Personal, Corporate Tax & Secretarial Practice

Hope the following pointers help. If in doubt please seek professional advice.

 Our income tax system (website www.iras.gov.sg)

  • Singapore’s tax system is territorial, what is accrued, derived and remitted into Singapore is taxable. Except - remittance of personal income is exempted from tax. Further, if for some reasons the income (corporate and personal income) can be attributable to Singapore source, these income may be subject to tax.
  • Our system is on the preceding year basis, that is to say income of companies for financial year ended in a particular month in a year is taxed in the following year.  Companies are required  to file an estimated chargeable income not more than 3 months after the financial year end and if there is tax payable, a notice to pay tax will be issued after the filing. The finalised tax will be an adjustment to the estimated tax when the tax form is filed on due date which is currently 30th November each year.
  • A company is free to decide its financial year end or change its financial year thereafter. A company changes its financial year end for commercial reasons and not to achieve a tax advantage.
  • Singapore has entered DTA, Limited Treaties and EOI Arrangements with many countries.  Resident companies should claim  tax advantages (if any) available within these agreements when filing taxes.
  • Singapore has signed the MCAA CbCR and is subject to the country by country reporting framework under OECD BEPS Action 13. Country by country reporting is compulsory for large corporations.
  • Companies should understand the guidelines on transfer pricing for the prevention of BEPS.
  • Our corporate tax rate is 17% and has been at this rate for many years.  However, the tax payable may be lower due to tax rebates applicable from time to time to resident companies.
  • Personal tax rates start from 2% to the maximum of 22%.  Chargeable personal income in excess of $320,000 is taxed at 22%.
  • Others – Corporate remittances/NOR/withholding tax etc can be discussed when requested.

 Setting up of Businesses (website www.acra.gov.sg)

  • There are various forms of entities. PTE LTD/LTD/LLP/LLC/sole – proprietorships
  • Requirement for a private limited company (PTE LTD) –
    • At least 1 local resident director (can be a local resident)
    • 1 share any currency and any amount. Shares need not have par value which means to say that x dollars can be for 10 shares or 100 shares or even 100,000 shares.
    • A company can be 100% foreign owned with 1 shareholder or more. An exempt private company must not have more than 20  individual shareholders and no corporation holds any beneficial interest in the company's shares. A private company must not have more than 50 shareholders (corporate and individual shareholders). If a company has more than 50 shareholders, it has to be a limited company.
    • A registered office can be a place of business or a local business address.
    • Business activities –  Whatever business the company intends to do, these must be legal and within the confines of laws, rules and regulations.  Licences, permits, approvals etc are required from governing bodies, the authorities etc for certain types of businesses.
    • Directors need to be aware of what can be done or cannot be done according to our laws  (https://sso.agc.gov.sg/). Please see this website for our lists of legislations.
    • Opening of bank account – For the opening of a bank accounts, banks may need information from the directors and shareholders and may also need documents to substantiate any declarations such as proof of (local and oversea) residential addresses, driving licences, ASIC report of companies, details of beneficial and controlling interests. For the opening of a bank account the directors/shareholders who are cheques signatories have to be present at the bank to sign the bank documents. On the actual procedures, clients are advised to approach the banks directly.
    • Import licence is issued by our Custom Authority before goods can be allowed to be imported.
    • Import of certain goods need specific licences such as food (www.nea.gov.sg), chemicals, dutiable goods such as liquors, tobacco, motor vehicles, petroleum products etc. (www.customs.gov.sg).
    • Import of goods of more than $400 are subject to Goods and Services tax.
    • Constitution – a constitution is required. 
    • Meeting of directors and shareholders can be physical or through written means and these are to be spelt out in the constitution.
    • Through pre-emptive rights, shareholders’ rights and ownership are safeguarded under the constitution and  safeguards are also contained in the Singapore Companies Act. Chapter 50.

Accounts, Small companies and Audit 

 Singapore has adopted substantially IFRS as Singapore Financial Reporting Standard (SFRS).

                          Audit Exemption for Small Companies:- (www.acra.gov.sg)

Effective Date -The audit exemption is applicable for financial years beginning on or after the change in the law (1 Jul 2015).

                        Qualification Criteria :-

A company qualifies as a small company if:

(a) it is a private company in the financial year in question; and

(b) it meets at least 2 of 3 following criteria :

    (i) total annual revenue not more than $10 million

    (ii) total assets not more than $10 million

    (iii) number of employees not more than 50.

For a company which is part of a group:

            (a) the company must qualify as a small company; and

b) entire group must be a "small group to qualify to the audit exemption,

For a group to be a small group, it must meet at least 2 of the 3 above quantitative criteria on a consolidated basis.

Where a company has qualified as a small company, it continues to be a small company for subsequent financial years until it is disqualified. A small company is disqualified if:

(a) it ceases to be a private company at any time during a financial year; or

(b) it does not meet at least 2 of the 3 the quantitative criteria.

If you need more details please let us know or if there are information that we missed out.

WITHHOLDING TAX

Withholding tax is a collection mechanism whereby non-resident persons has a deemed source of income taxable in Singapore.  Such deemed income are taxable at a certain rate (subject to the rate applicable under Double Tax  Agreements for Tax Treaty countries) by the payer and subsequently remitted to the Singapore Comptroller of Income Tax within a stipulated deadline.  Currently the tax is payable by the 15th of the following month following the date of payment or deemed payment. Please refer to the following IRAS website for more details.

https://www.iras.gov.sg/irashome/Other-Taxes/Withholding-tax/ 9WITHHOLDING TAX - IRAS)

ACRA PRACTICE DIRECTIONS

https://www.acra.gov.sg/training-and-resources/publications/practice-directions/past-issues