to submit ECI for any assessment year when both of the following conditions are fulfilled:
- Annual revenue1 is $5 million or below for the financial year; and
- ECI is nil for the YA. The ECI should be the amount before deducting the exempt amount under the partial tax exemption scheme or the tax exemption scheme for new start-up companies.
Employment Income Record
Employers are obliged to keep comprehensive employment records of employees under the Employment Act. The records must be kept for the latest two years (for current employees), and for the last two years of employment (for ex-employees). Two main categories must be included, namely Salary Records and Employee Record.
- Salary Records shall include the full names of both employer and employee, payment dates, basic salary information, allowances, additional payments, deductions, overtime details, and net salary paid.
- Employee records should include the address, NRIC number (or work pass number and expiry date for non-citizens), date of birth, gender, date of starting and leaving employment, working hours (including meal and tea break durations), and details of public holidays and leave taken.
Corporate Income Tax Return (Form C-S/ Form C-S (Lite)/ Form C)
Companies must annually report their income to the IRAs by submitting either Form C-S, Form C-S (Lite), or Form C.
- Form C-S is a simplified tax return form for qualifying small companies to report their income to IRAS, requiring fewer details compared to Form C. Form C-S comprises: A declaration statement of the company’s eligibility, Information on tax adjustments, and Information from the financial statements. Companies are allowed to submit form C-S if they are incorporated in Singapore, have an annual revenue of $5 million or less, derive income subject to the prevailing Corporate Income Tax rate of 17%, and do not claim specific allowances or reliefs for the relevant Year of Assessment.
- Form C-S (Lite) is a simplified variant of Form C-S, necessitating only six essential fields to be filled out by companies with uncomplicated tax affairs. Like Form C-S, companies are not required to file their financial statements and tax computation in Form C-S (Lite). If companies are qualified for filing Form C-S and have an annual revenue of $200,000 or less, they can choose Form C-S (Lite) for submission.
- Companies not qualifying to file Form C-S or Form C-S (Lite) must file Form C. The submission must include the companies’ financial statements, tax computation and other supporting documents together with Form C.
Accounting requirements in Singapore
Preparation of Financial Accounts
Annual financial accounts must be prepared in accordance with the Financial Reporting Standards. Bookkeeping can be monthly, quarterly or annual depending on the volume of transactions recorded by the company. The financial accounts should include a Statement of Comprehensive Income (i.e. Profit and Loss Account), Statement of Financial Position (i.e. Balance Sheet), Cash Flow Statement, Statement of Changes in Equity, Notes on significant accounting policies and other explanatory information, and Comparative information of the above statements and notes on the preceding period.
Audit of Financial Accounts
A company shall appoint an auditor within 3 months from the date of its incorporation, unless it is exempted from audit requirements. To be exempted, a company must be a private company in the financial year in question that fulfills at least two of the following three quantitative criteria for immediate past two consecutive financial years:
- total annual revenue of not more than $10 million;
- total assets of not more than $10 million;
- number of employees of not more than 50.
For a company which is part of a group to be exempt from statutory audit, the company must qualify as a small company and the group must also meet at least two of the three quantitative criteria on a consolidated basis.
Business taxation in Singapore
Single-tier income tax system
Tax paid by a company on its chargeable income is the final tax and all dividends paid to shareholders are exempt from further taxation in Singapore. This prevents double taxation.
There is no tax on capital gains in Singapore, which includes gains realized on the disposal of fixed assets, foreign exchange, capital transactions, etc.
Headline Tax Rate
Singapore’s headline corporate tax rate is a flat 17%. The effective rate is generally lower after the application of tax exemptions and incentives, depreciation rules, etc.
General Tax Incentives
There are general tax exemptions and rebates currently available to Singapore resident from-small-to-midsize companies which significantly reduces the effective tax rate.
Tax Exemption Scheme for Start-Up Companies
With effect from YA 2020, the tax exemptions for qualifying companies for their first 3 consecutive YAs are as follows:
- 75% exemption on the first $100,000 of normal taxable income.
- 50% exemption on the next %100,000 of normal taxable income.
All new start-up companies are eligible for this scheme, except:
- Companies specializing in investment holding
- Companies undertaking property development for sale, investment, or both
The new start-up company must also:
- Be incorporated in Singapore
- Be a tax resident in Singapore for that YA
- Have no more than 20 shareholders of which at least one is an individual shareholder holding at least 10% of shares.
Partial Tax Exemption Scheme
Companies that do not qualify for SUTE may be eligible for the Partial Tax Exemption (PTE) scheme. Starting from YA2020, all companies in Singapore benefit from a Partial Tax Exemption (PTE). This entails a 75% exemption on the initial $10,000 of normal chargeable income, followed by an additional 50% exemption on the subsequent $190,000 of normal chargeable income. In total, each company can enjoy up to $102,500 in exemptions for each YA. It’s important to note that this amount has been reduced compared to previous years.
Corporate Income Tax (CIT) Rebate for YA 2024
To assist companies in coping with increasing expenses, a Corporate Income Tax (CIT) Rebate equivalent to 50% of the corporate tax payable will be provided to all taxpaying companies in the year of assessment (YA) 2024. As not all companies generate profits and may not benefit from this rebate, the government offers a minimum cash payout of $2,000, known as the CIT Rebate Cash Grant, to companies that employed at least one local worker in 2023.
The maximum total amount a company can receive from both the CIT Rebate and CIT Rebate Cash Grant is capped at $40,000.
Corporate Income Tax (CIT) Rebate for YA 2024
To assist companies in coping with increasing expenses, a Corporate Income Tax (CIT) Rebate equivalent to 50% of the corporate tax payable will be provided to all taxpaying companies in the year of assessment (YA) 2024. As not all companies generate profits and may not benefit from this rebate, the government offers a minimum cash payout of $2,000, known as the CIT Rebate Cash Grant, to companies that employed at least one local worker in 2023.
The maximum total amount a company can receive from both the CIT Rebate and CIT Rebate Cash Grant is capped at $40,000.
Corporate income tax filing due date
Corporate income tax filing due date for Singapore companies is November 30.
Companies must submit Form C or Form C-S by 30 November of every year. If the company opts for e-filing, the due date is on 15 December.
Corporate income tax assessment period
Corporate income tax is assessed on a preceding year basis. Thus the basis period for any Year of Assessment (YA) refers to the financial year ending (FYE) in the year preceding the YA. For example, in 2025, a company will file a corporate tax return for the financial year ending between 1 January 2024 and 31 December 2024.
Goods and Services Tax (GST)
Goods and Services Tax (GST) is a consumption tax imposed on imported goods (administered by Singapore Customs) and virtually all transactions involving goods and services within Singapore. This tax is equivalent to Value-Added Tax (VAT) in other countries.
If companies’ taxable turnover is over $1 million, registration for GST is mandatory. For companies with taxable turnover not exceeding that turnover threshold, GST can also be registered voluntarily.
- Taxable supplies in Singapore are categorized into standard-rated supplies and zero-rated supplies:
o The GST is currently set at 9% for standard-rated supplies, which include most local sales, sales of imported low-value goods, most local provision of services, and imported services.
o In contrast, export of goods and international services are categorized as zero-rated supplies and subject to 0% GST.
- Non-taxable supplies in Singapore categorized into exempt supplies and out-of-scope supplies, both are not subject to GST.
o Exempt supplies include sale and rental of unfurnished residential property, importation and local supply of investment precious metals, financial services, and digital payment tokens.
o Out-of-scope supplies include sales where goods are delivered from overseas to another place overseas, and private transactions.
Withholding tax in Singapore
Singapore has implemented a tax-withholding mechanism to Singapore source income to ensure the collection of tax due from non-residents companies and individuals.
A person must withhold tax when certain types of payments (e.g. interest, royalty, services etc) are made to non-resident persons. The rate of withholding tax depends on the nature of payment.
Nature of Income and Corresponding Tax Rate
- Interest, commission, fee or other payment in connection with any loan or indebtedness : 15%
- Royalties or other lump sum payments for the use of moveable properties : 10%
- Royalties and other payments made to author, composer, or choreographer : 24%
- Payments for the use of or the right to use scientific, technical, industrial or commercial knowledge or information : 10%
- Rent or other payments for the use of moveable properties : 15%
- Technical assistance and service fees : 17% (prevailing corporate income tax rate)
- Management fees : 17% (prevailing corporate income tax rate)
- Proceeds from sale of any real property by a non-resident property trader: 15%
- Distribution of taxable income made by REIT to unitholder who is a non-resident (other than an individual) : 10%
However, please be informed that most withholding tax rates are reduced or exempted by the Double Tax Agreements signed between Singapore and other jurisdictions.
Tax residence of company in Singapore
A company is considered as resident in Singapore if the control and management of the business is exercised in Singapore, if board meetings take place outside Singapore and management and control is exercised outside Singapore it will be considered non-resident. A company’s tax residence may change from one year of assessment to the next depending on the circumstances. The basis of taxation for a resident company and non-resident company is generally the same, with the exception of certain benefits that are only available to resident companies, including:
- income tax exemption scheme for start-ups;
- income tax exemption on foreign-source dividends, foreign branch profits, and foreign-source service income under section 13(8) of the Income Tax Act; and
- benefits under the Double Taxation Agreements (DTA) concluded between Singapore and the treaty countries.
Singapore Double Tax Treaty Network
Singapore has an extensive network of Double Tax Treaties (“DTA”), the aim of which is to eliminate double taxation issues and provide reduced rates of withholding tax on dividends, interest and royalties. Most of Singapore’s DTAs are based on the OECD model, which determines the rights to tax different categories of income, allocated to each signatory country. In addition, most Singapore’s DTAs contain exchange of information provisions, inspired from the OECD model.
To enjoy the benefit of Singapore’s DTAs, a tax residence certificate issued by the tax authorities of the country where the recipient is a resident, shall be submitted to the Singapore tax authorities.
As of June 2024, Singapore has entered into 93 DTAs, with the following countries and regions:
Albania – Armenia – Australia – Austria – Bahrain – Bangladesh – Barbados – Belarus – Belgium – Brazil – Brunei – Bulgaria – Cambodia – Canada – People’s Republic of China – Cyprus – Czech Republic – Denmark – Ecuador – Egypt – Estonia – Ethiopia – Fiji – Finland – France – Georgia – Germany – Ghana – Greece – Guernsey – Hungary – India – Indonesia – Ireland – Isle of Man – Israel – Italy – Japan – Jersey – Jordan – Kazakhstan – Republic of Korea– Kuwait – Laos – Latvia – Libya – Liechtenstein – Lithuania – Luxembourg – Malaysia – Malta – Mauritius – Mexico – Mongolia – Morocco – Myanmar – Netherlands – New Zealand – Nigeria – Norway – Oman – Pakistan – Panama – Papua New Guinea – Philippines – Poland – Portugal – Qatar – Romania – Russian Federation – Rwanda – San Marino – Saudi Arabia – Serbia – Seychelles – Slovak Republic – Slovenia – South Africa – Spain – Sri Lanka – Sweden – Switzerland – Taiwan – Thailand – Tunisia – Turkey – Turkmenistan – Ukraine – United Arab Emirates – United Kingdom – Uruguay – Uzbekistan – Vietnam
