We provide timely and pro-active value added tax advice on all aspects of taxation including, but not limited to, the following areas:
- Establishing appropriate corporate structure to maximise tax planning opportunities and improve cash efficiency
- Outbound investments from Singapore
- Identifying and assisting in application and negotiation of appropriate tax incentives with the relevant authorities
- Inbound investments for foreign investors to explore and optimise opportunities in doing business within Singapore and around the region, including advice on why Singapore is an optimal regional holding company for your operations
- Transfer pricing
- Interpreting tax treaties
- Making representations and submissions to the IRAS for income tax assessments, objections, audits and investigations
- Planning for repatriation of income
- Obtaining tax rulings from the IRAS to provide certainty to your planned operations
- Updating changes in tax legislation and practices that impact businesses
- Special in-house (at your premises) workshops on any tax topics or issues that are directly relevant to you
- Merger and acquisition, corporate restructuring, joint venture and disposal of business
- Cross border transactions and dealing with withholding tax issues
- International tax planning (Where international and cross-border taxation issues are involved, the Practice is able to provide seamless advice to clients by coordinating and obtaining the necessary tax advice from firms in other jurisdictions) to help maximise your return on equity and minimise the overall tax impact for your group
- Corporate tax return preparation and / or review which encompasses the following:
- Filing of estimated chargeable income within 3 months of company's financial year end and arranging instalment payment for tax liability
- Preparing and submitting corporate income tax return with supporting tax schedule
- Attending to correspondence and queries raised by the IRAS in respect to company's tax matters
- Verifying and objecting, if necessary, the Notices of Assessment within the stipulated time frame
- Compliance of any other statutory tax compliance relating to company's income tax affairs
A Singapore tax resident company is taxed on its income on a derived and remittance basis. Singapore does not have capital gains tax. However, whether the income would be taxable is based on facts and assessed on its own merits. Points to consider are:
- Subject matter
- Length of period of ownership
- Frequency of sale
- Supplementary work on item/property before sale
- Circumstances for the sale
- Motive
Generally an income derived in Singapore is taxable in Singapore as long as it is regarded as not capital in nature. This will include:
- gains or profits from any trade or business
- income from investment such as dividends, interest and rental
- royalties, premiums and any other profits from property
- other gains of an income nature
Tax residency means the location where the direction and policies of the company is set (control and management test). A Singapore tax resident company will be able to:
- avail itself to the extensive Double Taxation Agreements which Singapore has signed with its more than 60 treaty partners
- claim tax credits for income which has been remitted into and taxed in Singapore
- qualify for full tax exemption if other conditions are met
- qualify for exemption of specified foreign income if conditions are met
- qualify for group relief system if conditions are met
For the purposes of computation, a branch is taxed in like manner as a company. However, the difference lies in the tax residency and it will not qualify for claims and exemptions stated as per above. A branch's tax residency will be that of the Head Office unless it can be proven that control and management is held in Singapore.
Prima facie, payments made to a branch would attract withholding tax.
Specified foreign income of a tax resident company such as foreign-sourced dividends, foreign branch profits, and foreign-sourced service income may be exempted from income tax so long as the following conditions are satisfied:
- The highest corporate tax rate (headline tax rate) of the foreign country from which the income was received is at least 15%; and
- The foreign income had been subjected to tax in the foreign country from which they were received. The rate at which the foreign income
was taxed can be different from the headline tax rate.
In the 2009 Budget announcements, there has been a temporary lifting of the critierias on ALL FOREIGN INCOME if:
- the foreign sourced income was earned or accrued outside Singapore on or before 21 Jan 2009; and
- the company remits the foreign-sourced income to Singapore during 22 Jan 2009 to 21 Jan 2010 (both dates inclusive).
With effect from the Year of Assessment 2010, the prevailing corporate tax rate has been reduced from 18% to 17%, and there are tax exemptions for up to the first S$300,000 chargeable income for all companies.
Full tax exemption vs. partial tax exemption
With effect from YA 2009, in order to qualify for the tax exemption for new start-up companies, a company must:
a) be incorporated in Singapore (other than a company limited by guarantee**);
b) be a tax resident* in Singapore for that YA;
c) have no more than 20 shareholders throughout the basis period for that YA where:
i) all of the shareholders are individuals beneficially holding the shares in their own names; OR
ii) at least one shareholder is an individual beneficially holding at least 10% of the issued ordinary shares of the company.
** With effect from YA 2010, the scheme will be extended to companies limited by guarantee, subject to the same conditions imposed on companies limited by shares.
| Exempt amount |
| First | $10,000 | @75% | $7,500 |
| Next | $290,000 | @50% | $145,000 |
| Total | $300,000 | | $152,500 |
| Exempt amount |
| First | $100,000 | @100% | $100,000 |
| Next | $200,000 | @50% | $100,000 |
| Total | $300,000 | | $200,500 |
Taking the example of a situation in YA 2010, a company on partial tax exemption with a Chargeable Income of $300,000 will have to pay more taxes by $8,075.00 ($200,000 - $152,500, @ 17%) as compared to one which qualifies for full tax exemption.
In order to take advantage of the full tax exemption, new start-ups must choose a financial year end that can maximise the benefit of being a new start-up.
For example, if a company is incorporated on 12 February 2006 and its year end is 31 October, the first three years of assessment will be as follows:
12.02.06 - 31.10.06 -> YA 2007
01.11.06 - 31.10.07 -> YA 2008
01.11.07 - 31.10.08 -> YA 2009
Therefore a company with a shorter period in the first Year of Assessment would not be able to maximize the advantages of being a new qualifying new start-up.
Tax losses such as unabsorbed capital allowances and unabsorbed losses are allowed to be carried forward indefinitely as long as there is no substantial change to the shareholders and their shareholdings (ie more than 50%). Unabsorbed capital allowances has the additional condition that it must remain in the same trade for which it was incurred. Unabsorbed donations, on the other hand, can be carried forward for up to 5 YAs.
Resident companies which qualify for group relief can also utilise the losses carried forward from other companies which are held within the group (at least direct and indirect 75% shareholding)
Current year tax losses of up to $100,000 are also allowed to be carried back to the previous year of assessment, while YA 2009 and YA 2010 enjoys a temporary enhancement to the scheme whereby :
- Current year qualifying deductions will be carried back up to three YAs immediately preceding that YA in which the capital allowances were granted or the trade losses were incurred;
- The order of setoff of qualifying deductions to the three immediate preceding YAs will be first to the third YA, followed by the second YA, and then the YA immediately preceding the YA in which the capital allowance were granted or the trade losses were incurred.
- The limit on the aggregate amount of current year qualifying deductions that can be carried back will be increased from $100,000 to $200,000.
Singapore is on a tax exempt "one-tier" dividend system. This means that distributable income from a Singapore company which is paid in the form of dividends are exempt from tax in the hands of the shareholders (both tax-resident and non tax-resident). There is also no withholding tax on such dividends payouts even when made to a non tax-resident and the rates are provided for in the tax treaties.
The tax incentives provided under the Singapore Income Tax and the Economic Expansion Incentives Act enables a qualifying company to be taxed at either a concessionary rate of tax or either exemption from tax or a tax holiday.
The numerous incentives available are governed by the Monetary Authority of Singapore, the Economic Development Board, the Maritime Port Authority and the International Enterprise Singapore.
Here is a list of commonly paid expenses which attract withholding tax:
| Nature of income | Tax rate |
| Interest, commission, fee in connection with any loan or indebtedness; | 15% |
| Royalty or other payments for the use of or the right to use any movable property; | 10% |
| Payment for the use of or the right to use scientific, technical, industrial or commercial knowledge or information or for the rendering of assistance or service in connection with the application or use of such knowledge or information; | 10% |
| Management fee * ; | Prevailing corporate tax rate | | Rent or other payments for the use of any movable property; | 15% |
| Technical assistance and service fees | Prevailing corporate tax rate |
| Payment for the purchase of real property from a non-resident property trader | 15% |
* reimbursement/allocation of management fees (without profit element) between head office and branches do not generally attract withholding tax
In cases where the recipient (non tax-resident) has a permanent establishment in Singapore and a tax treaty has been concluded with its country of residence, the provisions of the treaty will apply. Otherwise, the payer will have to withhold tax on the gross amount.
Generally IRAS follows the approach to transfer pricing adopted by the OECD. However, although the "arms-length" guiding principle is not yet imposed by legislation, IRAS will apply the approach to transactions involving local and foreign related parties.
At the moment, the arms-length principle is still on self-review and is subject to further scrutiny by IRAS on a case-to-case basis where there is high risk involved.
| | YA 2009 | YA 2010 |
| Tax rate | 18% | 19% |
| Enhanced partial tax exemption | First $ 10,000 @ 75%
Next $290,000 @ 50% | First $ 10,000 @ 75%
Next $290,000 @ 50% |
| Full tax exemption for new start-up (company only) * | First $100,000 @ 100%
Next $200,000 @ 50% | First $ 10,000 @ 75%
Next $290,000 @ 50% |
| Full tax exemption for new start-up (companies and businesses) * | First $100,000 @ 100%
Next $200,000 @ 50% | First $ 10,000 @ 75%
Next $290,000 @ 50% |
| Section 14Q deduction for renovation or refurbishment works | Incurred from 16.02.08 to 15.12.13 | Incurred from 16.02.08 to 15.12.13 |
| Capital allowances on plant & machinery - S19 | Yes | Yes |
| Industrial Building Allowances - S18 | Yes | Yes |
Writing down allowances:
Know how, research & development | | |
| Accelerated allowances - S19A | | |
| Carry forward of unutilized losses (same shareholders test) and capital allowances (same business test) | Indefinite | Indefinite |
| Group relief system (75% common ownership) | Yes | Yes |
| Double Taxation reliefs | Indefinite | Indefinite |
| |
| Deductions |
| Deductible expenses - S14 | Yes | Yes |
| Prohibited expenses - S15 | Yes | Yes |
| Exemption on ALL Foreign-sourced income | No | Yes |
| Loss carry-back relief (up to 3 YAs capped @ $200,000) | Yes | Yes |
| Accelerated capital allowance on plant and machinery within 2 years (75%+25%) | No | Yes |
| Capital allowance on renovation and refurbishment works | Claimed over 3 years
(capped at $150,000 for every 3 years) | Claimed over 1 year
(capped at $150,000 for every 3 years) |
| WDA for IP rights | Claimed over 5 years | Claimed over 2 years |
| Checklist of Incentives ** | Effective from |
| R&D tax allowance (S14D) | YA 2009-2013 |
| RISE | First 3 YA (YA 2009-2013) |
* Qualifying conditions for companies limited by shares: provided there is at least one individual shareholder with a minimum 10% shareholding. With effect from YA 2010, qualifying companies to include those limited by guarantee
** For more details, please refer to www.iras.gov.sg
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