Singapore Corporate Income Tax

·       The Income tax rate for is 17% of its chargeable Income.

 

·       Following tax exemptions is allowed to new start up companies (SUTE) incorporated at Singapore. The company must have 20 individual shareholders & does not engage in the business of investment & real estate.  The tax exemptions for qualifying companies for their first 3 consecutive YAs are as follows.

 

(i)                  75% exemption on the first $100,000 of normal chargeable income; and

(ii)                 A further 50% exemption on the next $100,000 of normal chargeable income.

 

·        Companies that do not qualify for the SUTE either in the first 3 YAs or companies that are in the fourth YA onwards will qualify for the Partial Tax Exemption (“PTE”) Scheme, as follows.

 

(i)                  75% exemption on the first $10,000 of normal chargeable income; and

(ii)                 A further 50% exemption on the next $190,000 of normal chargeable income.

 

·         The below table explain the method of calculating depreciation under Singapore Income Tax. 

 

Nature of assets	% of Depreciation
Computers & automation equipment’s	100% in first year
Other assets where no deferment of depreciation allowed	75% in first year & 25% in 2nd year
Other assets with deferment of depreciation	In 3 years

 

·       A foreign company or its Singapore branch cannot claim the tax exemption for new start-up companies as they are not incorporated in Singapore. However, a foreign company or its Singapore branch is eligible for the partial tax exemption on its normal chargeable income.

 

·       The Singapore government further encourage various industries and based on their nature of work, contribution to the country etc, the government tax them at concessional rate which range between 5% to 10%. For getting tax incentive, the company have to present their case before the designated government department and get sanction from them.   The below link provides which type of industry can get tax incentives and also provide the process of getting them.

IRAS | Applying For Tax Incentives

 

·       The below table provides the enhanced tax deductions who are engage into R&D.

 

Qualifying Activities	Amount of Tax Deductions and/ or Allowances Granted From YA 2024 to YA 2028
Qualifying R&D undertaken in Singapore	100% tax deduction on R&D expenditure plus Additional 300% tax deduction on first $400,000 of qualifying R&D expenditure plus Additional 150% tax deduction on balance of qualifying R&D expenditure in excess of $400,000
Registration of Ips	400% tax deduction on first $400,000 of qualifying IP registration costs plus 100% tax deduction on balance of qualifying IP registration costs in excess of $400,000
Acquisition and licensing of IPRs	400% writing-down allowance (“WDA”) and/ or tax deduction on first $400,000 (combined cap) of qualifying IPR acquisition costs and/ or qualifying IPR licensing expenditure plus 100% WDA on balance of qualifying IPR acquisition costs in excess of claim for enhanced allowances plus 100% tax deduction on qualifying IPR licensing expenditure in excess of claim for enhanced tax deduction
Training	400% tax deduction on first $400,000 of qualifying training expenditure plus 100% tax deduction on balance of qualifying training expenditure in excess of $400,000 and all other training expenditure
Innovation projects carried out with polytechnics, the ITE or other qualified partners	400% tax deduction on first $50,000 of qualifying innovation expenditure

 

 

·         Tax exemption for foreign sourced income

Various types of foreign-sourced income are tax exempt:

1. Foreign sourced dividends
2. Foreign branch profits
3. Foreign sourced service income

To be eligible for this exemption, foreign-sourced income has to be remitted to Singapore and it should meet these requirements:

• The headline tax rate of the foreign jurisdiction is at least 15% at the time the foreign income is received in Singapore.
• The foreign sourced income was taxed in the foreign jurisdiction (note, the rate at which the foreign income was taxed can be different from the headline tax rate).
• The Singapore government is satisfied that the tax exemption would be beneficial to the Singapore tax resident.