Understanding corporate income tax doesn’t have to be complicated. Here’s a simplified guide to help you navigate the tax system in Singapore and ensure your business remains compliant.
What Is Corporate Income Tax?
Corporate Income Tax is a tax imposed on the income earned by companies. In Singapore, this tax is assessed on a preceding year basis, meaning the income your company earned in the financial year 2023 will be taxed in 2024.
The corporate income tax rate in Singapore is 17%, one of the most competitive rates globally, making the city-state an attractive destination for businesses.
What Is Considered a Company for Tax Purposes?
For tax purposes, the following are considered companies:
- Local companies: Businesses incorporated or registered under the Companies Act 1967 or other local laws (e.g., those with names ending in “Pte Ltd” or “Ltd”).
- Foreign companies: Branches or entities registered in Singapore but incorporated abroad.
Entities such as sole proprietorships or partnerships are not classified as companies under these rules.
What Is the Basis Period and Year of Assessment (YA)?
The basis period is the 12-month period corresponding to your company’s financial year. The Year of Assessment (YA) is the year in which your company’s income for the preceding basis period is assessed for tax purposes.
For example:
- If your financial year ends on 31 December 2023, your basis period is 1 January 2023 to 31 December 2023, and your YA is 2024.
- If your financial year ends on 30 June 2023, your basis period is 1 July 2022 to 30 June 2023, and your YA is 2024.
Corporate Income Tax Rate
All companies in Singapore—whether local or foreign—are taxed at a flat rate of 17% on their chargeable income.
Chargeable income is your company’s taxable income after deducting tax-allowable expenses such as rent, salaries, and business operation costs.
YYC: Your Trusted Partner in Tax Compliance
Navigating corporate taxes can be overwhelming, but that’s where YYC comes in. We offer a comprehensive range of services to ensure your company remains tax-compliant and focused on growth.
Our Services Include:
- Tax Advisory and Planning: Customized strategies to optimize your tax position.
- Corporate Tax Filing: Timely and accurate submissions to IRAS.
- Tax Compliance Reviews: Helping you identify and address compliance gaps.
- Business Consultation: Guidance on structuring your company for tax efficiency.