Singapore is consistently ranked among the most business-friendly countries in the world. With a competitive corporate tax rate of 17%, a transparent regulatory framework, and strong government support, it offers an ideal environment for entrepreneurs and growing enterprises. 

Beyond the low tax rate, small businesses and startups benefit from a wide range of targeted tax incentives designed to reduce costs, support innovation, and encourage international expansion.

This article provides a comprehensive overview of the main tax schemes available to small businesses in Singapore, together with their eligibility requirements.

Start-Up Tax Exemption Scheme (SUTE)

Overview:

The SUTE provides new companies with substantial concessions from tax during their first three Years of Assessment (YA) by exempting a portion of the first $200,000 of chargeable income. 

Benefits:

• 75% exemption on the first $100,000 of normal chargeable income.
• 50% exemption on the next $100,000.

Eligibility:

• Incorporated and tax resident in Singapore.
• Not an investment holding company or one engaged in property development for sale/investment.
• Applies only to the first three consecutive YAs.

Partial Tax Exemption Scheme (PTE)

Overview:

Once the SUTE period ends, companies can continue to benefit from ongoing relief under the PTE.

Benefits:

• 75% exemption on the first $10,000 of normal chargeable income.
• 50% exemption on the next $190,000.

Eligibility:

• Available to all companies generating active business income.
• No restrictions by industry or size.

R&D Tax Deductions

Overview:

Designed to encourage innovation, this scheme provides enhanced deductions for qualifying research and development (R&D) activities.

Benefits:

• 250% deduction for qualifying R&D expenditure conducted in Singapore.
• Additional allowances for automation projects and intellectual property registration.

Eligibility:

• Company must be tax resident in Singapore.
• R&D must be carried out in Singapore.
• Work must address scientific or technological uncertainty (routine improvements are not eligible).

Double Tax Deduction For Internationalisation (DTDi)

Overview:

Supports Singapore companies in exploring overseas opportunities.

Benefits:

• 200% tax deduction on qualifying internationalisation expenses, such as overseas trade fairs, marketing trips, and feasibility studies for overseas expansion.

Eligibility:

• Company must be incorporated and tax resident in Singapore.
• Activities must fall within pre-approved categories, or require prior approval from Enterprise Singapore or the Singapore Tourism Board.

GST Schemes And Startup SG Support

Overview:

Provides cashflow advantages for import/export businesses and funding support for startups.

Benefits:

• Major Exporter Scheme (MES) – Suspension of GST on imports for exporters.
• Import GST Deferment Scheme (IGDS) – Defer import GST until monthly GST return filing.
• Startup SG and Angel Investor Schemes – Co-funding, mentorship, and investor tax deductions to support high-growth companies.

Eligibility:

• GST schemes – Company must be GST-registered and have a strong compliance record.
• MES – Must be a major exporter with significant zero-rated supplies.
• IGDS – Must regularly import goods with consistent GST compliance.
• Startup SG – Companies under 5 years old, incorporated in Singapore, and engaged in scalable, growth-oriented activities.

Conclusion

Singapore’s tax framework gives small businesses a strong competitive edge. Whether it’s through generous start-up exemptions, ongoing relief, support for innovation, or schemes that ease cashflow and encourage expansion abroad, SMEs can take advantage of a wide variety of government-backed measures. The key is to understand the eligibility requirements and plan early so that these incentives align with your business growth strategy.

Five Key Takeaways For Small Businesses

1. Start Strong – maximise savings in your first three years through the Start-Up Tax Exemption (SUTE).
2. Maintain Relief – benefit from the Partial Tax Exemption (PTE) even after the start-up phase.
3. Invest In Innovation – leverage enhanced R&D deductions and IP incentives to scale sustainably.
4. Expand Overseas – tap into the Double Tax Deduction for Internationalisation (DTDi) when entering new markets.
5. Optimise Cashflow And Funding – use GST deferment schemes and Startup SG programmes to ease liquidity and attract investors.

Are you an Australian business looking to expand in Singapore? In this episode of Money Side Up, our Managing Director Boon Tan shares valuable insights on helping Australian companies establish and grow in Singapore. 

In this episode, our Managing Director highlights the key tax considerations for doing business across borders which focus on corporate structures, compliance, and strategic planning.  

Gain deeper insights, listen to the podcast on Spotify.

Effective payroll compliance is essential for businesses operating in Singapore, ensuring smooth operations, regulatory adherence, and a trusted reputation among employees. Below is an overview of the crucial elements employers must address to achieve payroll compliance in Singapore.

Basic Employment Law Requirements

Employers in Singapore must adhere to the Employment Act (EA), which outlines the fundamental rights and responsibilities of employers and employees.

• Employment Contracts – Employees must have clearly documented employment contracts stating job responsibilities, compensation details, work hours, leave entitlements, benefits, and notice periods.
  
• Work Hours – Regular work hours are typically limited to 44 hours per week. Employees eligible for overtime pay (earning up to SGD 2,600 monthly) must receive appropriate compensation for additional hours worked.
  
• Leave Provisions – Employees are entitled to statutory leave benefits, including annual leave, medical leave, maternity and paternity leave, childcare leave, and other applicable leave categories.

Employers must diligently maintain accurate records, including attendance, payroll, and leave documentation, subject to periodic audits by Singapore’s Ministry of Manpower (MOM).

Taxation Obligations For Employers

Whilst Singapore does not operate on a pay-as-you-earn withholding tax system for employment income, employers have several key responsibilities concerning taxation compliance.

• Annual Income Reporting: Employers must submit annual income reports (Form IR8A and related documents) detailing employee remuneration by 1st March each year, via the Inland Revenue Authority of Singapore’s (IRAS) Auto-Inclusion Scheme (AIS).
  
• Foreign Employee Tax Clearance: Employers must manage tax clearance processes carefully for foreign employees who resign, complete their contracts, or permanently depart from Singapore.  

• Cancellation Of Working Visas: Employers must ensure that they advise the MOM when foreign employers end their tenure with them, so that the Employment Pass or S Pass can be cancelled.

Central Provident Fund (CPF) Obligations

The CPF scheme is a mandatory social security savings system designed for retirement, healthcare, and housing support for Singapore citizens and permanent residents. Employers are not required to contribute CPF payments for foreign workers holding employment visas such as an Employment Pass, S Pass or One Pass.

• Employer Contributions – Employers contribute monthly to CPF at rates of up to 17% of the employee’s monthly wages, subject to statutory caps.
  
• Employee Contributions – Employers must deduct and remit employee contributions (up to 20%) directly from monthly wages to the CPF Board.

• Record-Keeping – Detailed and accurate CPF contribution records must be maintained, and contributions must be remitted promptly to avoid penalties and interest.

Payroll-Related Levies Overview

Singapore employers must be aware of the following key levies which are payable each month:

Skills Development Levy (SDL)

The SDL is a mandatory levy payable by all employers in Singapore. Its main purpose is to finance training and development initiatives for Singapore’s workforce. It is calculated as 0.25% of gross income but capped at S$11.25 per employee per month. 

Foreign Worker Levy (FWL)

The FWL is a monthly levy imposed by the Singapore government on employers who hire foreign employees on Work Permits or S Passes. It is designed to regulate foreign labour intake and encourage employers to hire and train local Singaporeans.  

Your FWL rate is based on the employee type (EP, PEP, OnePass or S Pass), industry sector, seniority of the employee and the proportion of employees in your business who are foreigners versus locals (Singapore citizens of Singapore permanent residents). 

The current rate of the levy is S$650 per month.

Key Takeaways

Payroll compliance is vital for maintaining operational integrity, regulatory compliance and fostering employee confidence. Business employing staff in Singapore must:

• Ensure that all employees have signed an employment agreement which meets the requirements of the Employment Act.
  
• Maintain payroll accuracy through reliable record-keeping and timely reporting including the  provision of monthly payslips which show gross salary, CPF contributions and leave balances.
  
• Remit all levies and contributions by the due date each month.
  
• Advise the MOM of any changes to foreign employees including their salary package and termination date. 

Singapore remains a prime hub for foreign investment due to its stable regulatory environment, pro-business tax regime, and strategic location. However, many foreign owners underestimate their compliance responsibilities after incorporation. Failure to meet annual filing requirements can lead to penalties, enforcement actions, and reputational risks. 

Enforcement actions may involve monetary fines and the banning of individuals acting as Directors for companies incorporated in Singapore for up to five years. This article outlines the key annual filing obligations for foreign-owned companies in Singapore to ensure your entity remains compliant and operationally effective.

1. Annual General Meeting (AGM)

All Singapore-incorporated companies, including those fully foreign-owned, must hold an Annual General Meeting (AGM) unless exempted under specific circumstances (e.g. small companies opting for AGM dispensation with shareholder consent). The AGM must be held within 6 months after the company’s financial year-end (FYE).

During the AGM, directors present the company’s financial statements for shareholder approval. These financial statements must adhere to Singapore Financial Reporting Standards (SFRS) and include:

• Director’s statement
• Statement of financial position
• Statement of comprehensive income
• Notes to accounts and disclosures

Failure to hold an AGM within the prescribed period attracts late penalties under the Companies Act.

2. Annual Return Filing With ACRA

After holding the AGM (or if exempted, after financial statements are ready), companies must file their Annual Return (AR) with the Accounting and Corporate Regulatory Authority (ACRA) within 7 months after their FYE.

Key information in the Annual Return includes:

• Company particulars
• Shareholder and share capital details
• Director and company secretary particulars
• Financial statements in XBRL format (for most companies)

Filing the AR confirms to ACRA that the company is active and compliant. Persistent non-filing may lead to enforcement actions such as striking off, prosecution of the company Directors, or fines.

3. Preparation And Filing Of Financial Statements

All Singapore companies, including exempt private companies owned by foreigners, must prepare financial statements compliant with SFRS. Filing requirements vary:

• Small Companies (meeting 2 of 3 criteria: total revenue ≤ SGD 10 million, total assets ≤ SGD 10 million, ≤ 50 employees) are exempt from statutory audit but must still prepare financial statements.
• Non-small Companies require audited financial statements.

For foreign-owned subsidiaries, consolidated group reporting and transfer pricing documentation may also be required depending on group structure and intercompany transactions.

4. Corporate Tax Filing With IRAS

Singapore companies are taxed on a preceding year basis. Two tax filings are mandatory:

1. Estimated Chargeable Income (ECI) – filed within 3 months after FYE unless exempted (e.g. annual revenue ≤ SGD 5 million and ECI is NIL).
2. Form C Or Form C-S – annual corporate tax return filed by 30 November of the assessment year (YA).

Failure to file on time can lead to late filing penalties, issuance of estimated assessments (often higher), and potential enforcement action by the Inland Revenue Authority of Singapore (IRAS).

5. Transfer Pricing Documentation

Foreign-owned companies with related-party transactions must prepare transfer pricing documentation if annual revenue exceeds SGD 10 million or specific thresholds for related-party transactions are met. This ensures intercompany dealings are at arm’s length, preventing under- or overstatement of taxable profits in Singapore.

Non-compliance risks:

• 5% surcharge on transfer pricing adjustments
• Disallowance of related-party expense deductions
• Increased scrutiny and audits by IRAS

6. Goods And Services Tax (GST) Filing (If Registered)

Companies with annual taxable turnover exceeding SGD 1 million must register for GST. Once registered, periodic GST returns (usually quarterly) must be filed and GST payments remitted within one month after the end of each accounting period. Late filing attracts financial penalties and potential suspension of GST registration.

7. Other Compliance Considerations

• Register Of Registrable Controllers (RORC): Companies must maintain updated beneficial ownership information with ACRA.
• Licences And Business Permits: Ensure annual renewals (if applicable to sector activities) remain current to avoid operational breaches.

Key Takeaways

Running a foreign-owned company in Singapore comes with attractive tax and business advantages. However, annual compliance obligations remain strict and non-negotiable. 

Directors should:

• Maintain updated accounting records
• Engage qualified corporate secretarial and tax advisors
• Calendar filing deadlines to avoid penalties
• Ensure proactive preparation of financial statements and tax documentation

Singapore is widely recognized as one of the most business-friendly countries in the world. With its strategic location in Southeast Asia, strong legal framework, efficient infrastructure, and favourable tax regime, Singapore continues to attract companies seeking regional headquarters or expansion into Asia. 

For businesses planning to establish a presence in Singapore, understanding the visa options available to both owners and employees is crucial. It is not unusual for companies to relocate key executives to manage the entry into a new market. 

Visa Types For Business Owners And Employees

1. EntrePass (Entrepreneur Pass)

For: Foreign entrepreneurs looking to start and operate a business in Singapore.

• Eligibility – Innovative or venture-backed businesses in sectors such as technology, biotech, or digital media.
• Requirements – A business plan, and often, endorsement from a recognised incubator or VC.  The business plan must also include a forecast for the employment of Singapore citizens or permanent residents. 
• Renewal Conditions – Based on business performance and local job creation.

Ideal for start-up founders and innovation-driven enterprises.  A holder of an EntrePass can also act as a Director of multiple companies incorporated in Singapore. 

2. Employment Pass (EP)

For: Foreign professionals, managers, and executives.

• Eligibility – Monthly salary of at least SGD $5,000 (higher for older or more experienced applicants), with acceptable qualifications.
• Company Sponsorship – Required.
• Duration – Initially issued for 1–2 years, renewable.
• Fair Consideration Framework (FCF) – Employers must first advertise the job to locals unless exempt.

Best suited for key foreign hires such as general managers, technical leads, and consultants. It is important to note that an individual with an EP may only act as a Director of the company that sponsors their EP.  It is, however, possible to apply to the Ministry of Manpower requesting that the individual be appointed as the director of multiple companies. The key requirement is to show that the companies are directly related.

3. Overseas Networks & Expertise Pass (ONE Pass)

For: High-calibre professionals across business, tech, science, and academia.

• Eligibility – Monthly salary of at least SGD $30,000, or with outstanding achievements.
• Validity – 5 years.
• Flexibility – Allows holder to work for multiple companies without reapplying for new passes.

Excellent option for top-tier talent or founders planning long-term relocation.  Unlike a EP, you are not sponsored by a specific company, meaning that should you change roles, it is not necessary to apply for a new work visa.  

4. S Pass

For: Mid-skilled workers.

• Eligibility – Monthly salary of at least SGD $3,150 (as of 2025, increases annually), with relevant qualifications.
• Quota System – Employers are subject to a quota and levy.
• Duration – Up to 2 years, renewable.

Useful for companies hiring technicians, supervisors, or skilled tradespeople.

5. Dependant Pass (DP) And Long-Term Visit Pass (LTVP)

For: Families of EP and S Pass holders.

• Dependant Pass – For legally married spouses and children under 21.
• LTVP – For common-law partners, stepchildren, or parents (if the EP holder earns a sufficient salary).

These passes allow the family to legally reside in Singapore as long as the EP or S Pass remains valid. 

Key Considerations When Hiring Foreign Talent

• Singapore enforces a Fair Consideration Framework (FCF) which ensures fair hiring practices, especially when hiring foreign vs local talent. There a stringent requirements on businesses that seek to hire foreign talent over local talent. 
• There are quota restrictions especially for S Pass and Work Permit holders. The quota system is based on the Dependency Ratio Ceiling (DRC), which defines the maximum percentage of foreign workers a company can employ relative to its local workforce 
• Companies must stay updated with Ministry of Manpower (MOM) policies.
• Non-residents are taxed differently; holders of a working visa are often regarding as tax residents of Singapore from the date that they arrive in Singapore and are issued their pass. 

Final Thoughts

Singapore’s robust ecosystem makes it an ideal launchpad for regional expansion. However, navigating the immigration and employment landscape requires careful planning. 

Businesses should assess their workforce needs early and consult with immigration professionals or legal advisors when necessary.

By choosing the right visa types and understanding the regulatory framework, companies can ensure a smooth entry into the Singapore market and build a sustainable, talent-rich operation.

If you run a business in Singapore that deals with related companies overseas—like a parent company, subsidiary, or sister company—there’s one tax rule you really need to be aware of: transfer pricing.

It might sound like something only big multinational corporations worry about, but transfer pricing rules apply to any Singapore-based company that transacts with related parties across borders. And getting it wrong can lead to unexpected tax bills and even penalties.

Transfer pricing isn’t just a technical tax concept—it’s something every company with cross-border operations should understand. These rules are there to ensure fairness in how profits are reported and taxed across countries, and the Inland Revenue Authority of Singapore (IRAS) expects businesses of all sizes to follow them.

This article breaks it down simply, so you know what matters, what to look out for, and how to stay compliant without getting buried in legislation.

What Is Transfer Pricing?

Transfer pricing is all about how much your Singapore company charges—or is charged—when it buys or sells something to a related company overseas.

For Example: If your Singapore company pays your parent company $200,000 a year for “management services,” how do you know that’s a fair price? 

That’s where transfer pricing rules step in. The IRAS wants to ensure you’re charging or paying what’s called an “arm’s length” price — basically, the price you’d agree on if both parties were unrelated and negotiating normally.

If IRAS thinks you’re undercharging or overpaying (which could reduce your taxable profits in Singapore), they can make adjustments — and add a penalty on top.

Whilst traditionally associated with large multi-national companies, the principles of transfer pricing applies whenever a company deals with a related party.  “Related” means there’s some form of control or influence—same shareholders, same directors, same group of companies. 

Transfer Pricing Compliance

Here is what you need to focus on to ensure that you are compliant with your transfer pricing obligations.

1. Price Things Like You’re Independent

You should price intercompany transactions the same way you’d price them with an unrelated third party. That means you need to be able to explain why the pricing is fair and commercially reasonable.

2. Keep Proper Documentation

If your total revenue is over S$10 million, and your related party transactions cross certain thresholds (e.g. S$15 million in goods, or S$1 million in services), you’ll need to prepare what’s called transfer pricing documentation which you must keep for at least 5 years.

The documentation must include:

1. Group and entity-level business descriptions
2. Functional analysis of entities involved (functions, assets, risks)
3. Details of related party transactions
4. Transfer pricing method(s) used and rationale
5. Benchmarking analysis with comparables
6. Assumptions and economic conditions

Remember, even if you’re under these thresholds, IRAS still expects you to apply the arm’s length principle—and having basic documentation helps protect you.

3. Be Consistent And Defensible

IRAS may review your transactions during a tax audit, especially if your Singapore company shows low profits or losses. You’ll want to be ready to explain how you arrived at the prices you charged or paid.

If your pricing isn’t defendable, IRAS may adjust your taxable income and impose a 5% surcharge on the adjustment.

Common Examples Founders Should Watch For

Here are some real-life examples where transfer pricing rules come into play:

• Payments to HQ for branding, legal, or strategy services. Can you show the value of those services and that the fee is reasonable?
• Import of products from your overseas factory. Are you charging yourself a fair wholesale price, or are you inflating/deflating margins?
• Use of intellectual property (like software or a brand name) from a related company. Is the royalty rate reasonable based on similar deals in the market?
• Loans made to your overseas subsidiary. Are you charging interest? Is the rate similar to what a bank would charge?

How To Stay Compliant (Without Stressing Out)

Here’s a practical checklist:

1. Identify your related party transactions – Make a list of any dealings with overseas related companies.
2. Review your pricing – Ask: Would I agree to this price if I were dealing with a third party?
3. Prepare documentation early – Don’t wait until IRAS asks. A simple summary that explains the “who, what, and why” goes a long way.
4. Update it annually – Your business evolves, and your documentation should too.
5. Get expert help if needed – For complex transactions (like IP, licensing, or large service fees), a tax advisor or transfer pricing specialist can help you benchmark prices and draft supporting documents.

Advance Pricing Arrangements 

If your company does a lot of high-value intercompany transactions, Singapore offers something called an Advance Pricing Arrangement (APA). This is an agreement between you and IRAS that locks in your transfer pricing method for several years. It gives you certainty and reduces audit risk—but it takes time and preparation to set up, so it’s better for larger businesses or high-stakes deals.

In Summary

If you are a Singapore based company dealing with overseas-based related parties, then the issue of transfer pricing is one you will need to manage as soon as possible. Here are the 5 key principles to remember: 

1. Transfer pricing rules apply to any Singapore company transacting with related overseas entities.

2. All intercompany prices must reflect “arm’s length” terms.

3. Documentation is required—especially if your revenue exceeds S$10 million.

4. Non-compliance can lead to tax adjustments and a 5% surcharge.

5. Regularly review intercompany dealings and prepare justifications.

Introduction

On 24 April 2025, the High Court of Singapore issued a significant ruling that will reshape how foreign companies appoint local directors when setting up operations in Singapore.

The case involved Mr. Zheng Jia, a Chartered Accountant who offered incorporation and corporate secretarial services to foreign clients. As part of his service, Mr. Zheng acted as a nominee director for hundreds of companies, offering foreign business owners a quick route to satisfy Singapore’s legal requirement for a locally resident director. Over time, he expanded his model by recruiting another individual, Mr. Er, to perform the same role for additional clients.

Case Background

During the trial, the prosecution demonstrated that Mr Zheng and Mr Er failed to discharge their duties as directors appointed to a company. In two specific cases, this failure to exercise diligence and due care had serious consequences. 

In one instance, Ocean Wave Shela Pte Ltd—where Mr Zheng was a director—received USD 64,630 in stolen funds. In another, Rui Qi Trading Pte Ltd—where Mr Er was the nominee—was used to launder over USD 2.18 million and SGD 237,000, all proceeds from overseas scams. 

Mr Zheng was found to have knowingly facilitated these arrangements and failed in his duty as a director.

The District Court initially imposed fines and disqualified Mr Zheng from acting as a director for five years. However, the prosecution appealed, arguing that a custodial sentence was necessary given the scale and seriousness of the misconduct. 

The High Court agreed, overturning the fines and sentencing Mr Zheng to 10 months’ imprisonment.

The ruling introduced a new sentencing framework that distinguishes between casual lapses in diligence and systematic, profit-driven dereliction of duty. 

Under this revised approach, directors who intentionally abdicate their responsibilities—especially as part of a commercial model—can expect jail time. Passive involvement is no longer an excuse.

Implications For Foreign Businesses

This decision sends a strong message that re-enforces the obligations of an individual in a fiduciary position: being a director in name only is not, and has never been, acceptable under Singapore law. Directors must take active steps to understand and monitor the companies they are appointed to, regardless of whether they are commercially engaged to do so.

For foreign companies looking to establish a corporate presence in Singapore, it is prudent to expect that:

• Local directors will require access to management accounts and bank statements;
• Board meetings will need to be conducted with the local director present and informed;
• The cost of local director services may increase, including the potential requirement for directors and officers insurance coverage.

In many cases, foreign companies may prefer to appoint someone from within their own organisation to act as the local director. While this may involve relocating a trusted employee to Singapore and obtaining an Employment Pass, it may offer greater transparency and control. 

Employment Pass holders can be appointed as directors of their sponsoring company, making this a viable alternative to the traditional nominee arrangement.

Key Takeaways

• Local directors cannot be passive. Legal duties must be actively fulfilled, regardless of commercial agreement.
• Systematic neglect of directorship duties may now lead to jail, not just fines or disqualification.
• Local directorship fees are likely to rise, along with expectations for board involvement and access to company records.
• Foreign businesses should plan ahead—either by identifying trusted Singapore-based personnel or budgeting for relocation and compliance costs.

Singapore is renowned for its business-friendly environment, and its Goods and Services Tax (GST) system is a key example of an indirect tax policy designed to support economic activity. 

However, whilst many other jurisdictions also have this form of indirect tax, the Singapore approach does have its unique attributes to be wary of. This article outlines when and how to register for GST in Singapore, along with the specific compliance obligations foreign businesses need to meet.

Understanding GST In Singapore

GST is a broad-based consumption tax levied on the import of goods as well as nearly all supplies of goods and services in Singapore. Since 1 January 2024, the standard GST rate in Singapore is 9%. Businesses that meet certain criteria are required to register for GST and charge it on their sales, while also entitled to claim credits for GST paid on their purchases.

The following list are transactions which attract GST in Singapore: 

1. The supply of goods and services domestically.
   
2. Imports of goods into Singapore.
   
3. Online digital services. (We will consider this in detail later)
   
4. The sale of commercial property in Singapore.

The following types of transactions are either exempt or zero-rated:

• Exempt supplies include financial services, sales and leases of residential properties, and the supply of investment precious metals.
• Zero-rated supplies include the export of goods and services – generally where the recipient of the goods or the beneficiary of the services is a non-Singaporean.

When To Register For GST

Registration for GST is mandatory for businesses with taxable turnover exceeding S$1M.

There are two test methods when it comes to determining whether a business will exceed the S$1M threshold: 

1. The Retrospective Method – means that you must register for GST if your taxable turnover at the end of the calendar year exceeds S$1M.
   
2. The Prospective View – is done because you expect to exceed the S$1M threshold in the coming 12 months. 

Whilst voluntary registration is possible for businesses with taxable turnover less than S$1M, it is subject to approval by IRAS, and in some cases, IRAS may request a bank guarantee as a condition of registration. 

Compliance Obligations Post-Registration

Once registered, the company is required to report and file its GST return with IRAS quarterly, with lodgement due by the last day of the month following the end of a quarter (e.g., quarter ended 31 March 2025, the lodgement due date is 30 April 2025). Payment of any net GST collected is also due at this time. 

Record Keeping

Businesses need to maintain meticulous records of all business transactions for at least five years. This includes tax invoices, receipts, business contracts, and other supporting documentation.

Issuance Of Tax Invoices

Whenever goods or services are supplied, a GST-registered business must issue tax invoices with all necessary details, including GST registration number, total charge, and applicable GST rate.

Specific Considerations For Foreign Entities

Reverse Charge And Overseas Vendor Registration

In 2020, Singapore introduced the reverse charge mechanism as part of its GST framework to address the increasing consumption of cross-border digital services. The objective of this framework is to level the playing field between local and overseas service providers by effectively taxing services that are consumed in Singapore.

Under this framework, the responsibility of reporting GST on imported services lies with the Singapore-based consumer. Essentially, the business receiving the service must account for the GST as if they were the supplier, thereby self-assessing and paying GST on these services.

The introduction of this framework has meant that business who frequently engaged with foreign service providers for digital services have had to review their procurement strategies.

In Summary

• The Goods and Services Tax rate is 9% and applies to goods and services provided in Singapore. 
• The turnover threshold for compulsory registration is S$1M. While voluntary registration is possible, it is subject to approval from IRAS. 
• Certain transactions may be exempt from GST or are zero-rated. 
• When registered for GST, businesses are required to file their net GST position quarterly. 
• From 1 January 2020, Singapore operates a reverse charge framework targeted at the consumption of digital assets meaning the responsibility of reporting GST on imported services lies with the Singapore-based consumer. 

Understanding which transactions attract GST in Singapore is vital for both businesses and consumers. Whether you’re navigating import duties or dealing with professional service fees, grasp the fundamentals of GST compliance to enhance your competitiveness and operational efficiency in Singapore’s thriving economy.

A key element contributing to Singapore’s appeal is its corporate tax system, designed to encourage entrepreneurship and investment. 

This article provides an overview of the foundations of the corporate taxation landscape in Singapore, focusing specifically on compliance timelines, tax rates and statutory concessions available to all companies incorporated in Singapore.

Understanding Singapore’s Corporate Tax Structure

Singapore operates on a territorial tax system, meaning that only income generated within the country is subject to tax. This approach is conducive for businesses trading internationally, as income derived from foreign sources are generally exempt from tax. 

We will consider foreign-sourced income in a future article.  However, it is important to note that such income may still be subject to taxation in Singapore under certain circumstances.  The most common instance is where the foreign-sourced income is remitted into a bank account located in Singapore. 

The corporate tax rate in Singapore is currently a flat 17%.

However, there are statutory concessions that result in an effective rate of tax closer to 15% for SMEs operating from Singapore. 

There is no Capital Gains Tax (CGT) regime in Singapore, so the disposal of capital assets by a Singapore company are not subject to tax.

Singapore Corporate Tax Terminology

Before we go further, a quick overview of the Singapore corporate tax terminology:

a) The Singapore financial year ends on 31 December, however a company is able to elect to use another date throughout the year (e.g. 30 June) so that the tax compliance cycle is aligned to a parent company in another jurisdiction.

b) Year of Assessment (YA) refers to the year in which the company will receive a Notice of Assessment from the Inland Revenue Authority of Singapore (IRAS). As an example, the YA 2025 refers to a financial year which ends during the 2024 calendar year. 

c) Estimated Chargeable Income (ECI) is a submission due three months following the end of your financial year and acts as a preliminary estimate of what tax will be payable upon the filing of the corporate tax return. This is an additional submission to the annual company tax return.

Singapore’s Lodgement Timeline

The annual lodgement deadline for company tax in Singapore is as follows:

a) Lodgement Of ECI – three-months following the end of the company’s financial year.

b) Annual Company Tax Return – 30 November in the YA.

Singapore Company With A 31 December Year End

If a company adopts the default Singapore financial year which starts on 1 January and concludes on 31 December of a calendar year, then  for the financial year ending 31 December 2024, the due dates for submissions to IRAS are: 

a) ECI is due by 30 March 2025; and 

b) Company tax return is due by 30 November 2025.

Singapore Company With An Elected Year End

If we assume that a company has a 30 June 2025 year end, the two lodgement deadlines are

a) ECI – due by 30 September 2025

b) Company tax return – due by 30 November 2026

As the Company’s year end is within the YA2026, the tax return is due in 30 November 2026. 

Statutory Concessions Available To Foreign Owned SMEs

Partial Tax Exemption

As the name suggests, the Partial Tax Exemption makes a portion of a company’s first S$200,000 of taxable income exempt from taxation for each YA. 

The Partial Tax Exemption is available to all companies which are incorporated in Singapore.  Thus, a foreign company is not able to access this concession as it is not incorporated in Singapore. 

The current exemption is calculated as:

   – Exemption of 75% for the first S$100,000 of chargeable income.

   – A further 50% exemption on the next S$100,000 of chargeable income.

Meaning that the first S$125,000 of taxable income is not subject to tax.

Start-Up Tax Exemption (SUTE)

In the same vein as the Partial Tax Exemption, the Start-Up Tax Exemption allows for a portion of a company’s first S$200,00 exempt from taxation for its first three financial years. 

Qualifying new companies incorporated in Singapore can enjoy additional tax exemptions under the Start-Up Tax Exemption scheme. 

For the first three years of assessment (YA), qualifying companies may receive:

   – Exemption on the first S$100,000 of chargeable income.

   – A further 50% exemption on the next S$200,000 of chargeable income.

For the first three YA, the company will be exempt to pay tax on the first S$200,000 of taxable income. 

To qualify for this Start-Up Tax Exemption, your company must meet all of the following requirements:

a) Incorporated in Singapore; and

b) Derive trading income; and

c) Be a tax resident of Singapore; and

d) Have at least one individual owning at least 10% of the company – this individual does not need to be a tax resident of Singapore.

Given the requirement for an individual shareholder to qualify for the Start-Up Tax Exemption, it is important to consider the long-term implications from owning the shares in this manner.

Some of the issues to consider include:

– From an asset protection perspective, there may be a preference for the shares not to be held by an individual Founder; 

– In the event of a future disposal of the shares, the resulting tax payable (for example, capital gains tax) may exceed the benefits arising from the concession;

– In many cases, new companies often fail to generate significant income in the initial years of operations, and thus fail to maximise the benefits provided by the Start-Up Tax Exemption.

Key Takeaways For Foreign Owned SMEs

The key considerations for foreign owned SMEs operating in Singapore include: 

• Singapore operates on a territorial tax system which generally means that only income sourced in Singapore is subject to taxation. 
• Foreign-sourced income which is remitted to a Singapore bank account may still be subject to tax in Singapore at the 17% rate. 
• While the standard financial year ends on 31 December, a Singapore company is able to align its year end to a date which matches related companies based in other jurisdictions. 
• There are two forms of tax exemption available to companies incorporated in Singapore which reduces the effective corporate rate of tax.
• Whilst the Start-Up Tax Exemption provides a more generous concession, there are long-term planning and commercial issues to be considered before deciding to structure the company in a way to qualify for this concession. 
• The ECI return is due 3 months after the end of the financial year. 
• The annual corporate tax return is due on 30 November in the YA. 

“I don’t understand, Boon – we offered the landlord the price they wanted and agreed on everything last week, but now they don’t want to proceed because the share capital in the company is only $100.  Don’t they realise we are a multi-billion dollar shipping company?” 

This is a common issue for many companies entering the Singapore market who are unfamiliar with the local culture and protocols. A key aspect of Singapore’s corporate culture is the company’s share capital level. 

While many foreign jurisdictions are familiar with the idea of a “$2 company,” approaching Singapore with the same mindset will likely limit their ability to operate in Singapore.

The amount of share capital you inject into your Singapore company reflects how serious you are about building your presence in this market. If your company has a low share capital value, the market view is that you are not fully invested in Singapore as a market for your company. 

Your company is viewed as a risky counterparty to any agreement because it appears to have limited working capital to meet the company’s ongoing running costs. 

Share Capital vs. Loan 

Your counterparty in Singapore prefers share capital rather than a loan injection because share capital is more permanent and is covered by statutory provisions under the Companies Act 1967. 

Whilst the Companies Act does allow for a capital reduction, the process is covered by provisions that include the need for the company to be solvent when the capital reduction is made and, in some instances, approval from the company’s creditors and the court. 

In contrast, loans are usually undocumented and can be called upon for repayment at any time by the lender. 

The barriers to taking out the funds as share capital are higher than for a loan – the most significant being the costs involved to engage lawyers and company secretaries.  

Who Looks At Share Capital?

The share capital of a company is usually reviewed in the following circumstances: 

1. Opening A Bank Account – Singapore is renowned for its strong and secure banking system. The process of opening a bank account goes through a compliance review, which prefers to onboard a company with at least S$10,000 of share capital. 
2. By The Ministry Of Manpower When Assessing An Application To Sponsor A Foreigner On A Working Visa – A key obligation for a company sponsoring an individual on a working visa is the payment of their monthly salary.  It is not unusual for the Ministry to request that share capital equal 6 – 12 months of the gross salary figure for the sponsored employee. 
3. Suppliers (Including Landlords) Looking To Enter Agreements With The Singapore Company – When dealing with a new company, it is common for landlords only to enter into agreements with companies with an amount of share capital that reflects the planned operations (including the payment of rent) to minimise their exposure to risk. 

In Summary

The key consideration regarding share capital that companies need to consider include: 

1. The amount of share capital reflects how seriously a business is invested in making its mark in the Singapore market.
2. An injection of share capital is preferrable as it is viewed as more permanent than a loan, which can be quickly repaid.
3. If you are applying for a working visa for an employee, it is recommended that the share capital be equal to at least half of the total salary payable to the employee.
4. Given the importance of share capital, it is crucial that you have sufficient savings to inject such funds into the Singapore company’s bank account.