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Singapore Business Services Overview About Singapore Setting up a business in Singapore Taxation

TAXATION

Corporate Income Tax

Singapore's tax structure favours enterprise and business, with one of the lowest corporate tax rates in the world. The aim is to attract foreign investment, encourage entrepreneurship and business development. A host of tax schemes and incentives are in place to help companies grow their businesses.

A quick look at the key tax elements

Corporate Tax

Key Features
Corporate Income Tax 18%
Capital gains tax None
Withholding tax (refer to 2)
Dividends None (refer to 3)
Interest 15%
Royalties 10%
Branch Remittance Tax None
Net operating losses (years)
Carry forward Unlimited
Carry back companies can carry back losses of up to $100000 from one year back (with effect from year of assessment 2006)
  • The tax rate of 18% is with effect from the year of assessment 2008. It applies to both Singapore-incorporated subsidiaries as well as branches of foreign companies. It applies equally to resident and non-resident companies.
  • Withholding taxes at the corporate income tax rate also apply to certain other payments to non-residents, such as technical assistance fees and management fees.
  • A one-tier corporate taxation system took effect on 1 Jan, 2003. It replaced the imputation system of taxing dividends, where taxes paid by a company can be imputed or passed on to shareholders.

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Personal or Individual Income Tax

The personal income tax rates in Singapore are among the lowest in the world. The amount of tax payable depends on tax resident or non-resident status and income earned. Singapore taxes on a territorial basis of taxation. Only income derived in Singapore, or income derived overseas but received in Singapore are subject to tax. However, foreign income received in Singapore by non- residents is not subject to tax.

A tax resident:

  • All income earned in Singapore and any overseas income that is brought into Singapore will be taxed.
  • After deducting personal relief, income will be taxed at graduated rates from 0% to 20%.
  • Types of relief entitled to, subject to conditions, include support of dependants, course fees paid for attending academic and professional courses, and premiums paid on life insurance policies.

A non-resident will be exempted from paying income tax if the employment period is 60 days or less in a calendar year However, this rule does not apply if to a director, public entertainer or exercising a profession in Singapore. Tax rate for employment income for non-resident individuals is 15% or resident rates, whichever gives rise to higher tax.

Tax Bands (Rates)
Tax Rates for Resident Individuals

For Year of Assessment 2007
Chargeable Income($) Rate(%) Gross Tax Payable($)
On the first
On the next
20 000
10 000
0
3.5
0.00
375.00
On the first
On the next
30 000
10 000

5.5
375.00
575.00
On the first
On the next
40 000
40 000

8.5
950.00
3500.00
On the first
On the next
80 000
80 000

14
4450.00
11600.00
On the first
On the next
160 000
160 000

17
16050.00
28800.00
On the first
Above
320 000
320 000

20
44850.00
Tax Rate For Non-Resident Individuals Receiving Director's Fees, Consultation Fees And All Other Income
Year of Assessment Tax Rate
1997 – 2000 26%
2001 25.5%
2002 24.5%
2003 22%
2004 22%
With Effect from 2005 20%

The various other taxes imposed in Singapore are:

Property Tax

Property tax is imposed on owners of properties based on the expected rental values of the properties.

Estate Duty

Estate duty is levied on the value of a deceased's net assets in excess of a threshold amount.

Motor Vehicle Taxes

These are taxes, other than import duties, that are imposed on motor vehicles. These taxes are imposed to curb car ownership and road congestion.

Customs & Excise Duties

Singapore is a free port and has relatively few excise and import duties. Excise duties are imposed principally on tobacco, petroleum products and liquors. Also, very few products are subjected to import duties. The duties are mainly on motor vehicles, tobacco, liquor and petroleum products.

Goods & Services Tax

GST is a tax on consumption. The tax is paid when money is spent on goods or services, including imports. A Goods and Service Tax (GST) of 7% is payable on the supply of goods and services, excluding financial services and the sale or lease of residential properties. The GST is also payable on goods imported into Singapore.

Betting Taxes

These are duties on private lottery, betting & sweepstake.

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