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Company Taxes

Updated: Jun 3

Corporate Tax Rates


Tax Rates and Corporate Income Tax Rebates for both local and foreign companies.


Companies can enjoy the partial tax exemption.


Partial tax exemption for companies


Chargeable income | % exempted from Tax | Amount exempted from Tax

First $10,000 @75% =$7,500

Next $190,000 @50% =$95,000

Total $200,000 =$102,500


A company is taxed at a flat rate of 17% on its chargeable income regardless of whether it is a local or foreign company.


Corporate Income Tax (CIT) Rebate


Companies are granted a 25% Corporate Income Tax Rebate capped at $15,000.


Example: Company with income taxable at 17%


Chargeable income (after exempt amount)

$500,000

Tax payable at 17%

$85,000

Less: Corporate Income Tax Rebate ($85,000 x 25%, restricted to cap of $15,000)

$15,000

Net tax payable

$70,000


Dividends


Dividends are profits you receive from your share of ownership in a company, which may be paid out to you in cash or in kind. For example, a company may pay its shareholders dividends in the form of company's shares.


Tax Treatment of Dividends


Under the one-tier corporate tax system, shareholders will not be taxed on dividends paid by a Singapore resident company.


Non-Taxable Dividends


Generally, the following dividends are not taxable:

  1. Dividends paid by a Singapore resident company under the one-tier corporate tax system except co-operatives;

  2. Foreign dividends received in Singapore by resident individuals;

  3. Income distribution from Real Estate Investment Trusts (REITs), except distributions derived by individuals through a partnership in Singapore, or from the carrying on of a trade, business or profession in REITs.

Taxation of Foreign Interest Income


Foreign-sourced interest is taxable in Singapore when it is remitted or deemed to be remitted into Singapore.


Foreign income refers to income derived from outside Singapore. Generally, such income is taxable in Singapore when remitted to and received in Singapore.


Income Received from Abroad


Under Section 10(25) of the Income Tax Act, income from outside Singapore is considered received in Singapore when it is:


a. remitted to, transmitted or brought into Singapore;


b. used to satisfy any debt incurred in respect of a trade or business carried on in Singapore; or


c. used to purchase any moveable property (such as equipment, raw material etc.) brought into Singapore.


As an administrative concession, foreign income which is applied towards overseas investments without being repatriated to Singapore will not be treated as having been received in Singapore under section 10(25) at the point of reinvestment. This means that the taxing point of the foreign income is deferred till when the investment is realised and the proceeds are brought into Singapore.


If you are subject to tax on foreign-sourced income, you will continue to be entitled to claim tax reliefs or credits available under section 50, 50A or 50B of the Income Tax Act in respect of the foreign tax paid or payable on such income.


Gains from Sale of Property


Generally, the gains derived from the sale of a property in Singapore are not taxable as it is a capital gain. However, gains from "trading in properties" may be taxable.


Taxable Gains from Sale of Property


The gains may be taxable if the individual buys and sells property with a profit-seeking motive, or deemed to be trading in properties. Whether a person is deemed to be carrying on a trade will depend on individual circumstances. Some criteria used to assess if you are trading in properties are as follows:

  • Frequency of transactions (buying and selling of properties);

  • Reasons for acquiring and selling of property;

  • Financial means to hold the property for long term; and

  • Holding period


Reporting Taxable Gains


You must declare taxable gains from the sale of property under 'Other Income' in your tax form.


Gains from Sale of Shares and Financial Instruments


Generally, profits or losses derived from the buying and selling of shares or other financial instruments are viewed as personal investments. Payouts from insurance policies are also not taxable as they are capital receipts.

These profits are capital gains and are not taxable. You need not report such gains in your tax return.


If you would like to know more, please contact Bestar.





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