The following types of income are generally considered “non-taxable” income in Singapore:
- Capital gains such as:
- Gains on sale of fixed assets; or
- Gains on foreign exchange translations on capital transactions.
- Income that qualifies for tax exemption under the Income Tax Act such as
- Exempt shipping income derived by a shipping company;
- Foreign-sourced income such foreign-sourced dividends, branch profits, or service income that is remitted into Singapore, provided the income was already subject to a minimum headline tax rate of 15% in a foreign jurisdiction.
- Foreign-sourced income that is not remitted into Singapore.
- Dividend income
There is no difference in the tax rates for resident and non-resident corporations. However, non-resident corporations are not eligible for full tax exemption and other benefits such as the Double Taxation Agreement that Singapore has with other countries and tax exemption on foreign sourced dividends, foreign branch profits and foreign sourced service income under Section 13(8) of the Income Tax Act.
If I have incurred a loss or have no income for the first three years, do I qualify for tax exemption scheme for new companies in the subsequent years
No. Each loss-incurring year that is part of the first three years of business will still be considered as part of the three years of full tax exemption.
Yes. Even if your company made losses for the year, you are still required to file Form C.
You can claim deduction for expenses that are incurred in the production of income, that are not capital in nature.
Examples of deductible and not deductible expenses:
|Deductible expenses||Not deductible expenses|
|Bad debts (trade debtors)
|Bad debts (non-trade debtors)|
|Commission CPF, skill development levy, foreign workers’ levy||CPF contributions (Voluntary)
Certificate of entitlement (COE) for motor vehicles
|Depreciation (you may claim capital allowances)
Exchange loss (trade and revenue in nature)
|Entrance fee (country club or other clubs)
Exchange loss (non-trade or capital in nature)
|Fixed assets written off
Fixed assets acquisition cost
|Impairment loss on trade debts
Insurance (e.g. fire, workmen compensation)
|Impairment loss on non-trade debts
Installation of fixed assets
Insurance (certain life insurance)
|Legal and professional fees (trade and revenue transactions)||Legal and professional fees (non-trade or capital transactions|
|Medical expenses (restricted to 1% of total remuneration)
Motor vehicle expenses (goods / commercial vehicles, e.g. van, lorry and bus)
|Medical expenses (amount exceeding 1% of total remuneration)
Motor vehicle expenses (“S” plate private passenger cars)
|Periodicals & newspapers
Printing & stationery
Provision for obsolete stocks (specific)
Private and domestic expenses
Private hire car
Provision for bad and doubtful debts (general)(note impairment loss on trade debts)
Provision for obsolete stocks (general)
|Rental of business premises
Repairs and maintenance
Restoration costs (according to tenancy agreement)
Research and development
|Renovation or refurbishment works (you may claim Section 14Q deduction for qualifying expenditure incurred from 16 Feb 2008 to 15 Feb 2013)|
Staff remunerations (salary, bonus and allowances)
|Tax fees (service fees paid to tax agent)
Transport (public transport and goods / commercial vehicles)
|Transport (“S” plate private passenger cars)|
Water & electricity
If a company’s ECI is not furnished within the stipulated period, the Comptroller may issue a Notice of Assessment based on an estimation of the company’s income. If the company does not agree with IRAS’ estimated assessment, it has to object in writing within 30 days from the date of being served the Notice of Assessment. Otherwise the estimated assessment will be treated as final even if the Form C submitted subsequently shows a lower taxable amount.
A Notice of Assessment is a statement showing the company’s income assessed and the amount of tax payable or repayable. Hence, it is advisable to forward any correspondences from IRAS to your respective tax agent.
These are tax-deductible at twice the donation amount:
- Cash Donations
- Shares Donations
- Computer Donations
- Artefact Donations
- Public Art Tax Incentive Scheme
- Land and Building Donations
- Understatement of income
- Businesses should properly account for all the earnings and invoices issued for goods sold or services rendered. Omission of particular receipts or invoices issued amounts to an understatement of income, which is an offence.
- Taxpayers should issue serially numbered invoices in respect of goods sold or services rendered. These receipts supported by proper invoicing should be properly accounted when preparing accounts.
- Claiming Deductions for Non-deductible Expenses
- Expenses not incurred for the business such as directors’ private expenses on entertainment, vacation and personal purposes. Businesses should segregate private expenses and exclude them from their claims.
- Claims of motor vehicle expenses in respect of private-plate cars (i.e. non-Q plate cars) and business service passenger vehicles (Q-plate cars) e.g. petrol, insurance, repair & maintenance, parking fees, ERP charges, hire purchase interest, etc. Such expenses are not deductible even if they are incurred in the course of business.