Singapore

Tax Guide 

I

IMPORTANT DISCLAIMER: No person, entity or corporation should act

or rely upon any matter or information as contained or implied within this
publication without first obtaining advice from an appropriately qualified
professional person or firm of advisors, and that such advice specifically
relates to their particular circumstances. This publication should not be
regarded as offering a complete explanation of the taxation matters that
are contained within this publication.
This publication has been sold or distributed on the express terms and
understanding that the publishers and the authors are not responsible
for the results of any actions which are undertaken on the basis of the
information which is contained within this publication, nor for any error in,
or omission from, this publication.
The publishers and the authors expressly disclaim all and any liability and
responsibility to any person, entity or corporation who acts or fails to act as
a consequence of any reliance upon the whole or any part of the contents
of this publication.

PKF International Limited is an association of legally independent member

firms.
 Singapore 1

Singapore
Currency: (S$) Dial Code To: 65 Dial Code Out: 001
Member Firm
CITY NAME CONTACT INFORMATION
Singapore Sajjad Akhtar 65 6325 9360
info@pkfsingapore.com

A. Taxes payable

Federal taxes and levies

Company tax: Under the Singapore Income Tax Act (Cap. 134),
income tax is imposed on income accruing in or derived from Singapore
or received in Singapore from outside Singapore in respect of the following:
• gains or profits from any trade or business
• dividends, interest and discounts
• charges or annuities
• rents, royalties, premiums and any other profits arising from property
• any gain or profit of an income nature not covered in the above.
There are two bases of taxation in Singapore: territorial and remittance.
Under the territorial basis, income is liable to Singapore tax if the source of
the income is in Singapore. Under the remittance basis, income that has a
source outside Singapore is liable to Singapore tax only if it is received in
Singapore, unless specifically exempt from tax.
A company is resident in Singapore if it is managed and controlled in
Singapore. Non-resident companies carrying on business in Singapore
are taxed on their Singapore source income and on foreign source income
received in Singapore unless specifically exempted.
The profits of the foreign branch of a Singapore company are subject
to tax if remitted to Singapore. The profits of the Singapore branch of
a foreign company taxed on the same basis as a Singapore resident
company.
Income tax is levied on the income of companies at the prevailing
corporate rate while income tax is levied on the income of individuals at a
progressive scale of rates.
The tax year is referred to as the year of assessment (YA) and runs from 1
January to 31 December of each year.
Income tax for a YA is computed on the basis of the income derived in the
preceding calendar year from all sources. In the case of a trade, business,
profession or vocation, when the accounting year ends on a date other
than 31 December, the Inland Revenue Authority of Singapore (IRAS)
normally accepts the accounting year as the basis year instead of the
calendar year. Under such circumstances, tax is assessed on the income
for the accounting year ending within the year preceding the Year of
Assessment. Non-trade income has been taxed on a calendar year basis
in the past. With effect from YA 2005, dividends (except for Singapore
franked dividend income derived prior to 1 January 2008 that will continue
to be assessed on a calendar year basis until YA 2009 when the one-tier
system comes into full force), interest, rents and other passive income are
also taxed on an accounting year basis.
From YA 2008, the corporate tax rate is 18%. This is reduced from 20%
in YA 2007. Corporate income tax returns for each YA must be filed by
30 November of that year. A company is required to provide an estimate
of its chargeable income within three months of its financial year end. The
number of instalments available for payment of the estimated tax varies
depending on whether the estimate of the chargeable income is submitted
within one to three months of the year end and also whether the estimate
is electronically filed or paper-filed.
Goods and Service Tax (GST): This is a value added tax levied
on taxable goods and services in Singapore and on imports into the
territory called Goods and Service Tax (GST). Input tax paid is generally
offset against output tax payable. The tax rate was increased from 5% to
7% from 1 July 2007. Exempt supplies relates to the sale and rental of
residential properties and specified financial services.
Stamp duty: Stamp duty is a tax on commercial and legal documents
relating to immovable property and shares. These include a sale/mortgage/
2 Singapore

lease of immovable property and sale/mortgage of shares. The stamp duty

varies with the type of document.
It is payable before executing the document. Once it is executed, it must
be stamped:
• within 14 days after the date of the execution of the document in
Singapore; and
• within 30 days after the date of its receipt in Singapore if the document
is executed overseas.

B. Determination of taxable income

In general, deductions are allowed for expenses incurred wholly and
exclusively for the production of the income concerned. Restrictions apply
to medical expenses and motor vehicle expenses.
Capital Allowance: Accounting depreciation is not allowed for
tax purposes. Instead, capital allowances will be available at the following
rates:
Year of Subsequent
Acquisition Years
(%) (%)
Industrial buildings 25 3
Plant and machinery 20 Varies according to
useful economic life
Alternative rate – plant and
machinery – 33.33
Computerised and automated
equipment, designated
environmentally friendly assets,
websites and low value
(≤S$1000) items up to S$30,000. 100%

Stock/Inventory: No specific basis is required although this should

conform to generally accepted accounting practices and be applied
consistently from year to year. The LIFO method is specifically prohibited.
Capital Gains and Losses: Capital gains are generally not taxable,
accordingly the capital losses are not tax-deductible, although transactions
may be categorized as trading in nature and thus taxable by the tax
authorities.
Dividends: Dividends paid by Singapore resident companies are
exempt from tax in the hand of recipient from 1 January 2008.
Interest Deductions: Interest is deductible to the extent it relates
to funds borrowed for income-producing purposes. There are no thin
capitalisation or controlled foreign company rules.
Capital allowances and Losses: Current year unutilised capital
allowances (CA) and trade losses can be:
i) carried back to the YA immediately preceding YA in which the
capital allowance arose or trade losses incurred up to a maximum of
$100,000. The carry-back relief is available to all businesses including
sole-proprietors and partnerships
2) carried forward.
For capital allowances to be carried back/forward, there are two tests
(i.e. business continuity test and shareholding test) to be satisfied. The
business continuity test means that the business carries on the same
trade. The shareholding test means that there is no substantial change
(>50%) in the ultimate shareholders and their respective shareholdings on
relevant days. That is the first day of the YA in which the capital allowance
arose and the last day of the YA in which the capital allowances are utilised
for CA to carry back. Also, the last day of the YA in which the capital
allowance arose and the first day of the YA in which the capital allowances
are utilised for CA to carry forward.
For losses to be carried back/forward, there is only the shareholding test
which means that there is no substantial change (>50%) in the ultimate
shareholders and their respective shareholdings on relevant days. That is
the first day of the year in which the losses incurred and the last day of the
YA in which the losses are utilised for losses to carry back. Also, the last
 Singapore 3

day of the year in which the losses incurred and the first day of the YA in
which the losses are utilised for losses to carry forward.
Foreign-sourced income: With effect from 1 June 2003, foreign
income such as dividends, foreign branch profits and foreign services
income remitted into Singapore by any resident person (including a
company, body of persons) except a partnership is exempted from
Singapore tax provided the following conditions are met:
(1) In the year the income is remitted to Singapore, the headline tax rate
(highest corporate tax rate) of the foreign jurisdiction is at least 15%.
(2) The foreign income has been subject to tax in the foreign jurisdiction
from which it was received.
The second condition, whereby the foreign income has been subject to tax
in the foreign jurisdiction from which it was received, would not be satisfied
if no tax is imposed by that foreign jurisdiction on the foreign income (that
is the income is taxable but exempted from tax in the foreign jurisdiction).
Where the foreign income is a dividend, the second condition covers the
tax imposed in the foreign jurisdiction on the dividend itself and the tax
paid in the foreign jurisdiction (underlying tax) on the income out of which
the dividend is paid.
Foreign-sourced income received in Singapore by resident individuals on
or after 1 January 2004 will be exempt from tax except where the foreign-
sourced income is received through a partnership in Singapore.
Tax incentives: Various tax incentives are available to apply for under
Income Tax Act and Economic Expansion Incentive Act. The following is
an overview:
Exemption from tax:
• shipping profits
• income of non-resident arising from funds managed by fund manager
in Singapore
• international shipping profits
• income of foreign trust
• income of venture company
• gains or profits from entrepreneurial employee equity-based
remuneration scheme
• gains or profits from company employee equity-based remuneration
scheme
• income of not-for-profit organisation
• income of foreign account of philanthropic trust
• income derived from asset securitisation transaction
• relevant income of prescribed locally administered trust
• income of company incorporated and resident in Singapore arising
from funds managed by fund manager in Singapore
• income of shipping investment enterprise
• income derived by law practice from international arbitration held in
Singapore.
Concessionary rate of tax under Income Tax Act:
• Asian currency unit, fund manager and securities company
• non-resident shipowner or charterer or air transport undertaking
• insurance and reinsurance business
• offshore transactions on any market maintained by Singapore
Exchange or its subsidiaries
• headquarters company
• oil trading company
• finance and treasury centre
• international commodity trading company
• offshore leasing of machinery and plant
• trustee company
• members of commodity futures exchange
4 Singapore

• income derived from debt securities

• cyber trading
• global trading company
• financial sector incentive company
• provision of processing services to financial institutions
• commodities derivatives trading company
• income derived from securities lending or repurchase arrangement
• income derived from organizing or staging tourism event
• clearing member of Singapore clearing house
• shipping investment manager
• leasing of aircraft and aircraft engines
• aircraft investment manager.
Economic Expansion Incentives:
• pioneer industries
• pioneer service companies
• development and expansion incentive
• export of services
• foreign loans for productive equipment
• royalties, fees and development contributions
• investment allowances
• overseas enterprise incentive
• enterprise investment incentive
• integrated industrial capital allowances
• research and development and intellectual property management hub
• overseas investment incentive.
Tax exemption scheme:
All Companies
With effect from YA 2008, a partial tax exemption applies in respect of the
first $300,000 of the chargeable income of a company. Under this scheme:
(1) 75% of the first $10,000 of chargeable income is tax exempt
(2) 50% of the next $290,000 of chargeable income is tax exempt.
Effectively, this means that an amount of $152,500 out of the first
$300,000 of chargeable income is tax exempt. The exemption does
not apply to Singapore dividends received by companies, companies
granted tax incentives whereby the income is taxed at a rate other than
the corporate tax rate, and income of a non-resident company subject to a
final withholding tax rate.
New Companies
With effect from YA 2008, the first $100,000 and 50% of the next
$200,000 of chargeable income (excluding Singapore dividends) is tax
exempt for any of its first three consecutive YA. The first YA refers to the YA
that relates to the basis period in which the company is incorporated.
From YA 2005 to YA 2007, the amount of tax exempt chargeable income
was $100,000.
Conditions for Tax Exemption:
• the company must be incorporated in Singapore (other than a
company limited by guarantee)
• the company must be tax resident* in Singapore for that YA
• the company have no more than 20 shareholders throughout the basis
period for that YA where:
i) all of the shareholders are individuals beneficially holding the shares
in their own names; or
ii) at least one shareholder is an individual beneficially holding at
least 10% of the issued ordinary shares of the company.
* A company is resident in Singapore if the control and management of
its business is exercised in Singapore.
 Singapore 5

C. Foreign tax relief

Where both Singapore and overseas tax has been incurred on foreign
source income, tax credits are available both unilaterally and under
Singapore’s tax treaty network under specified circumstances. Foreign tax
relief is available as follows:
(1) Commonwealth relief for tax paid in Commonwealth countries which
grant reciprocal relief (subject to certain circumstances)
(2) tax credit for countries which have a double tax treaty agreement with
Singapore
(3) unilateral tax credit for certain income.
Tax credits for overseas taxes are available under double tax treaties,
subject to a maximum of the Singapore tax suffered on the income.

D. Corporate groups
With effect from YA 2003, a company belonging to a group may transfer
its current year unabsorbed capital allowances, current year unabsorbed
trade losses and current year unabsorbed donations to another company
in the same group under the group relief system. The items transferred will
be deducted against the assessable income of the transferee company.
For group relief, both the transferor and transferee companies would:
• have to be Singapore incorporated companies
• belong to the same group of companies and maintain a 75%
shareholding threshold; and
• have the same financial year-end.
Two Singapore incorporated companies are members of the same group if:
• at least 75% of the ordinary share capital in one company is
beneficially held, directly or indirectly, by the other; or
• at least 75% of the ordinary share capital in each of the two
companies is beneficially held, directly or indirectly, by a third
Singapore incorporated company.

E. Related party transactions

In general, all related party transactions are expected to be carried out at
arm’s length. The IRAS has the power to substitute an arm’s length price
for tax purposes. Other measures that may be taken include:
• a resident company may be taxed as an agent of a non-resident
company under certain circumstances
• capital allowances may be restricted where the sale and purchase
of fixed assets between related parties is deemed not to be at arm’s
length.

F. Withholding tax
1. Interest, fees, payments in connection 15%
with any loan or indebtedness
2. Royalty or other payment for the use of 10% (final tax)
movable property
3. Payment for the use or right to use 10% (final tax)
scientific, technical, industrial or
commercial knowledge or information
4. Technical assistance and service fees Prevailing corporate tax rate
and management fees (20% for individuals)
5. Rent or other payments for the use of 15% (final tax)
movable properties
6. Time charter fees and voyage charter Nil to 3%
fees, bareboat charter fees
7 Directors' remuneration/directors' fees 20%
8. Proceeds from sale of any real property 15%
by a non-resident property trader
There is no withholding tax on dividends.

G. Exchange controls
There are no exchange controls in Singapore. However, effective from 1
November 2007, anyone who carries with him into or out of Singapore,
moves into or out of Singapore, through cargo, post or other means; or
6 Singapore

receives from outside Singapore, physical currency and bearer negotiable

instruments, the total value of which exceeds S$30,000 (or its equivalent
in foreign currency) must give a report to an immigration officer or to the
Suspicious Transaction Reporting Office.

H. Personal taxation
Personal Income Tax Rates
Income will generally be taxable in the hand of the individual except
otherwise exempted.
The personal income tax rate is capped at a maximum of 20% with effect
from YA 2007 See the table below for details of rates charged.
Not Ordinarily Resident Scheme (NOR)
The NOR scheme was first introduced to attract global talent to relocate to
Singapore. Qualifying individuals can apply for NOR status and certain tax
concessions under the scheme. Concessions available are:
• the time apportionment basis of taxation provided that the resident
NOR Singapore employee must spend at least 90 days outside
Singapore for business reasons pursuant to Singapore employment
and the minimum Singapore employment income threshold of
$160,000 is met
• the tax exemption of employer contributions to non-mandatory
overseas pension funds or social security schemes up to NOR
cap, provided that resident NOR Singapore employee is neither a
Singapore citizen nor a permanent resident of Singapore and his/
her employer must not claim deduction on contribution made to non-
mandatory overseas pension or provident funds and social security
schemes up to the NOR cap.
In general, an individual could apply for NOR status if he has three
consecutive non-resident tax years immediately prior to his first year
of residency in Singapore. The NOR status would be accorded to the
qualifying individual for a five-year period commencing with his first year
of residency in Singapore. During this five-year period, the individual may
claim for applicable yearly tax concessions under the NOR scheme as long
as he is tax resident for that year.
Taxable Income ($) (%)
Up to 20,000 0
20,001–30,000 3.50%
30,001–40,000 5,5%
40,001–80,000 8.5%
80,001–160,000 14%
160,001–320,000 17%
Over 320,000 20%

I. Treaty withholding tax rates

The chart shows the maximum withholding tax rates applicable under the
tax treaties between Singapore and the respective territories. Where the
domestic rate is lower, that rate applies rather than the treaty rate.

Dividends Interest Royalties

(%) (%) (%)
Treaty countries:
Australia 15 10 10
Austria 10 5 5
Bahrain 0 5 5
Bangladesh 15 10 10
Belgium 15/5 (4) 5 5
Brunei 10 5(2)/10 10
Bulgaria 5 5 5
 Singapore 7

Dividends Interest Royalties

(%) (%) (%)
Treaty countries:
Canada 15 15 15
China 10/5 (1) 7(2)/10 10
Cyprus 0 7(2)/10 10
Czech Republic 5 0 10
Denmark 10/5(9)/0 (3) 10 10
Egypt 15 15 15
Estonia 10/5 (3) 10 7.5
Fiji 15/5 (4) 10 10
Finland 10/5 (4) 5 5
France 15/10 (4) 10 0
Germany 15/5 (4) 8 8
Hungary 10/5 (1) 5 5
India 15/10 (1) 10(2)/15 10(10)/15
Indonesia 15/10 (1) 10 15
Israel 10/5 (4) 7 5
Italy 10 12.5 15(11)/20
Japan 15/5 (5) 10 10
Kazakhstan 10/5 (1) 10 10
Kuwait 0 7 10
Latvia 10/5 (1) 10 7.5
Lithuania 10/5 (1) 10 7.5
Luxembourg 10/5 (4) 10 10
Malaysia 10/5 (1) 10 8
Malta  0 (17) 7(2)/10 10
Mauritius 0 0 0
Mexico 0 5(2)/15 10
Mongolia 10/5 (1) 5(2)/10 5
Myanmar 10/5 (1) 8(2)/10 10(11)/15
Netherlands 15/0 (1) 10 0
New Zealand 15 15 15
Norway 15/5 (1) 7 7
Oman 5 7 8
Pakistan 10/12.5/15 (6) 12.5 10
Papua New Guinea 15 10 10
Philippines 25/15 (12) 15 0(13)/15(14)/25
Poland 10 10 10
Portugal 10 10 10
Qatar 0 5 10
Romania 5 5 5
Slovak Republic 10/5 (4) 0 10
South Africa 15/5 (4) 0 5
South Korea 15/10 (1) 10 15
Sri Lanka 15 10 15
Sweden 15/10 (15) 10(16)/15 0
Switzerland 15/10 (1) 10 5
Taiwan ‑ (7) ‑ (7) 15
8 Singapore

Dividends Interest Royalties

(%) (%) (%)
Treaty countries:
Thailand 20 (1) 10(2)/25 15
Turkey 15/10 (1) 7.5(2)/10 10
United Arab Emirates 5 7 5
United Kingdom 15/5 (4) 10 10
Uzbekistan 5 5 8
Vietnam 12.5/5/7 (8) 10 5(11)/15

1 The rate generally applies to participations of at least 25% of capital or

voting shares, as the case may be.
2 The lower rate applies to interest received by a bank or financial
institution.
3 The rate applies to dividends paid to a company which holds directly
at least 25% of the payer’s capital for an uninterrupted period of at
least one year, and the dividends are declared in that period.
4 The rate generally applies to participations or control of at least 10% of
capital or voting power, as the case may be.
5 The rate applies to dividends paid to a company which holds directly
at least 25% of the payer’s voting shares during a six month period
prior to the year-end for which the distribution of profits occur.
6 10% for dividends paid to the beneficial owner by a company engaged
in an industrial undertaking, 12.5% for dividends paid to the beneficial
owner by a company not engaged in an industrial undertaking, and
15% in all other cases.
7 The domestic rate applies. There is no reduction under the treaty. In
respect of dividends, the aggregate of dividend withholding tax and
corporate income tax on the payer’s profits cannot exceed 40% of the
taxable income from which the dividends are declared.
8 5% for dividends paid to a company which contributed directly or
indirectly more than 50% of the payer’s capital or more than USD
10 million, 7.5% for dividends paid to a company which contributed
between 25% to 50% of the payer’s capital.
9 The lower rate applies to dividends received by pension fund or
similar institution providing pension schemes in which individuals may
participate in order to secure retirement benefits.
10 The lower rate applies to royalty paid for any industrial, commercial or
scientific equipment and related technical service fees.
11 The lower rate applies to payments of any kind received as a
consideration for the use of, or the right to use, any copyright of
scientific work, any patent, trade mark, design or model, plan, secret
formula or process or for the use of, or the right to use, industrial,
commercial or scientific equipment, or for information concerning
industrial or scientific experience.
12 The lower tax rate applies when the recipient is a company (including
partnership) and during the part of the paying company’s taxable
year which precedes the date of payment of the dividend and during
the whole of its prior taxable year (if any), at least 15 percent of the
outstanding shares of the voting stock of the paying company was
owned by the recipient company.
13 The lower tax rate applies in the case of Singapore where the royalties
are approved under the Economic Expansion Incentives (Relief from
Income Tax) Act of Singapore.
14 The lower tax rate applies in the case of the Philippines where the
royalties are paid by an enterprise registered with the Philippine Board
of Investments and engaged in preferred areas of activities and also
royalties in respect of cinematographic films or tapes for television or
broadcasting.
15 The lower tax rate applies where the dividend is paid to a parent
company (beneficial owner of the dividend), which is a resident of
Sweden.
 Singapore 9

16 The lower tax rate applies where the interest derived from sources
within one of the Contracting States by any financial institution which is
a resident of the other Contracting State.
17 The tax on the gross amount of the dividends shall not exceed the tax
chargeable on the profits or income of the company out of which the
dividends are paid.
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