Singapore Corporate Taxation

A  number of entrepreneurs and investors flock to Singapore due to its  attractiveness as a major international commercial hub, which boasts of  pro-business government policies, desirable economic environment and  appealing taxation scheme.

Lets take a closer look at why the Corporate Taxation scheme is appealing:

First, Singapore adopts a one-tier tax system. A one-tier tax system  means that the income tax payable on the chargeable income of a  specific company is considered the “final tax” and shareholders will no  longer be taxed on their dividend income.

Second, there is no withholding tax on dividends. And third, there is no capital gains tax imposed on gains of a capital nature.
Singapore Corporate Tax Rates

Investors and entrepreneurs alike would be glad to note that:

Zero tax applies to newly-incorporated companies on the first $100,000 net profits for its first 3 years of operation.
All newly incorporated companies(with some execptions) enjoy approximately 9% corporate tax rate for profits of up to $300,000.
The overall company tax rate is a fixed 18%, which will be reduced to 17% starting from 2010.

Yes, you read it right. FULL tax exemption will be granted on the  first $100,000 net profits of qualifying companies for each of its  first three consecutive tax filing years.

‘So, what is a qualifying company?’ you might muse. A qualifying company:

Is a company incorporated in Singapore
Is a tax resident in Singapore for that calendar year
Has less than 20 shareholders; and
At least 10% of its shareholders are individuals.

However, a company that does not meet these qualifications would still be eligible for partial corporate tax exemption.

Companies are eligible for partial tax exemption on chargeable income of up to $300,000 as follows:

Chargeable Income ($) Effective Tax Rate (%)
First $10,000 4.5
Next $290,000 9.0
More than $300,000 18.0

Taxation for Non-Resident Companies

In Singapore Corporate Taxation context, a company is considered a “Resident  Singapore Company” if its central operations and management is carried  out in Singapore.

Non-resident companies are not at liberty to enjoy the benefits of  double tax treaties. On the good side, non-resident companies are not  liable to Singapore income tax on foreign source income if it is not  received in Singapore. This makes non-resident Singapore companies the  ideal channel for international trading.

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