Singapore

Last modified: 27/01/2025 03:27

Corporate taxation

	Rate
Corporate income tax rate	17
Branch tax rate	17

Residence: A taxpayer entity is defined to be a Singapore tax resident if the control and management of its business is exercised in Singapore. Tax residency is determined on an annual basis. With effect from calendar year 2025 onwards, a foreign-owned investment holding company will be required to either have at least a key employee or executive director based in Singapore, or establish that it is managed by a related company based in Singapore, for the purposes of demonstrating that it has valid reasons for setting up Singapore operations and has its tax residency in Singapore.

Basis: Singapore adopts a quasi-territorial basis of taxation where tax is imposed on income accruing in or derived from Singapore. Where income is sourced outside Singapore and received in Singapore, it will also be taxable at the point of remittance or deemed remittance, unless specifically exempted from tax (subject to certain conditions). This applies to both resident and non-resident entities.

Taxable income: Corporate income tax is imposed on the accounting profit, after the relevant tax adjustments for non-taxable income and non-deductible expenses, and after deducting capital allowances and special tax deductions.

Significant local taxes on income: Not applicable.

Alternative minimum tax: Not applicable.

Taxation of dividends: Singapore operates a one-tier corporate tax system whereby tax at the corporate level is the final tax. Dividends paid by Singapore resident companies are tax exempt in the hands of the recipient. Foreign-sourced dividends are taxable in Singapore upon remittance or deemed remittance into Singapore, unless specifically exempted from tax where certain conditions are satisfied.

Capital gains: There is generally no capital gains in Singapore. Gains which are construed to be of an income in nature could potentially be subject to tax. Under the new foreign-sourced disposed gains tax regime set out in Section 10L of Singapore Income Tax Act, gains derived from disposals of foreign assets (i.e. movable or immovable property situated outside Singapore) that take place on or after 1 January 2024 will be chargeable to tax if the gains are:- a) Received / deemed received in Singapore from outside Singapore; b) Derived and received by a “Covered entity”; and c) Derived by an entity without adequate economic substance requirement in Singapore; or d) The gains are from the disposal of foreign Intellectual Property Rights (“IPRs”).

Losses: Unutilised tax losses, capital allowances and donations may be carried forward, subject to the shareholders test. Unutilised capital allowances are subject to an additional same business test. Unutilised donations may be carried forward for five years. Current year unutilised losses and capital allowances may be carried back for one year, subject to a cap of SGD100,000 and the satisfaction of the shareholders and same business (for unutilised capital allowance) tests.

Foreign tax relief: Singapore tax resident companies may claim a credit for foreign tax paid on income derived overseas that is received and assessable to tax in Singapore. The foreign tax credit is limited to the lower of the foreign tax paid and the Singapore tax payable on that income. An election can be made to claim the foreign tax credit on a pooled basis, subject to certain conditions.

Participation exemption: See above under “Taxation of dividends”.

Holding-company regime: Not applicable.

Tax-based incentives: Tax incentives available to taxpayers, subject to the meeting of stipulated conditions and approval by relevant government agencies (if applicable), including: 1) Intellectual property incentives where companies can claim enhanced tax allowances/ deductions for acquisition or licensing costs, or costs for protection of intellectual property 2) R&D incentives which provide for enhanced deductions on qualifying R&D expenditure 3) Special tax regimes which provide tax exemptions or concessionary tax rates for certain industries or sectors including banking, fund management, insurance, shipping and leasing 4) In response to the implementation of the BEPS 2.0 Pillar 2 – the Income Inclusion Rule (“IIR”) and the Domestic Top-up Tax (“DTT”), the Refundable Investment Credit (RIC) scheme has been introduced as part of Singapore’s investment toolkit. RIC is a tax credit with a refundable cash feature which may be used to offset corporate tax payable or be refunded in cash within four years from when the company satisfies the conditions for receiving the credit. RIC will be aligned with the qualified refundable tax credit (QRTC) framework of the OECD Pillar Two Model, ensuring compliance with international standards as Singapore prepares to implement Pillar Two’s IIR and DTT in 2025.

Group relief/fiscal unity: Under the group relief system, a loss-making company within a group may transfer its current year unutilised losses, capital allowances and donations to a qualifying company in the same group, subject to the satisfaction of certain conditions.

Small company/alternative tax regimes: Not applicable.

Corporate taxation: compliance

Tax year: The tax year, known as the Year of Assessment, is the calendar year. However, a company files its tax return based on income assessed on a preceding accounting year basis.

Consolidated returns: Not applicable.

Filing and payment: Companies must file their Estimated Chargeable Income (ECI) to the Singapore Revenue within three months from their accounting year-end, unless they qualify for the ECI waiver or they are specifically not required to file ECI. In addition, all income tax returns must be electronically filed by 30 November of each tax year. The Notice of Assessment will be issued by the Singapore Revenue upon submission of the ECI and/ or income tax returns. The tax is generally due and payable within one month after the date of issue of the Notice of Assessment, unless the company is under the instalment (GIRO) plan for purpose of tax payment on the ECI filed.

Penalties: Penalties apply for late/ non-filing of income tax returns, as well as late/ non-payment of taxes.

Rulings: An advance ruling may be applied by the taxpayer to seek certainty on:- 1. Tax treatment of proposed transactions; or 2. The adequacy of a company’s economic substance in Singapore in respect of a proposed sale or disposal of foreign asset(s), for the purpose of determining the tax treatment under Section 10L of the Singapore Income Tax Act.

Taxation of individuals

A resident is taxed on chargeable income at graduated rates ranging from 0% to 24%. A non-resident is taxed on his employment income at a flat rate of 15% or at resident tax rates, whichever is higher.  Other Singapore sourced income of a non-resident is generally taxed at 24% unless specifically exempt or subject to reduced rate under a tax treaty.

Residence: An individual is a tax resident of Singapore for a tax year if, in the year preceding that tax year, he resides in Singapore, is physically present or exercises an employment (other than as a director of a company) in Singapore for 183 days or more. Under the 3-year administrative concession, an individual may be regarded a tax resident if his stay straddles 3 consecutive years or more, notwithstanding that the 183 days test may not have been met in the first or final year of employment. Under the 2-year administrative concession, a foreign employee who exercises employment in Singapore for a continuous period of 183 days or more straddling 2 years will be regarded as a resident of Singapore for both years.

Basis: Singapore tax resident individuals are generally taxed on all income accruing in or derived from Singapore. Foreign-sourced income received in Singapore by resident individuals is exempt from tax unless the income is received through a partnership in Singapore. Non-resident individuals are subject to Singapore income tax on income accruing in or derived from Singapore.

Taxable income: Income tax is imposed on gains or profits from a trade, business, profession or vocation, and gains or profits from employment.

Capital gains: There is no capital gains tax in Singapore.

Deductions and allowances: Expenses are tax deductible if they are incurred in the production of the income, revenue in nature and are not statutorily prohibited by statute. Generally, there are few deductions that can be claimed against employment income. Personal reliefs, available to resident individuals, may be deducted against their assessable income.

Foreign tax relief: Foreign tax relief is available, subject to certain conditions, to an employee who suffered taxes in Singapore and in the foreign jurisdiction for the income received in respect of services physically rendered in that jurisdiction.

Taxation of individuals: compliance

Tax year: The tax year (Year of Assessment) is the calendar year. Tax is imposed for a tax year based on income accrued or derived in the preceding calendar year.

Filing and payment: An individual is required to file his Singapore tax return by 15 April of each tax year, or 18 April if filed electronically. After the filing of the tax return, the Notice of Assessment will be issued by the Singapore Revenue. The tax is normally due for payment within 1 month from the date of issue of the Notice of Assessment, unless the individual is under the instalment (GIRO) plan.

Penalties: Penalties apply for late/ non-filing of income tax returns, as well as late/ non-payment of taxes.

Rulings: An advance ruling may be applied by the taxpayer on the tax treatment of proposed transactions.

Withholding taxes

Type of Payment	Resident recipients		Non-residents recipients
	Company	Individual	Company	Individual
	Rate (%)	Rate (%)	Rate (%)	Rate (%)
Dividend	0	0	0	0
Interest	0	0	15/17	15/24
Royalty	0	0	10/17	10/24
Rent	0	0	15/17	15/24
Fees for technical services	0	0	17	24

1. Higher rate applies where income is derived by non-resident through operations carried in Singapore.
2. The rate of withholding tax may be reduced in accordance with the provisions of the respective tax treaties.

Branch remittance tax: Not applicable

Anti-avoidance legislation

Transfer pricing: In Singapore, Transfer Pricing Documentation (“TPD”) is mandatorily required if a company exceeds the revenue threshold of S$10 million and the specified transactional thresholds (e.g., S$15 million for related-party sales, purchases, and loans, and S$2 million for other transactions from YA 2026).

The key updates to TP guidelines on 14 June 2024 are summarised below:

1. Relaxation of Exemption Thresholds for the preparation of TPD From YA 2026, the transactional threshold for other related-party transactions, excluding the sale and purchase of goods and loans, has been doubled to S$2 million.

2. Domestic Loan Guidance With effect from 1 January 2025, arm’s-length interest rates must be applied to new domestic loans. Prior to that, taxpayers may use restricted interest deduction as a proxy for the arm’s-length principle.

3. Long-Term Loan Documentation IRAS clarified that annual review and updates are required for long-term related-party loan in the TPD, similar to other related-party transactions. A simplified TPD may be prepared under specific conditions.

4. Tighter Enforcement • TP Audits: The consultation phase has been removed, reflecting a stricter approach by IRAS. • Surcharge Remission: Stricter criteria that require no history of penalties or surcharges, to be eligible for remission of surcharge.

5. Streamlined MAP Process The MAP process now involves fewer steps but demands more upfront evaluation by IRAS before accepting applications.

6. New Guidance Areas

• TP Adjustment on Capital Transactions: IRAS may adjust non-arm’s-length sales or transfers unless related gains, losses, or deductions are non-taxable or non-deductible.

• Working Capital Adjustments: Taxpayers are permitted to make working capital adjustments to improve reliability of comparable analysis, aligning with OECD guidelines.

• IBOR Reform: Related-party loans adjusted solely for IBOR transition are considered arm’s length. Loans with changes beyond IBOR reform may be treated as new loans.

• Government Assistance: IRAS has clarified how subsidies should be considered in related-party transactions, with comparability analyses required to determine relevance.

More info: https://complete-corp.com/articles/updates-on-singapore-transfer-pricing-guidelines/

Interest restriction: The deductibility of interest expense generally depends on the usage of the loan. Interest is deductible if the loan is used for revenue purposes. Interest incurred on a loan to finance the purchase of a capital asset is deductible if such asset is employed in acquiring income that is subject to Singapore income tax. Where the loan is used for income and non-income producing purposes, the Singapore Revenue may restrict the deduction of the interest expense.

Controlled foreign companies: Not applicable.

Hybrid mismatches: No special rules.

Disclosure requirements: Singapore-headquartered multinational enterprises that meet certain conditions are required to comply with Country-by-Country reporting.

Exit taxes: Not applicable.

General anti-avoidance rule: Singapore has anti-avoidance provisions. The Singapore Revenue is empowered to impose a 50% surcharge on the amount of income tax/ duty payable/ GST if the arrangement is found to be a tax avoidance arrangement.

Digital services tax and Other significant anti-avoidance legislation: Digital services are subject to GST in Singapore.

Value-added tax/Goods and services tax

Type of tax: Goods and Services Tax (GST) is a broad-based consumption tax levied on the supply of most goods and services in Singapore, including the importation of goods into Singapore. It was introduced into Singapore on 1 April 1994 with the purpose of enabling Singapore to place its reliance on indirect taxes. There are 4 categories of supplies – standard-rated supplies, zero-rated supplies, exempt supplies and out-of-scope supplies.

Standard rate: The current standard-rate in Singapore is 9%.

Reduced rates: International services and exportation of goods are zero-rated (GST to be charged at 0%). No GST needs to be charged on exempt supplies (i.e. provision of most financial services, supply of digital payment tokens, sale and lease of residential properties and local supply of investment precious metal) and out-of-scope supplies (transaction that does not fall within the GST Act).

Registration: It is mandatory for a business to register for GST if the taxable turnover is:

– more than S$ 1 million at the end of the calendar year (retrospective basis); or

– expected to be more than S$ 1 million in the next 12 months (prospective basis).

Business may apply for exemption from GST registration if it makes predominantly zero-rated supplies (> 90%).

Business that does not meet the threshold for compulsory registration can also apply to be GST-registered on a voluntary basis.

Overseas Vendor Registration

Effective since 1 January 2020, the Overseas Vendor Registration (“OVR”) regime requires overseas vendors or supplier to register for GST in Singapore, if they have a global turnover exceeding S$1 million and make Business-to-Consumer (“B2C”) supplies of remote services in Singapore exceeding S$100,000. Under OVR, GST will apply to supplies of digital services made by the overseas vendors to non-GST registered customers in Singapore. In-scope supplies include imported remote services such as supply of digital products, professional services, memberships.

GST incentive schemes

GST-registered businesses in Singapore could explore industry-specific schemes to mitigate the GST implications and liabilities arising from their business arrangements. For instance, the Major Exporter Scheme (“MES”) is designed to ease the cash flow of businesses that import and export goods substantially. Businesses under MES can import non-dutiable goods without paying import GST.

Filing and payment: Most GST-registered businesses in Singapore file quarterly GST returns. Both GST returns and payments are due 1 month after the end of the accounting period covered by the return.

Social security contributions

The Central Provident Fund (CPF) is a compulsory comprehensive saving and retirement plan for working Singapore citizens and Singapore Permanent Residents, primarily to fund their retirement, healthcare and housing needs. The plan requires both employers and employees to contribute at a progressive rate based on the employees’ ordinary wages (capped at S$7,400 per month. The cap will be increased to S$8,000 with effect from 1 January 2026) and additional wages, depending on the age of the employee at the time of employment.

Age	Employer	Employee
	Rate (%)	Rate (%)
55 and below	17	20
Above 55 to 60	15.5	17
Above 60 to 65	12	11.5
Above 65 to 70	9	7.5
Above 70	7.5	5

Self-employed

Self-employed persons are required to contribute to their CPF-Medisave Account to save for future medical expenses. They are also encouraged to top up their CPF Account, subject to an annual cap.

Other taxes

Capital duty: Not applicable.

Immovable property taxes: Property tax is levied on immovable properties, computed as a percentage applied to the annual value which is the gross amount for which a property is expected to be rented for the year. Non-residential properties such as commercial and industrial buildings are taxed at 10%. For residential properties, owner-occupier tax rates range from 0% to 32% while non-occupier tax rates range from 12% to 36%.

Transfer tax: Not applicable.

Stamp duty: Stamp duty is levied on specific dutiable documents relating to immovable property in Singapore and stocks/ shares of Singapore companies, as follows: – Transfer of shares at 0.2% of purchase consideration or net assets (whichever is higher) – Sale of immovable property at stepped rates of 1% to 6% for residential properties, and 1% to 5% for non-residential properties. Additional stamp duties may be applicable to the acquisition/ sale of residential and industrial properties and property holding entities.

Net wealth/worth tax: Not applicable.

Inheritance/gift taxes: Not applicable.

Other: Excise taxes are imposed on intoxicating liquors, motor vehicles, petroleum products and tobacco products. Duties are also imposed on gambling.

Tax treaties

Singapore has concluded full and limited double taxation agreements, and exchange of information arrangements with around 100 jurisdictions. Some of the double taxation agreements have been amended by the Multilateral Convention to implement tax treaty related measures to prevent base erosion and profit shifting (MLI).