The five taxes relevant to your business are corporate income tax, consumption tax, estimated chargeable income, withholding tax, and personal income tax.
1. Corporate Income Tax
Corporate income tax rate
Companies, whether local or foreign, must pay tax at a flat rate of 17% of its taxable income.
General rules for all companies
All Singapore companies are taxed on the income of the previous financial year. Income from the 2019 fiscal year will be taxed in 2020.
Basis Period and Year of Assessment
In terms of taxation, using the same example above, 2020 is the year of assessment (YA). In other words, YA is the year when the business’ income is assessed and taxed.
In order to assess the tax amount, the Inland Revenue Service of Singapore (IRAS) will check the income, expenditure, etc. of the company in the financial year. This financial year is called the "basis period"
The basis period is generally 12 months prior to the YA.
2. Consumption tax
Goods and Services Tax or GST is a broad-based consumption tax levied on imported goods (collected by Singapore Customs) and almost all goods and services supplied in Singapore. In other countries, goods and services tax is called value-added tax or VAT.
The exemption from GST applies to the provision of most financial services, the supply of digital payment tokens, the sale and leasing of residential properties, and the import and local supply of investment precious metals. The tax rate for export goods and international services is zero.
Enterprises that need to register consumption tax
As an enterprise, when the annual taxable turnover exceeds SGD 1 million, it must register for GST.
If the taxable turnover of the enterprise does not exceed SGD 1 million, it can still choose to register for consumption tax voluntarily after careful consideration.
Consumption tax rate
Singapore's current GST rate is 7%, and will gradually be raised to 9% over the next two years. In other words, the GST rate will be 8% in 2023, and 9% in 2024. Goods and Services sales enterprises registered in Singapore must levy GST at the rate of 7% currently unless they can sell at zero tax rate or are exempted according to the Goods and Services Tax Law.
3. Estimated Tax
Definition of Estimated Tax
Estimated Chargeable Income (ECI) is the estimate of the corresponding taxable profits of the Singapore company in the assessment year (YA).
In addition to stating the ECI, you must also report your company's income on the ECI form.
The declaration is mandatory from January 2017.
Income refers to the main source of revenue of the company, excluding items such as income from the sale of fixed assets. If your company is an investment holding company, your main source of income will be investment income (such as interest and dividend income).
If there are no audited financial statements, you can refer to the company's management accounts to report the amount of income.
If the amount of income reported according to the audited financial statements is different from the amount of income reported on the ECI form, and your ECI has not changed, you do not need to modify the income figures.
Who needs to submit estimated tax
Electronic submission of ECI documents is mandatory.
From 2020 onwards, all companies must submit corporate income tax electronically.
In line with the government’s goal to provide public services in a more cost-effective manner and the vision of a Smart Nation employing technology to improve productivity, the government mandates all companies to submit their corporate income tax returns (including corporate income tax and C-S/C forms) electronically. From 2018 to 2020, inclusive of both years, the following measures will be implemented in stages:
| Tax year | Companies mandated to report |
| From 2018 | Companies with a revenue of more than SGD 10 million in 2017 |
| From 2019 | Companies with a revenue of more than SGD 1 million in 2018 |
| From 2020 | All companies |
4. Withholding tax
Definition of withholding tax
According to the laws of Singapore, a person (the payer) who pays a certain amount (such as royalties, interest, technical service fees, etc.) to a non-resident company or individual (the payee) must withhold a certain proportion of the amount and pay the amount withheld (called the "withholding tax") to IRAS.
What payments to non-residents are subject to tax deduction?
- Service fees, interests, royalties, movable property rents, etc.
- Payments to non-resident directors, professionals, public entertainers and international market agents.
- Withdrawals from supplementary retirement scheme (SRS) accounts by foreigners/Permanent Residents
- Distribution of Real Estate Investment Trusts (REITs)
What situations do I need to pay withholding tax for?
In order to determine whether withholding tax is applicable, the payer must determine that the payer is paying to a company or individual that is not a resident of Singapore.
Non-resident company
The company is either a tax resident of Singapore or a non-resident. In Singapore, the tax resident status of a company is determined by the place of control and management of the company.
"Control and management" refers to making decisions on the company's policies, strategies and other strategic matters. The location in which the company is managed and controlled is a matter of fact. Usually, the location of the company's board meetings is the key factor in deciding where control and management are carried out, as the company's strategic decisions are made by the board of directors during the board meetings.
On the contrary, when the control and management power of the company is not exercised in Singapore, the company is a non-resident.
Kindly note that the place of incorporation does not necessarily represent the tax residence of the company.
For more details, you can refer to the company's tax residence status.
Non-resident individuals
a. Foreign professionals (non-resident professionals)
Foreign professionals refer to individuals who engage in any independent profession (i.e., personnel other than employees) under the service contract.
For more details, please refer to non-resident professionals.
b. Non-resident public entertainers
Public entertainers performing in Singapore are allowed to engage in professions, occupations or jobs.
For more details, you can refer to non-resident public entertainers.
c. Foreign directors of the board of directors (non-resident directors).
For tax purposes, directors on the board of directors refer to members of the board of directors of the company.
For more details, you can refer to non-resident directors.
Nature of payments subject to withholding tax
The following types of payments are subject to withholding tax when paid to non-resident companies:
- Interest, commissions, and fees in connection with any loan or debt.
- Royalties or other payments for the use of, or the right to use, any movable property.
- Payments made for the use of, or the right to use, scientific, technical, industrial or commercial knowledge or information, or for the provision of assistance or services related to the application or use of such knowledge or information.
- Payment of management fees.
- Rent or other payments for the use of any movable property.
- Payment for purchase of real estate from non-resident property traders.
- Structured products (except for payments eligible for tax exemption under Article 13 (1) of the Income Tax Act).
- Distribution of REITs
Most of these payments also fall within the scope of Article 12 (6) and 12 (7) of the Income Tax Act.
You can refer to this flow chart to understand the impact of withholding tax on such payments.
5. Personal income tax
Obligation to pay income tax
Unless specifically exempted under the Income Tax Act or the Administrative Concession, all individuals who earn, derive or obtain income in Singapore are subject to income tax annually.
Individuals are taxed according to their income in the previous calendar year. This means that the income earned in the 2019 calendar year will be taxed in the assessment year 2020.
1.Individuals working in Singapore
All individuals who receive payments (whether in cash or in-kind) for any services rendered in Singapore or employment in Singapore are subject to income tax unless specifically exempted under the Income Tax Act. Learn more about working and taxation in Singapore.
2. Individuals doing business in Singapore
All self-employed persons who earn income in Singapore, such as sole proprietors, partners, freelancers, taxi drivers, hawkers, commission agents, etc., are required to pay income tax.
3. Individuals investing in Singapore
All individuals who gain income from investing in real estate, stocks, unit trusts, fixed deposits, etc. in Singapore are required to pay income tax unless their investment is specifically exempted according to the Income Tax Law. Find out more about Singapore Investment Tax.
4. Individuals working outside Singapore
The following individuals are required to pay income tax:
- Individuals working outside Singapore whose overseas work is conditionally attached to their work in Singapore
- Individuals working outside Singapore on behalf of the Singapore government
- Individuals who earn income through partnerships in Singapore
5. Individuals without jobs but with income
Individuals who do not work but obtain the following income are required to pay income tax, unless they are specifically exempted according to the Income Tax Law:
- Investment income
- NSF income (including all awards and allowances, such as IPPT Incentive Awards).
- Part-time income
- Income from royalties
- Pension
- Withdrawals from supplementary retirement plans
Exempted individuals
Generally speaking, if you meet the following conditions, you do not need to pay income tax.
- Your total annual income is SGD 22000 or less
- You have not earned or received any income in Singapore
Individual income tax rate
The income tax rate depends on the tax resident status of the individual. You will be considered a tax resident for a year of assessment if you are:
- A Singapore citizen (SC) or Singapore Permanent Resident (SPR) living in Singapore but not in Singapore temporarily;
- Or a foreigner who has stayed/worked in Singapore for 183 days or more in the previous year (excluding company directors).
Otherwise, you will be treated as a non-resident of Singapore for tax purposes.
1.Individual income tax rate for Singapore residents
From year of assessment 2017
| Taxable income | Income tax rate% | Taxes |
| First $20,000 Next $10,000 | 0 2 | 0 200 |
| First $30,000 Next $10,000 | - 3.50 | 200 350 |
| First $40,000 Next $40,000 | - 7 | 550 2,800 |
| First $80,000 Next $40,000 | - 11.5 | 3,350 4,600 |
| First $120,000 Next $40,000 | - 15 | 7,950 6,000 |
| First $160,000 Next $40,000 | - 18 | 13,950 7,200 |
| First $200,000 Next $40,000 | - 19 | 21,150 7,600 |
| First $240,000 Next $40,000 | - 19.5 | 28,750 7,800 |
| First $280,000 Next $40,000 | - 20 | 36,550 8,000 |
| First $320,000 In excess of $320,000 | - 22 | 44,550 |
2. Individual income tax rate of non-residents
Employment income tax
The employment income of non-residents shall be levied at a uniform tax rate of 15% or a progressive tax rate of residents (see table below), whichever is higher.
Tax on directors' remuneration, advisory fees and all other income
Since 2017, the individual income tax rate of non-resident individuals (except for some reduced final withholding tax rate) has increased from 20% to 22%. This is to maintain the equality between the individual income tax rate of non-resident individuals and the highest marginal tax rate of resident individuals.
| Type of income | Withholding tax rate | ||
|---|---|---|---|
| From YA 2017 to YA 2023 | From YA 2024 onwards | ||
| (a) | Remuneration including director's fees received by non-resident directors | 22% See Tax Obligations for Non-Resident Directors | 24% |
| (b) | Income received by non-resident professionals (e.g. consultants, trainers and coaches) for services performed in Singapore | 15% of gross income or 22% of net incomeSee Taxable Income of Non-Resident Professionals | 15% of gross income or 24% of net income |
| (c) | Income received by non-resident public entertainers for services performed in Singapore | 10% concessionary rate up to 31 Mar 2022; 15% concessionary rate from 1 Apr 2022See Tax for Non-Resident Public Entertainers | 15% concessionary rate |
| (d) | SRS withdrawals received by non-Singapore SRS account holders | 22% See Withholding Tax on SRS | 24% |
| (e) | Interest, commission, fee or other payment in connection with any loan or indebtedness | 15% reduced final withholding tax rate (subject to conditions) or 22% if reduced withholding tax rate is not applicable | 15% reduced final withholding tax rate (subject to conditions) or 24% if reduced withholding tax rate is not applicable |
| (f) | Royalty or other lump sum payments for the use of movable properties | 10% reduced final withholding tax rate (subject to conditions) or 22% if reduced withholding tax rate is not applicable | 10% reduced final withholding tax rate (subject to conditions) or 24% if reduced withholding tax rate is not applicable |
(Source: Inland Revenue Authority of Singapore. Individual Income Tax Rates. iras.gov.sg)
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