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A Summary of Singapore’s Corporate Tax System

Many of you know that Singapore has done well in luring and retaining global investments by reducing corporate tax rates and initiating numerous tax incentives. 

Unlike many countries that implement double-taxation, Singapore has been following a one-tier corporate income tax system since the introduction of Budget 2002. The one-tier corporate income tax system implies that tax imposed on a firm’s chargeable income is final, and dividends are tax-exempt.

Whether a company is a Singapore company or a foreign company, with effect from Year of Assessment (YA) 2010,  tax on corporate income is a flat rate of 17%. Income for the YA is calculated based on the income derived in the preceding year. If 2021 is the YA, the basis period will be the 12 months preceding the 12 months 2021 fiscal year.


Tax schemes to lighten tax payable

There is, however, a tax exemption scheme for new start-up companies.  If a new start-up company meets the preconditions to be eligible for the plan, it will benefit from tax exemptions for the first three consecutive YAs.

If the YA starts from YA 2020, new start-up companies will enjoy a 75% exemption on the primary $100,000 of normal chargeable income and an additional 50% exemption on subsequent $100,000 of normal chargeable income.

Suppose the YA falls between YA 2010 and YA 2019. In that case, new start-up companies will enjoy total exemption on the primary $100,000 of normal chargeable income and an extra 50% exemption on subsequent $200,000 of normal chargeable income.

Another tax exemption scheme that applies to all companies, including companies limited by guarantee, is the Partial Tax Exemption scheme.

Starting from YA 2020 under this scheme, companies will enjoy a 75% exemption on the primary $10,000 of normal chargeable income and an additional 50% exemption on subsequent $190,000 of normal chargeable income. 

For YA 2010 to 2019, companies will enjoy a 75% tax exemption on the first $10,000 of normal chargeable income and an additional 50% exemption on subsequent $290,000 of normal chargeable income.

The third scheme that also applies to all companies is the Corporate Income Tax Rebate. This scheme helps to lighten business spending and applies for YA 2013 to YA 2020. Businesses will obtain a corporate income tax rebate of between 25% – 50%, capped between $10,000 – $30,000, depending on the YA. You can calculate the rebate by taking the tax payable left after deducting tax set-offs.

 

Tax forms

Companies must submit the Estimated Chargeable Income (ECI) form per annum to the Inland Revenue Authority of Singapore (IRAS). Submission must be within 3 months from the company’s financial year-end note that this does not apply to companies that fulfil the requirements under the Administrative Concession and corporations that are not required to file ECI.

Companies must also submit the  Corporate Income Tax Returns form annually by 30 November. Submission of the Corporate Income Tax Returns form does not apply to dormant companies that IRAS has issued a waiver to waive the filing requirement.

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Declaration of Eligibility and General Declaration

The OCBC Start Digital Pack is supported by Enterprise Singapore (“ESG”) and the Info-communications Media Development Authority (“IMDA”) and is offered by Oversea-Chinese Banking Corporation, Limited (“OCBC”) to its business banking customers.

You must meet the following criteria (“Eligibility Criteria”) to be eligible for the OCBC Start Digital Pack:

  1. Registered and incorporated in Singapore with a valid UEN issued by ACRA for the following business entity types: Sole Proprietorships, Partnerships, Limited Partnership, Limited Liability Partnership and Companies;
  2. At least 30% local shareholding;
  3. Group annual sales turnover of not more than $100 million OR Group employment size of not more than 200 employees;
  4. First time applicant to the Start Digital Pack (each business can sign up for only one Start Digital Pack across the Start Digital partners);
  5. Must not be an existing user of Quickbooks;
  6. Have an active business current account with OCBC.



To OCBC:

  1. We declare that as at the date of this form, we have met the Eligibility Criteria and that the information provided in this form is true and accurate in all respects.
  2. We confirm that we would like to apply for the OCBC Start Digital Pack, and we acknowledge and agree that:
    1. OCBC may supply any governmental agency (including, without limitation, ESG and IMDA) with documents and information relating to us or provided by us (including contact information) for purposes in connection with our application for the OCBC Start Digital Pack (Quickbooks);
    2. ESG and IMDA may use our information provided by OCBC to contact us to verify our application for the OCBC Start Digital Pack:
    3. we will supply and/or provide any information and/or documentary proof as OCBC may require from time to time and such information and documents shall thereby become and remain the property of OCBC;
    4. we will indemnify OCBC immediately on first written demand for any losses, damages, liabilities, claims, expenses, fees and costs that may be incurred or suffered by OCBC as a result of or in connection with (i) our failure to satisfy or comply with any of the Eligibility Criteria; (ii) us providing any declaration, information and/or document which is not true and/or accurate; or (iii) us not complying with any of the terms below;
    5. OCBC does not own or provide the TNB Global Outsource Pte. Ltd., or Quickbooks services to us. No warranty of any kind, including without limitation of merchantability, satisfactory quality, fitness for a particular purpose, freedom from malicious code, or non-infringement of third party rights is given in conjunction with the OCBC Start Digital Pack, and OCBC shall not be liable for any loss and/or damage suffered or incurred by or in connection with the use thereof;
    6. we have read, understood and accepted the terms and conditions set out on OCBC’s website (at https://www.ocbc.com/business-banking/accounts-and- services/start-digital/). OCBC reserves the right to update, amend or change the terms and conditions from time to time without our consent;
    7. the OCBC Start Digital Pack is subject to any terms and conditions imposed by ESG and IMDA and we have agreed to, and shall comply with, the same.


Terms and Conditions of OCBC Start Digital Pack

To TNB Global Outsource Pte. Ltd. (“TnB”):

By submitting an application, we acknowledge and agree that:

  1. the information provided in this form is true and accurate in all respects;
  2. we understand that TnB is an authorised reseller of Quickbooks by Intuit Inc. (“Quickbooks”), and TnB will be setting up our Quickbooks accounts with respect to this application;
  3. TnB may (a) share information with OCBC relating to us or our Quickbooks accounts, and (b) send us promotional collaterals relating to our business;
  4. we authorise TnB to set up, activate and access our Quickbooks accounts and we will bear the fees and charges imposed by TnB for services rendered which are not included in the OCBC Start Digital Pack;
  5. the OCBC Start Digital Pack is only valid for OCBC business banking customers who meet the Eligibility Criteria. In the event we are determined by OCBC and/or TnB in their sole and absolute discretion to not be eligible, (a) we will pay to TnB the fees and charges listed on (https://tnbgo.com/grant/ocbc-start-digital/) (“the TnB website”) for any service(s) already provided, and (b) we will be required to reimburse OCBC for all expenses incurred as a result of this application;
  6. any payments relating to the OCBC Start Digital Pack must be made via an OCBC Business Debit Card issued to us;
  7. fees will be paid directly to TnB and OCBC will not be liable for any payment.
  8. we will subscribe to the OCBC Start Digital Pack for a minimum period of 18 continuous months at the fees stated herein. Thereafter, the fees payable will follow that as listed on the TnB website;
  9. in the event of any cancellation request, we will notify TnB in writing (by letter to its registered office or email to the person-in-charge) with a notice period of 1 month. Any refund of any unutilised part of the subscription will be refunded back to us by TnB by bank transfer within 4 weeks of the date of such notice.
  10. we agree that, notwithstanding anything to the contrary, if we fail to satisfy or comply with any of the Eligibility Criteria; or any declaration information and documents given by us are not true or accurate; or we do not comply with clause (ix) above, TnB reserves the right to terminate the package without our notice;
  11. we have read, understood and accepted TnB Terms and Conditions (/https://tnbgo.com/privacy-policy-2/). TnB reserves the rights to update the Terms and Conditions from time to time without our consent;
  12. we have read, understood and accepted the Intuit Terms of Service (https://quickbooks.intuit.com/sg/terms-of-service) and Privacy Policy (https://www.intuit.com/privacy).

 

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