Corporate Tax Computation
For people around the world who are looking to start a new business, there are many benefits of incorporating a company in Singapore. However, the key benefit from a corporate perspective is the attractive tax framework of the city-state.
By fully automating the tax calculation process, which is a constant bottleneck for many companies, Tianlong Services radically reduces the time taken to finish a tax computation by performing fairly complex tax computations quickly.
Requirement to submit tax computation
According to IRAS, a tax computation refers to a statement displaying the tax adjustments to the accounting profit to arrive at the income that is chargeable to tax. Tax adjustments include:
- Non-taxable receipts,
- Non-deductible expenses,
- Capital allowances, and
- Further deductions.
Companies should prepare their tax computations annually before completing the Form C-S/ C. Only companies filing Form C need to submit their audited/unaudited financial statements, tax computation and supporting schedules together with Form C. Companies filing Form C-S are still required to prepare their financial statements, tax computation and supporting schedules and submit them to IRAS upon request.
Situations to pay corporate taxes
Who must pay corporate taxes in Singapore?
Under the Income Tax Act, all companies are required to pay corporate tax on any chargeable income derived from Singapore or foreign income remitted into Singapore irrespective of tax-residency status. However, Singapore tax-resident companies enjoy several benefits over non-tax resident companies.
When it comes to filing your corporate tax, it is important for you to understand items that can be deducted and items that need to be included for taxing. According to Singapore tax law, a company is required to file returns only on income accrued in or derived from Singapore or any income received in Singapore from abroad that stem from the above.
Singapore Corporate Tax Rates
Singapore’s current headline tax rate for companies is capped at 17% regardless of whether it is a local or foreign company. A company is taxed a flat rate on chargeable income, but the effective tax rate can be significantly lower owing to the tax exemption and incentive programs offered by the Singapore government.
The below table illustrates the tax rates and tax exemption rates/rebates for each YA:
Year of Assessment (YA)
Full Tax Exemption and Partial Tax Exemption scheme for new start-up companies for the first 3 YA
After 3 YA, companies will continue to enjoy the partial tax exemption scheme.
Since YA 2010, the Tax Exemption Scheme for new start-up companies will extend to companies limited by guarantee under the same conditions.
For example, Adrian is a client of ours who owns and operates a electronics business. The first time he contacted us, his office was his vehicle, and he frequently carried out operations while in motion.
Adrian used to spend about two days trying to beat the deadline for filing tax returns because he couldn’t locate his receipts. He hunted for them in his truck and in every room of his house, and usually had to make that dreadful call to his suppliers for copies. With a fast-growing business, he got frustrated every time such mishaps happened because they slowed down his progress.
Like many other business owners, Adrian hated putting on hold a number of income generating tasks just to deal with his accounting paperwork. Since we were his bookkeepers, we took care of his data entry processes; however, getting the much needed information became a nightmare.
When we suggested to Adrian that his business needs automation, he was thrilled!
After going through such a harrowing experience with accounting data entry, we explained to him how our accounting software works and he was ready to learn along the way. Most of the time, all he had to do was to take photos of various receipts and we would record the data in his business accounts including bank transactions.
It’s been a year since he started using our bookkeeping services, and now he has all the time he needs to manage his business.
Singapore Corporate Income Tax Computation
A company’s taxable income is not the same as net income.
The calculation of taxable income for a company begins with the net profit/loss in the company’s accounts and then after making various adjustments, arrive at the taxable income for the given accounting year.
Adjustments are made because some of the expenses incurred by your company may not be deductible for tax purposes. Similarly, some of the income received by your company may not be taxable or it may be taxed separately as a non-trade source income.
How can we help?
At Tianlong Services, we are guided by systematic approaches that are built into corporate tax computation software, and you do not need high level staff to perform these tax calculations.
We adopt standard formats and formulas to compute your corporate taxes, which empowers your tax personnel to work smarter and more efficiently resulting in productivity growth. This results in productivity growth as well as substantial cost savings and improved profits for your business.
Request a free trial
You will get a month’s worth of bookkeeping. Whether or not you continue with us, your reports for the month are yours to keep.