Tax Residency
A company is tax resident in Singapore if the control and management of its business is exercised in Singapore.
Corporate Taxation
A corporation is generally liable for Singapore income tax on all income accruing in, or derived from Singapore, as well as foreign sourced income remitted or deemed remitted into the country.
Foreign dividends, branch profits and service income (attributable to a foreign permanent establishment of the Singapore tax resident company) received by a Singapore tax resident company are exempt, provided these are derived from a jurisdiction operating corporate tax rates of at least 15% and have been subjected to tax in that jurisdiction.
Income is taxable in Singapore if the source of income comes from Singapore. Branches of foreign corporations are usually viewed to be carrying on business in Singapore and are as such, considered to have derived Singapore sourced income.
In addition, the Income Tax Act deems interest and other charges related to indebtedness, royalties, rents, technical fees and management fees to be derived from Singapore if these are either borne by a Singapore resident entity or permanent establishment or are deductible against Singapore-sourced income. Foreign companies receiving such payments from Singapore may be subject to withholding taxes.
Generally, resident and non-resident companies are treated in the same manner except that non-resident companies may not benefit from double taxation agreements that Singapore has entered into with other countries.
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Year of Assessment (YA)
Year of Assessment refers to the year in which income tax is calculated and charged as defined by the IRAS for individuals and companies.
Tax Rate
The corporate tax rate is 17%.
Tax Deductible Expenditure
Singapore income tax is imposed on the net income of a corporation after deducting expenditure and capital allowances.
Corporate Income Tax Rebate
Corporate Income Tax rebates were applicable for the Years of Assessment (YAs) 2013 to 2020. The rebates are no longer available for YA 2023, based on Budget 2023.
Losses
Tax losses may be carried forward to set off against income of future years subject to the shareholders’ continuity test.
Groups
A loss-making company may elect to transfer its current year unutilised losses and capital allowances to set off the taxable profiles in another Singapore company in the same group.
Tax Return and Compliance
The chargeable income of a company for each fiscal year is based on the result of its financial year ended in the preceding fiscal year.
Withholding Taxes
In the case of non-resident recipients, tax may be collected by deduction at source.
Dividend and Corporate Distributions
There is no dividend withholding tax.
Capital Gains Tax
There is no capital gains tax in Singapore.
Remittances
A Singapore tax resident company can enjoy tax exemption on its foreign-sourced dividend income, foreign branch profits and foreign-sourced service income remitted or deemed remitted into Singapore if the following conditions are met
Taxation of Foreign Corporations
The income of a branch of a foreign company is generally assessed in the same way and subject to the same tax rate as that of a locally incorporated subsidiary. The Comptroller requires transactions between the branch and head office to be conducted at arm’s length basis.
Anti-Avoidance Legislation
In line with developments in other countries, the Singapore Income Tax Act gives the tax authorities wide powers to counteract any scheme of arrangement to avoid tax.
Transfer pricing
Transfer pricing (TP) is the pricing of goods, services and intangibles between related parties. IRAS endorses the arm’s length principle as the standard to guide transfer pricing.
Our experts
Elaine Chow Partner, Tax
