Tag: setting up a company in singapore

Guide To: Understanding Tax Rates For Business After Setting Up A Company In Singapore

After setting up a company in Singapore, business owners are fully able to begin sales. While they are exempted from compliance regulations for a fixed period of time, they are still required to pay attention since they will have to comply after the time period is up. Some of the compliance requirements that all businesses should comply with involve change updating and tax filing.


Business owners who have just accomplished the Singapore company formation process can rely on this as a guide to keep up to date with information and tax processes.


Tax Exemption


For the time being, companies in Singapore are eligible for partial tax exemption. Startup companies that have accomplished their Singapore company formation are eligible for a tax exemption scheme specially catered to startups too.


Eligible corporations can get a 75% tax exemption for the first $10000 they have earned (with a cap limit of $7500). For their next $290000 chargeable income earned, they can receive up to 50% tax exemption under the scheme (with a cap limit of $145000).


Corporate Income Tax Rebate (YA2013 to YA2018)

Taking the new revisions into account, eligible companies can be granted up to 50% for their corporate income tax rebate for year of assessment 2017, and up to 20% for their rebate for year of assessment 2018. Income that was derived under non-resident companies and subjected to final withholding tax are not considered applicable when it comes to the corporate income tax rebate.

Computation Process


The corporate income tax rebate is computed only after all tax set offs like foreign tax credits have been deducted from the tax payable.


An example for the computation process in YA 2017, where there is a tax rate of 17% would be to first consider the chargeable income after removing the exempt amount. Let’s say this amount is $500000. With reference to the 17% tax payable rate, the total amount of tax payable is [(500 000/100) x 17].

Next, business owners should factor in the 50% corporate income tax rebate rate, which is 50% of the tax payable amount. However, it is also prudent to note that there is a cap restriction. So instead of using the amount calculated, business owners should use the rebate cap instead.

This means that the net tax payable for year of assessment 2017 should amount to [$85000-$25000].

In cases where the corporation has a tax rate of 17% and an added concessionary rate of 10% for YA 2017, the computation will reveal differences. To further elaborate, let’s assume that the chargeable income after is $500000 again.

The first step would be to derive the gross tax payable amount by measuring the tax payable rate and then adding the amount to what has been derived from the amount calculated with the concessionary rate. Let’s assume that this amount is $180000. A proper calculation equation would look like:  [(500000/100) x 17] + [($180000/100) x10].


These are some information about tax to know about after setting up a company in Singapore.