In some ways, companies are resigned to the same fate as most people – they die (typically within 20 years) and, of course, they have to pay taxes.
In 2023, Corporate Income Tax contributed $28.38 billion to the Inland Revenue Authority of Singapore (IRAS). This is more than a quarter of the Singapore government revenue collected in 2023, and also 23% higher than in 2022.
Companies are taxed based on the income they earned the previous year. What this means is that for the Year of Assessment (YA) 2024, companies will be paying taxes on the income they earned in the financial year 2023.
How Much Is The Corporate Tax In Singapore?
The corporate tax rate for both local and foreign companies in Singapore is a flat 17%. This is chargeable on a company’s income (or profits).
As Singapore operates on a one-tier corporate tax system, this is the only corporate tax levied on companies. Capital gains earned by companies and dividends paid by Singapore tax resident companies to both corporates and individuals are tax-exempt.
Singapore also has agreements to help local and foreign companies avoid double taxation on foreign-sourced income. With the Avoidance of Double Taxation Agreements (DTAs), Exchange of Information (EOI) and Limited Treaties, foreign income earned by Singapore companies may not attract any tax or may be taxed at a reduced rate in the foreign jurisdiction. This applies to close to 100 DTAs, EOIs and Limited Treaty partners.
In Budget 2024, DPM Lawrence Wong announced that Singapore will implement BEPS 2.0, which will take the Effective Tax Rate (ETR) for Multinationals to a minimum of 15%. Furthermore, a Domestic Top-Up Tax (DTT) rule ensures that if local or foreign sourced is not taxed at the 15% ETF, other jurisdictions will have the right to collect the difference as a top-up tax.
In line with this, Singapore will also roll out measures, including the Refundable Investment Credit (RIC), to attract foreign investments. 50% of qualifying investments can be used to offset Corporate Income Tax. Unutilised tax credits will be refunded to the company as cash within four years.
You can use IRAS’ Basic Corporate Tax Calculator as a guide to prepare your tax computations.
Read Also: What is BEPS 2.0 and How Does It Impact Singapore?
Corporate Income Tax (CIT) Rebate In YA2024
To help companies manage rising costs, a Corporate Income Tax (CIT) Rebate worth 50% of the corporate tax payable will be granted to all taxpaying companies in YA2024.
As not all companies are profitable and may not benefit from this grant, the government will provide minimum benefit of $2,000 in cash payouts, termed the CIT Rebate Cash Grant, for companies that employed at least one local employee in 2023. This will be determined by CPF contributions made to at least one Singapore Citizen or Permanent Resident employee, not including shareholders who are also directors of the company, in the calendar year 2023.
The maximum CIT Rebate and CIT Cash Rebate Grant that a company may receive is $40,000.
| If company meets local employee condition and receives CIT Rebate Cash Grant of $2,000 | If company does not meet local employee condition and does not receive CIT Rebate Cash Grant of $2,000 |
| If CIT Rebate ≤ $2,000, no CIT Rebate to be given.If CIT Rebate > $2,000, CIT Rebate (capped at $40,000) less $2,000 to be given. | If CIT Rebate > $0, CIT Rebate (capped at $40,000) to be given. |
Corporate Tax Relief – Partial Tax Exemption (PTE) – For All Companies In Singapore
All companies in Singapore enjoy a Partial Tax Exemption (PTE). From YA2020, all companies enjoy a 75% exemption on the first $10,000 of normal chargeable income; and a further 50% exemption on the next $190,000 of normal chargeable income. This means all companies can enjoy up to $102,500 exemption for each YA. Note that this has been reduced from previous years.
| From YA2020 onwards | ||
| Chargeable Income | % Exempted From Tax | Amount Exempted From Tax |
| First $10,000 | 75% | $7,500 |
| Next $190,000 | 50% | $95,000 |
| YA2019 and before | ||
| First $10,000 | 75% | $7,500 |
| Next $290,000 | 50% | $145,000 |
For example, if your company declares a chargeable income of $300,000 for YA2024, you will only have to pay a corporate tax on $197,500 of your chargeable income.
Finally, while only revenue expenses incurred after your business commences are tax-deductible, IRAS allows “revenue expenses incurred one year before the first day of the financial year in which you earn your first dollar of business receipt” to be tax-deductible.
Tax Exemption Scheme For New Start-Up Companies
To support entrepreneurship and aid new start-ups grow in their initial years, IRAS provides a tax-exemption scheme for such companies. This too was reduced in YA2020.
Read Also: How To Choose The Right Legal Entity To Start A Business In Singapore
From YA2020, new start-ups will be eligible for 75% tax exemption on the first $100,000 of normal chargeable income and 50% tax exemption for the next $100,000 of normal chargeable income, for the first 3 consecutive YAs, where the YA falls in or after YA2020. Thereafter, companies will be eligible for the Partial Tax Exemption available to all companies. Note that this has been reduced from previous years.
| From YA2020 onwards | ||
| Chargeable Income | % Exempted From Tax | Amount Exempted From Tax |
| First $100,000 | 75% | $75,000 |
| Next $100,000 | 50% | $50,000 |
| YA2019 and before | ||
| First $100,000 | 100% | $100,000 |
| Next $200,000 | 50% | $100,000 |
For example, if your company declares a chargeable income of $300,000 in YA2024, you only have to pay corporate tax on $175,000 of your chargeable income. This is lower than if your company was in its 4th YA as it would have to pay corporate tax on $197,500 of your chargeable income.
This scheme does not apply to companies 1) whose principal activity is that of investment holding; and 2) which undertake property development for sale, investment or both investment and sale. Start-ups must also be incorporated in Singapore, be a tax resident in Singapore for that YA and must be held by no more than 20 shareholders in the YA, where all shareholder are individuals or at least one shareholder is an individual who owns at least 10%.
How The CIT Rebate And Tax Exemption Schemes Are Applied
Companies should first determine that chargeable income, after taking into account the relevant tax exemptions they qualify for.
For example, an established business (that met the local employee condition and received the CIT Rebate Cash Grant of $2,000) has a chargeable of $200,000, and qualifies for Partial Tax Exemption.
| Corporate Income Tax you have to pay | $ |
| Chargeable Income: | $200,000 |
| Chargeable Income (After Partial Tax Exemption of $102,500) | $97,500 |
| Gross Tax Payable ($97,500 x 17%) | 16,575 |
| Less: CIT Rebate $16,575 x 50% = $8,287.50 (capped at $40,000) less $2,000 CIT Rebate Cash Grant | (6,287.50) |
| Net Tax Payable | 10,287.50 |
Note that if your Net Tax Payable is less than $2,000, you may qualify for the $2,000 CIT Cash Rebate Grant instead.
| Corporate Income Tax you have to pay | $ |
| Chargeable Income: | $25,000 |
| Chargeable Income (After Partial Tax Exemption of $15,000) | $10,000 |
| Gross Tax Payable ($10,000 x 17%) | 1,700 |
| Less: CIT Rebate $1,700 x 50% = $850 (but this is less than the CIT Rebate Cash Grant of $2,000, hence no CIT Rebate is provided) | NIL |
| Net Tax Payable | 1,700 |
Are You Allowed To Deduct Revenue Expenses Incurred Before The Commencement Of A Company?
Short answer – yes. Long answer – also yes, but this only applies to revenue expenses incurred “one year before the first day of the financial year in which you earn your first dollar of business receipt”.
Are You Allowed To Deduct Losses From Previous Years?
Singapore companies may carry forward losses to offset future income tax.
Under the Loss Carry-Back Relief, companies may carry-back unutilised capital allowances (CAs) and trade losses to reduce the amount of taxes payable in an immediately preceding YA. What this means is that it can offset losses in the current year to claim back taxes paid in the immediate preceding year.
What Is The Deadline To File Corporate Income Tax In Singapore?
Most companies are required to submit two Corporate Income Tax Returns to IRAS every year.
The first is the Estimated Chargeable Income (ECI) – to be filled within 3 months from the end of the financial year, if the company is required to submit ECI. Your company does not need to file the ECI if its annual revenue is not more than $5 million for the financial year AND the ECI is NIL for the YA.
The second is the YA2024 Corporate Income Tax Returns (From C-S/ C) – which is due on 30 Nov 2023 for YA2024. All companies, including those that did not carry on business or have incurred a loss, must e-File their YA2024 Form C-S/ C forms as paper submissions will not be accepted.
e-Filing Made Easier For Small Companies
For companies that qualify to fine Form C-S and have an annual revenue of $200,000 or below, you can opt to submit e-File Form C-S (Lite) – a simplified version of Form C-S – comprising only six essential fields to be completed for companies with straightforward tax matters.
If your small company has straightforward tax matters, you can also leverage on the new digital solution co-created by IRAS and Accounting and Corporate Regulatory Authority (ACRA), in partnership with accounting software providers. This digital solution allows companies to automate the preparation and filing of Form C-S and Annual Return to IRAS and ACRA respectively via the accounting software.
There are government grants for companies to purchase software solutions with the Start Digital Pack, as well as the Productivity Solutions Grants (PSG).
Paying Your Corporate Tax
For companies with straightforward tax affairs, IRAS will typically send a Notice of Assessment (NOA) by 31 May the following year.
For companies with more complex tax affairs, more in-depth reviews of your corporate tax returns will be undertaken. The Notice of Estimated Assessment, pending review, will be sent by 28 February the following year. After review, the NOA will be sent by 30 Nov of the second year.
Companies have one month from the date of the Notice of Assessment (NOA) to pay the corporate tax. Even if your company has filed an objection and is awaiting the outcome, you must pay the tax assessed as shown on your NOA within one month from the date of the NOA.
If payment is not received by the due date, a 5% late payment penalty will be imposed. Additional penalties of 1% per month, up to 12 months, may be imposed if the tax remains unpaid 60 days after the imposition of the 5% penalty.
IRAS may appoint agents such as the company’s bank, tenant or lawyer to pay the moneys to IRAS; and/or take legal action against the company.
This article was originally published on 26 October 2020 and has been updated with new information.
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