Your Guide to Corporate Tax Filing in Singapore
As a company director, you must know all the facets of corporate tax filing in Singapore. Because authorities, here, hold company directors responsible and liable for fulfilling corporate tax obligations of their charge within the deadlines.
However, Singapore is a pro-business environment. However, there are specific corporate tax regulations in place. If you are a newbie, this corporate tax filing guide will assist you in mastering the process and filing your dues on time and accurately.
What is Corporate Tax Filing in Singapore?
Corporate tax filing is a compulsory yearly process. You use it to declare the company’s income to the IRAS. You also pay unpaid taxes to IRAS which the government uses for the development.
Is Corporate Tax Filing Important?
Yes, timely and accurate corporate tax filing is important. Let us see a few of its key reasons:
Compliance
On-time corporate tax filing makes your company compliant with the tax regulations in force. It enables you to avoid penalties for late filing and legal issues arising from it. It protects your brand name and image and boosts investor’s confidence. You also stay on the right side of the regulating agencies like IRAS and ACRA.
Maintaining Records
Preparation for corporate tax filing updates your financial records. You can analyse these records from various angles to know the true financial status of your business. You get a clear-cut idea of your earnings, expenses, and tax dues. It also simplifies tracking the performance of your business and locates weaknesses in your business.
Claiming Deductions and Incentives
Error-free corporate tax filing in Singapore enables you to claim a number of tax exemptions and deductions that are provided by IRAS. They help to minimise your tax amounts and ultimately, improve your company’s financial standing.
Singapore Corporate Tax Filing is a Must for
As per IRAS, you must file corporate tax for your business if it is a,
- Business incorporated or registered in Singapore under the Companies Act. Typically, the names of these businesses contain terms like ‘Pte Ltd’ or ‘Ltd’
- Branch Office of a foreign-based company
- Foreign company registered or incorporated abroad
The owners of sole proprietorships must pay personal income tax on their income from their business firms. The partnerships must file their partnership tax returns to comply with the regulations.
Singapore Corporate Tax System
If you want to master corporate tax filing in Singapore, you must understand the concept of the Year of Assessment (YA). It denotes the calendar year, such as YA 2024 or Year of Assessment 2024, for which a company is filing its taxes.
In Singapore, you pay corporate tax on earnings of the preceding year. So, in YA2024, your corporate tax return filing will consider the income earned in 2023.
Both foreign and local companies must pay their corporate income tax at the flat rate of 17% on their chargeable income. You can easily calculate your company’s chargeable income (taxable income) by deducting claimable expenditures from its gross income.
Corporate Tax Filing Requirements
Take note that you must complete two corporate tax returns every year to comply with the requirements. It means you have to manage the filing of your business’ A) Estimated Chargeable Income (ECI) and B) Form C-S/ Form C-S (Lite)/ Form C on time.
Estimated Chargeable Income (ECI)
ECI is an estimate or a forecast of your business’ taxable profits (after deducting claimable expenses) for a YA. You file this estimate with IRAS within 3 months of the end of your financial year. It means if the end of a company’s financial year falls on March 31, 2024, its deadline for ECI filing will be June 31, 2024.
Determine If Your Company Must File ECI
You must self-assess if your company qualifies for the ECI filing waiver or is exempted from filing it. There is no need for you to file ECI for a financial year if you fulfil both criteria listed below:
- Annual revenue is $5 million or less, and
- ECI is nil for that YA
If mytax.iras.gov.sg web portal shows your ECI filing status as ‘Ready to File’ you should do so. However, if you qualify for an ECI filing waiver, ignore the status. There is also a need to contact IRAS for confirmation.
Who is Not Required to File ECI
The following entities are not required to file ECI:
- Foreign ship owners or charterers because their local shipping agent has already submitted or will submit their Shipping Return
- Foreign universities
- Designated unit trusts and approved CPF unit trusts
- Real estate investment trusts that enjoy tax treatment under Section 43(2) of the Income Tax Act 1947
- Cases where IRAS has granted the ECI filing waiver
Form C-S/Form C-S(Lite)/Form C
Each year, you must fill out and file one of the Forms C-S/C-S(Lite)/C with IRAS. The form you must use depends on your business’ revenue and other circumstances.
Form C-S/Form C-S(Lite)
You should use one of these forms if your taxable income is charged at 17% of the corporate income tax rate and you are not claiming certain deductions or credits in YA. These deductions may include Carry-back of Current Year Capital Allowances/Losses, Group Relief, Investment Allowance, Foreign Tax Credit, and Tax Deducted at Source.
- Use Form C-S (Lite) if your business’ annual revenue is $200,000 or less
- Use Form C-S if your business’ annual revenue is $5 million or less
Form C
Use Form C if your company don’t belong to the above two groups.
Note that you must fill and submit your form to IRAS on time. The deadline is November 30 of the YA.
Corporate Tax Filing Penalties
IRAS expects you to adhered to corporate tax filing requirements. Your filing must be accurate and on time. It may penalise you for late or inaccurate corporate tax filing. The penalties may include:
Penalty for Late Filing
If you miss the deadline for corporate tax filing, IRAS may send you an estimated Notice of Assessment (NOA). It uses your past information to calculate the estimated tax.
It may not reflect your current circumstances, and you have the right to object to it. However, you must pay it within 1 month from the issue date of NOA. Or you may have to pay 5% of the due tax amount as a penalty.
Penalty for Late Payment
After the 5% penalty, you have 60 days to pay your taxes in full. If you miss the deadline, IRAS may charge you a 1% monthly penalty which can go up to 12% of the due tax amount.
Penalty for Inaccurate Filing
If your corporate tax filing turns out to be inaccurate and there is evidence of intention of tax evasion, IRAS may ask you to pay 200% – 400% of the extra tax. In the worst-case scenario, IRAS may prosecute you, leading to a fine of $50,000 and/or 5 years in imprisonment.
Corporate tax filing in Singapore can be complicated. Any mistake in it, even unintentional, can have consequences. And, as a company director, you are responsible and liable for each of them. It is a thankless job as it generates no revenue for you and can be too demanding and resource-heavy. Hiring us, an expert corporate tax services Singapore, will enable you to delegate this task to our experienced tax consultants.
Focusing your entire attention on achieving business goals will help you grow your business. We will expertly manage your corporate tax filing in Singapore. Contact us at +65-6536 0036 or info@sbsgroup.com.sg for customised tax solutions.
Also Read: Singapore Income Tax Filing Services: Personal & Corporate Taxation
