Corporate Income Tax Guide for Businesses in Singapore

In Singapore, corporate income tax is calculated in a year-to-year manner. The rate itself is 17%. If you have a business that has just been established, you must know the brief guide to Singapore’s corporate income tax below.

A Brief Definition of a Corporate

Before fulfilling your obligation as a business or company owner, you must know first about the definition of a business or company that is outlined as follows regarding corporation income tax:

• A company is formed or authorized under the Companies Act 1967 and every other Singapore statute. The name frequently includes the letters ‘Ltd’ or ‘Pte Ltd’.
• A multinational corporation established in Singapore, including a multinational business’s branch
• A multinational corporation formed or licensed outside of Singapore.

Proprietorships or partnerships are not defined as companies.

Basis Timeframe and Year Assessment

The company gets audited on the money made in the previous fiscal year. Which means money received in the fiscal year 2021 can be taxed in 2022. In tax parlance, 2022 will be the Year of Assessment (YA), since that is the year when your profit earned is taxed.

IRAS examines the revenue, spending, and so on during the fiscal year to calculate the amount of taxation. This fiscal year has been regarded as a ‘basis period.’ It is often a one year period before the YA. 

Your organization determines the fiscal year end depending on what best represents its company’s operations. Companies’ fiscal year ends are not determined by IRAS.

Whenever you modify your company’s fiscal year end, you must notify the Accounting and Corporate Regulatory Authority (ACRA) using BizFile+. The information provided through ACRA can subsequently be used by IRAS to amend its records. This seems a little bit complicated but no need to worry since you can use Biz Atom’s services instead.

Obligations for Corporate Income Tax Forms

Annually, the company is supposed to report two corporation income taxes through IRAS: ECI or Estimated Chargeable Income, as well as Form C-S/Form C-S (Lite)/Form C.

A Summary of Business Taxable Income

There are two kinds of corporate income tax that you must fill. So, to understand them, you must know ECI and Form C-S/Form C-S (Lite)/Form C.

ECI

Its goal is to announce an estimation of the business’s income taxation over a certain fiscal year (YA).

Apart from firms that are eligible for such an ECI registration waiver, including those that are explicitly exempt from submitting an ECI, businesses must file within 3 months of the end of the fiscal year.

Form C-S/Form C-S (Lite)/Form C

This one is intended to report the business ’ financial taxable revenue for a YA on November 30th annually.

ECI or Estimated Chargeable Income Filing

You would be notified about an ECI file well before the conclusion of the company’s fiscal year. It is a friendly reminder to submit your business’s ECI.

You may understand further about ECI so if your enterprise is eligible for ECI compliance exemption or is explicitly exempt from filing by visiting the ECI website.

For New Companies

IRAS can send you one ECI registration reminder before the conclusion of your business’s fiscal year, beginning with the year following the year of formation. Because most firms do not shut down their initial chart of finances during the year of establishment, you would not obtain the notice in that year.

Whenever your firm finishes the very first chart of financial during the year of establishment, you must still submit the ECI within 90 days of the conclusion of your business’s first fiscal period, even if you’ve never gotten any ECI registration notification. Unless the firm meets the requirements for an ECI registration waiver, it is the case.

Form C-S/Form C-S (Lite)/Form C Filling

By May annually, you will get a Form C-S/Form C-S (Lite)/Form C submission reminder. It is a prompt to complete the company’s Form C-S/Form C-S (Lite)/Form C.

You can learn more about Form C-S/Form C-S (Lite)/Form C, as well as whether your organization is required to submit Form C-S, Form C-S (Lite), or Form C.

For New Companies

Beginning with the 2nd year following establishment, you will get the Form C-S/Form C-S (Lite)/Form C submission announcement from IRAS around May annually. Since many firms need not shut down their initial chart of financials during the year of establishment, you would not obtain the notice in that year. 

For instance, if your business is formed in 2021, then you can acquire your initial Form C-S/Form C-S (Lite)/Form C submission announcement during the Year of Assessment (YA) 2023 in May 2023.

Conversely, if the business was formed in the following year:

• Shuts the initial batch of accts; plus
• Runs a business as well as earns significant earnings

Whether you did not obtain either Form C-S/Form C-S (Lite)/Form C submission announcement, you must still submit the Form C-S/Form C-S (Lite)/Form C for the YA shortly following the establishment year.

In the same instance, when your business shuts the 1st chart of finance on December 31, 2021, as well as begins operations or earns revenue during 2021, you must complete the Form C-S/Form C-S (Lite)/Form C for YA 2022 on November 30, 2022.

Additional Information for New Companies

The first YA of your company is the YA that relates to the basis period during which your company is incorporated.

It depends on the financial year end chosen and the closing date of the first set of accounts. Hence, the first YA of your company may differ from another company that was incorporated on the same day.

Conclusion

So, those are the guides for the corporate income tax. They might be a little complicated, but you have no need to worry because there is Biz Atom, that is ready to solve your problems in business taxation.

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