Mastering Singapore's Tax System: Uncover Strategies for Business Growth

Accounting, Audit and Assurance Firm in SingaporeHomeResources @ Precursor › Mastering Singapore's Tax System: Uncover Strategies for Business Growth

Although Singapore is one of the lowest tax regime countries in the world with a favourable Singapore tax system, many entrepreneurs end up paying much more than the actual tax amount. This was either due to the businesses not utilising the benefits or exemptions provided by the government or the authorities fined them as they needed to submit the correct documents to comply with the tax laws in Singapore. All these could have been avoided if they had the knowledge of the types of taxes in Singapore, like income tax, goods and services tax (GST), property tax, withholding tax, and stamp duty, or if they had engaged a professional accounting firm in Singapore to help with tax compliance and managing tax risk.

In this post, we are sharing some pointers on understanding the corporate taxation system in Singapore and how it can benefit your Company.

The tax rates for the different type of Singapore Company you have chosen to incorporate

When starting a business in Singapore, the type of company entity you choose to incorporate will impact tax rates. For instance, Singapore's sole proprietorship and partnership companies are taxed based on the owner's income tax bracket, as if the business' profits were also the owner's salary. Private limited companies and subsidiary companies are considered separate legal entities and are taxed at the corporate tax rate of 17%. This is the company income tax rate.

The entity must be a tax resident in Singapore to be able to enjoy the tax benefits and tax exemption schemes given. Tax residency is an essential factor in determining Singapore's income tax obligations.

Entrepreneurs who are interested in knowing more about the Singapore tax slabs and Singapore tax rates should consult a professional company incorporation service provider to determine the best business structure in line with their requirements. They can advise on the applicable Singapore income tax, including foreign income tax in Singapore and the minimum salary to pay income tax in Singapore.

Ensure the accuracy of the bookkeeping processes

Bookkeeping is essential as it enables the user to know the actual financial state of their Company. Each business transaction should be recorded systematically per the Singapore Financial Reporting Standards (SFRS) to aid in timely decision-making. This includes the analysis of transactions, profit and loss statements, budgeting cash flow statements and preparing year-end forecasts. Proper bookkeeping is essential for calculating taxable income in Singapore.

According to the Inland Revenue Authority of Singapore (IRAS), you should keep proper records and accounts supported with invoices, receipts, vouchers, and other supporting documents for five years so that the income tax earned and business expenses claimed can be determined. This is important for tax audits.

The most time-saving and fuss-free way is to hire a professional team for services in Singapore so the entrepreneur can concentrate on running and growing his business.

The importance of filing all required compliance documents on time

Late filing and non-filing of tax returns is a punishable offense in Singapore.

GST-registered businesses must pay the goods and services tax (GST) collected to IRAS within a month from the end of each accounting quarter. If tax payment is not received by the due date, a 5% penalty for overdue tax with an additional 2% on subsequent overdue tax amount will be imposed. Proper management of input tax and output tax is essential.

Companies that do not file their audited or unaudited accounts, tax computation and Form C or Form C-S by 30 November or 15 December (if e-filing) of the year would be liable to pay fines and late fees and may be summoned to court. Timely tax filing is critical.

Late filing or non-filing personal income tax return (Form B1) than 15 Apr (for paper returns) or 18 Apr (for e-filing) is a punishable offence with a late fee of up to twice the taxation amount assessed. This applies to Singapore's personal income tax.

Need Guidance?

Get your questions right away by our team of experts. We can provide you with sound advise on understanding the taxation system in Singapore and how it can benefit your company. Book your appointment with us today!

Contact Us Contact Us

Understanding the various tax benefits in Singapore

Specific tax rebates can also be made available to certain types of companies as part of the government's schemes to promote business for a particular segment. There are various tax deductions, tax reliefs and tax incentives available.

In fact, to encourage new investment and maintain a conducive business environment, the Start-up Tax Exemption Scheme (SUTE) was introduced in 2004 to provide newly incorporated qualifying companies exemption on their taxable income in Singapore in their first three years of operations.

Startups must satisfy these 3 conditions to qualify for tax exemption:

1. The company must be incorporated in Singapore;
2. The company must be a tax resident in Singapore for that year;
3. The company must not have more than 20 shareholders throughout the basis period for that year.

Under SUTE, tax exemption is given on normal chargeable income tax of up to S$300,000 for each of the first three consecutive years of operation as under:

  • For first S$100,000, after 100% exemption, the exempt amount is S$100,000
  • For next S$200,000, after 50% exemption, the exempt amount is S$100,000
  • Hence the total exempt amount for income tax of up to S$300,000 is S$200,000. 

All other companies can enjoy Partial Tax Exemption (PTE) as follows:

  • 75% tax exemption on the first $10,000 of normal chargeable income; and
  • A further 50% tax exemption on the next $290,000 of normal chargeable income.
  • Hence the total exempt amount for income of up to S$300,000 is S$152,500.

Finally, to ensure fairness to the tax treatments on the company, only the revenue expenses incurred one year before the first day of the financial year in which you earn your first dollar of business receipt is tax-deductible. This is part of the Singapore tax system.

By understanding the various government schemes, your company can ensure that the correct amount of taxes is paid to IRAS. This will help you minimise your company's corporate tax payable in Singapore. It is therefore recommended that you engage a professional tax service provider for their professional help with tax governance.

Whether you have a company incorporated or are still looking to start a business in Singapore, Precursor has the expertise, years of proven experience and an award-winning team to handle all parts of your business operations right from advisory, documentation, registration, accounting, bookkeeping, business process outsourcing to various other corporate services.

Get in touch!

Write to us.

Discover more about how we can help you to understand the taxation system in Singapore and how it can benefit your company. Your business' success is our priority.

First Name
Last Name
E-mail Address
Phone Number


Our Awards & Accreditations