Corporate Income Tax Rate                             (%)17(a)

Capital Gains Tax Rate                                       (%)Not applicable 

Branch Tax Rate                                                 (%)17(a)

Withholding Tax                                                 (%) (b)  

Dividends0                                                          (b)(c)

Interest                                                                 15(b)

Royalties from Patents, Know-how, etc.        10(b)

Branch Remittance Tax                                    Not applicable 

Net Operating Losses                                      (Years)  

Carryback                                                           1(d)

Carryforward                                                      Unlimited(d)

​

​

(a)Various tax exemptions and reductions are available (see Section B).

(b)See Section F.

(c)See Section B.

(d)See Section C.

​

TAXES ON CORPORATE INCOME AND GAINS

​

Corporate income tax. Income tax is imposed on all income derived from sources in Singapore, and on income from sources outside Singapore if received in Singapore. However, a nonresident company that is not operating in or from Singapore is generally not taxed on foreign-source income received in Singapore. A company is resident in Singapore if the control and management of its business is exercised in Singapore; the place of incorporation is not relevant.

​

Remittances of foreign income in the form of dividends, branch profits and services income (specified foreign income) into Singapore by companies resident in Singapore are exempt from tax if prescribed conditions are met. For remittances of specified foreign income that does not meet the prescribed conditions, companies may be granted tax exemption under specific scenarios or circumstances on an approval basis.

​

Rates of corporate income tax. The standard corporate income tax rate is 17%. Seventy-five percent of the first SGD10,000 of normal chargeable income is exempt from tax, and 50% of the next SGD290,000 is exempt from tax. The balance of chargeable income is fully taxable at the standard rate of 17%. As proposed in the 2018 budget, for the 2018 year of assessment, a 40% corporate income tax rebate is granted, capped at SGD15,000.

​

Tax incentives, exemptions and reductions. The following tax incentives, exemptions and tax reductions are available in Singapore.

Pioneer companies and pioneer service companies. The incentive for pioneer companies and pioneer service companies is aimed at encouraging companies to undertake activities that have the effect of promoting economic or technological development in Singapore. A pioneer enterprise is exempt from income tax on its qualifying profits for a period of up to 15 years. A sunset clause has been introduced under which no approval will be given for the incentive on or after 1 January 2024.

​

Development and Expansion Incentive. The Development and Expansion Incentive (DEI) is available to companies that engage in high value-added operations in Singapore but do not qualify for pioneer incentive status and to companies whose pioneer incentive status has expired. DEI companies enjoy a concessionary tax rate of 5% or 10% on their incremental income derived from the performance of qualifying activities. Typically, the initial relief period is 5 years, and the company may subsequently apply for 5-year extensions, up to a maximum relief period of 40 years. A sunset clause has been introduced under which no approval will be given for the incentive on or after 1 January 2024.

Approved royalties, technical assistance fees, and contributions to research and development costs. Approved royalties, technical assistance fees, and contributions to research and development (R&D) costs paid to nonresidents may be awarded an exemption from withholding tax or a reduced withholding tax rate. A sunset clause has been introduced under which no approval will be given for the incentive on or after 1 January 2024.

Investment allowances. On approval, investment allowances are available to companies that engage in qualifying projects. Such allowances are granted in addition to the normal tax depreciation allowances, and are based on a specified percentage (up to 100%) of expenditure incurred on productive equipment. Different sunset clauses (up to 31 December 2023, depending on the type of project) have been introduced under which no approval will be given for the incentive on or after the specified date.

​

Tax exemption scheme for new companies. Subject to certain conditions, a newly incorporated and tax-resident Singapore company or a Singapore company limited by guarantee may qualify for a full tax exemption on the first SGD100,000 of chargeable income and a 50% tax exemption on the next SGD200,000 of chargeable income. The exemption applies only to the qualifying company’s first three consecutive years of assessment. However, the scheme does not apply to new start-ups undertaking property development or investment holding.

Productivity and Innovation Credit. Businesses that incur qualifying expenditure on the following six activities qualify for an enhanced deduction or allowance, known as a Productivity and Innovation Credit (PIC), from the 2011 year of assessment to the 2018 year of assessment:

​

• R&D 

• Eligible design activities

• Acquisition and in-licensing of intellectual property rights

• Registration of patents, trademarks, designs and plant varieties

• Acquisition or leasing of PIC information technology (IT) and automation equipment

• External training and qualifying in-house training

​

All businesses can claim a deduction or allowance of 400% of the first SGD400,000 of their expenditures per year of assessment on each of the above activities from their taxable income, subject to a combined cap of SGD1,200,000 of eligible expenditure for each activity for the 2016 year of assessment to the 2018 year of assessment.

​

A PIC+ scheme is also available to support small and medium enterprises that are making more substantial investments to transform their businesses. Under the scheme, which is effective for expenditure incurred from the 2015 year of assessment to the 2018 year of assessment, the expenditure cap is increased from SGD400,000 to SGD600,000 per qualifying activity per year of assessment, and the expenditure caps may also be combined. To qualify, the entity’s annual turnover must not exceed SGD100 million or it must not employ more than 200 workers; the criterion is applied at the group level if the entity is part of a group.

​

Qualifying persons with at least three local employees have the option to convert up to SGD100,000 of eligible expenditure for each year of assessment into a non-taxable cash grant. The conversion rate is 40% (60% for qualifying expenditure incurred before 1 August 2016) until the 2018 year of assessment.

​

R&D incentives. Liberalized R&D deductions are available from the 2009 year of assessment through the 2025 year of assessment. 

A tax deduction can be claimed for undertaking R&D in any area (that is, the R&D is no longer required to be related to the trade or business carried on by the company), and an additional 50% tax deduction is allowed for certain qualifying R&D expenditure. If the companies outsource their R&D activities to an R&D organization in Singapore, the tax deduction available is at least 130% of the amount of R&D expenses incurred. Businesses that incur qualifying R&D expenditure may qualify under the PIC scheme (see Productivity and Innovation Credit above).

​

IP Development Incentive. A new intellectual property (IP) regime named the IP Development Incentive (IDI) was proposed in the 2017 budget. This incentive incorporates the Base Erosion and Profit Shifting (BEPS)-compliant modified nexus approach. The date of introduction of the IDI has been delayed; it was originally intended to be effective from 1 July 2017, but it is now expected to be effective from 1 July 2018.

Tax certainty on gains on disposal of equity investments. To provide upfront tax certainty, and with certain exceptions, gains derived from the disposal of ordinary shares by companies during the period of 1 June 2012 through 31 May 2022 are not taxed if the qualifying divesting company had legally and beneficially owned at least 20% of the ordinary shares in the investee company for a continuous period of at least 24 months before the disposal of the shares.

​

International Headquarters Programme. The International Headquarters Programme applies to entities incorporated or registered in Singapore that provide substantive headquarters activities in Singapore for their network companies on a regional or global basis. Under the Programme, the pioneer incentive or DEI may be awarded to companies that commit to anchor substantive headquarters activities in Singapore for the management, coordination and control of regional business operations. Companies may enjoy tax exemption or concessionary tax rates of 5% or 10% for a specified period on qualifying income, depending on the level of commitment to Singapore. This commitment is demonstrated by various factors, including level of headcount, total business expenditure and quality of personnel hired.

Finance and treasury center incentive. The finance and treasury center (FTC) incentive is aimed at encouraging companies to use Singapore as a base for conducting treasury management activities for related companies in the region. Income derived from the provision of qualifying services to approved network companies and from the carrying on of qualifying activities on own account (for its own purposes or benefit) is subject to tax at a rate of 8%. Approved network companies are offices and associated companies of the company granted the FTC incentive that have been approved by the relevant authority for purposes of the incentive.

​

A sunset clause of 31 March 2021 applies to the FTC scheme.

​

Financial sector incentive. The financial sector incentive (FSI) is designed to encourage the development of high-growth and high value-added financial activities in Singapore. A 5%, 10%, 12% or 13.5% concessionary tax rate applies to income derived from carrying on qualifying activities by approved FSI companies in Singapore. The FSI will expire on 31 December 2018, unless it is extended.

Maritime sector incentives. Ship operators, maritime lessors and providers of certain supporting shipping services may enjoy tax incentives under the Maritime Sector Incentive (MSI), which consists of the following three broad categories:

​

• International shipping enterprise

• Maritime (ship or container) leasing

• Supporting shipping services

​

The tax benefits include tax exemptions or concessionary tax rates of 5% and 10%.

​

Shipping companies that either own or operate a fleet of foreign vessels can apply for the MSI-Approved International Shipping Enterprise (MSI-AIS) award. Successful applicants are granted either MSI-AIS status or the MSI-AIS (Entry Player) [MSI-AIS (Entry)] status, depending on the company’s scale of operations. Under this scheme, income derived from the operation of non-Singapore flagged vessels plying in international waters and other qualifying income are exempt from tax. An MSI-AIS award may be granted for a renewable period of 10 years (extendible up to 40 years), while MSI-AIS (Entry) status may be granted for a non-renewable period of 5 years, with the option of graduating to the MSI-AIS status if qualifying conditions are met. Applications for MSI-AIS (Entry) can be made from 1 June 2011 to 31 May 2021.

​

Under the MSI-Maritime Leasing (Ship) award, approved shipping investment enterprises (Singapore-incorporated ship leasing companies, shipping funds, business trusts or partnerships) may enjoy tax exemption on their qualifying income, which includes income from the chartering or finance leasing of seagoing ships to qualifying persons for use outside the port limits of Singapore. Approved shipping investment managers may also enjoy a 10% concessionary tax rate on income derived from the management of an approved shipping investment enterprise, and prescribed services and activities. Applications can be made from 1 March 2011 to 31 May 2021, and successful applicants are granted the status for a period of five years.

​

Under the MSI-Maritime Leasing (Container) award, approved container investment enterprises (Singapore-incorporated companies, business trusts or partnerships) may enjoy a concessionary tax rate of 5% or 10% on their qualifying income, which includes income from the operating or finance leasing of sea containers that are used for the international transportation of goods. Approved container investment managers may also enjoy a 10% concessionary tax rate on income derived from the management of an approved container investment enterprise and prescribed services and activities. Applications can be made from 1 March 2011 to 31 May 2021, and successful applicants are granted the status for a period of five years.

​

The MSI-Supporting Shipping Services (MSI-SSS) award aims to promote the growth of ancillary shipping service providers and encourage shipping conglomerates to set up their corporate services functions in Singapore. An approved MSI-SSS company enjoys a 10% concessionary tax rate on incremental income derived from the provision of approved supporting shipping services, such as ship broking, forward freight agreement trading, ship management, ship agency, freight forwarding and logistics services. Applications can be made from 1 June 2011 to 31 May 2021, and successful applicants are granted the MSI-SSS award for a period of five years.

​

Global Trader Programme. The Global Trader Programme (GTP) is aimed at encouraging international companies to establish and manage regional or global trading activities with Singapore as their base. Under the GTP, approved companies enjoy a concessionary tax rate of 5% or 10% on qualifying transactions conducted in prescribed commodities and products (including energy, agricultural, building, industrial, electrical and consumer products, and carbon credits), qualifying transactions in derivative instruments and qualifying structured commodity financing activities. In addition, the 5% concessionary tax rate applies to income derived from qualifying transactions in liquefied natural gas, as specified by the relevant authority. A sunset clause of 31 March 2021 applies to the GTP scheme.

​

Venture capital funds incentive. The venture capital funds incentive aims to encourage a thriving venture capital industry in Singapore. Gains derived from the disposal of approved investments, interest from approved convertible loan stocks and dividends derived from approved investments are exempt from tax for a period of up to 10 years. Extension periods of up to five years each may be available, but the maximum total incentive period is 15 years. A sunset clause of 31 March 2020 applies to the incentive.

​

Capital gains. Capital gains are not taxed in Singapore. However, in certain circumstances, the Singapore Revenue considers transactions involving the acquisition and disposal of assets, such as real estate, stocks or shares to be the carrying on of a trade, and, as a result, gains arising from such transactions are taxable. The determination of whether such gains are taxable is based on a consideration of the facts and circumstances of each case.

​

Administration. The tax year, known as a year of assessment, runs from 1 January to 31 December. The period for which profits are identified for assessment is called the basis year. Therefore, income earned during the 2017 basis year is assessed to tax in the 2018 year of assessment. For companies engaged in business in Singapore that adopt an accounting period other than the calendar year, the assessable profits are those for the 12-month accounting period ending in the year preceding the year of assessment.

​

An estimate of the chargeable income (ECI) of a company must be filed within three months after the end of its accounting year. However, companies are not required to file an ECI if their annual revenue is not more than SGD5 million for the financial year and if their ECI is nil.

​

The statutory deadline for filing the income tax return is 30 November for paper filing and 15 December for e-filing. No extension of time to file the return is allowed. Mandatory e-filing will be implemented in stages beginning from the 2018 year of assessment for companies with turnover of more than SGD10 million in the 2017 year of assessment, with e-filing becoming mandatory for all companies from the 2020 year of assessment.

Income tax is due within one month after the date of issuance of the notice of assessment. In certain circumstances, companies may pay tax in monthly installments on the ECI, up to a maximum of 10, with the first installment payable one month after the end of the accounting period. No installments are allowed if the ECI is submitted more than three months after the end of the relevant accounting period.

​

A late payment penalty of 5% of the tax due is imposed if the tax is not paid by the due date. If the tax is not paid within 60 days of the imposition of the 5% penalty, an additional penalty of 1% of the tax is levied for each complete month that the tax remains outstanding, up to a maximum of 12%.

 

The tax law provides that it is an offense for a person chargeable to tax in Singapore not to file an income tax return with the tax authority. On conviction of such offense, a penalty of up to SGD1,000 is imposed for late filing of tax returns. In default of payment, the person may be liable to imprisonment for a term not exceeding six months. On conviction, a further penalty of SGD50 per day is imposed for each day that the tax return remains unfiled. If a person fails or neglects without reasonable excuse to file a tax return for a year of assessment for two years or more, a higher penalty of double the amount of tax assessed for the relevant year of assessment and a fine of not exceeding SGD1,000 is imposed on conviction. In default of payment, the person may be liable to imprisonment for a term not exceeding six months. The Singapore Revenue may compound any of these offenses.

​

Dividends. Dividends paid by a Singapore tax-resident company are exempt from income tax in the hands of shareholders, regardless of whether the dividends are paid out of taxed income or tax-free gains.

​

Foreign tax relief. Singapore has entered into double tax agreements with more than 80 countries, but notably not with the United States. Under Singapore rules, a foreign tax credit is limited to the lower of the foreign tax paid and the Singapore tax payable on that income. The foreign tax credit (FTC) is granted on a country-by-country, source-by-source basis unless the resident taxpayer elects to claim FTC under the pooling method, subject to meeting certain conditions.

​

A unilateral tax credit system, similar to FTC relief, is also available for income derived from countries that have not entered into double tax agreements with Singapore.

​

To continue reading, and to obtain the full publication, please visit: https://www.ey.com

​

The content is based on information current as of 1 January 2018, unless otherwise indicated in the text of the chapter. Changes to the tax laws and other applicable rules in various countries covered by this publication may be proposed. Therefore, readers should seek independent tax advice from their local and international firms to obtain further information.

​

This publication contains information in summary form and is sourced from the Ernst & Young Worldwide Corporate Tax Guide, and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither Aston & Willson LLP  or EYGM Limited nor any other member of an organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.