Here is a brief overview and understanding of Singapore’s corporate income tax (CIT):
- Singapore imposes a flat corporate income tax rate of 17% on the chargeable income (taxable profits) of companies. This rate applies to both local and foreign companies operating or deriving income in Singapore.
- Singapore operates a single-tier tax system, meaning corporate profits are taxed once at the corporate level, and dividends distributed to shareholders are exempt from further taxation.
- The tax is assessed on a preceding year basis, i.e., income earned in a financial year is taxed in the following Year of Assessment (YA). For example, income earned in 2024 is assessed in YA 2025.
- Companies must file their corporate tax returns annually by November 30th following the YA. They also file an estimated tax return within 3 months of their financial year-end.
- The chargeable income includes profits from trade or business, royalties, rental income, and income from investments like interest.
- There are tax exemptions and rebates for qualifying companies, such as a start-up tax exemption scheme and a 50% tax rebate for YA 2025 capped at SGD 40,000, including a SGD 2,000 cash grant for companies employing at least one local employee.
- From January 1, 2025, a 15% minimum effective tax rate applies to large multinational enterprises (MNEs) with substantial revenue, aligning with global Base Erosion and Profit Shifting (BEPS) 2.0 rules.
- Various tax incentives exist for specific sectors and activities, including concessional rates for financial services and incentives to encourage corporate listings and fund management in Singapore.
In summary, Singapore’s corporate income tax regime is characterized by a competitive flat rate of 17%, significant incentives and exemptions to promote business growth, and alignment with global tax standards for large multinational corporations (“MNCs). This framework supports Singapore’s attractiveness as a business and investment hub in Asia.
Please reach out to us via the Contact Us Form if you need to enquire about corporate tax services!