When it comes to corporate tax filing, you need to understand what documents you will have to submit, items that can be deducted, and items that need to be included for taxing. In this article, we’ve summarized general knowledge about corporate tax filing in Singapore. Do note that this guidance should not be used as a replacement for professional advice.
Taxable Income Overview
Singapore companies are taxed on income accrued in or derived from Singapore. Income received in Singapore from outside Singapore is subject to applicable tax exemptions and reliefs. Taxable income refers to:
- gains or profits from any trade or business;
- income from an investment such as dividends, interest, and rental;
- royalties, premiums, and any other profits from properties; and
- other gains that are revenues in nature.
To calculate taxable income, the following adjustments are made to the net income/loss data of Singapore companies:
Deduct non-taxable income
Income that is not taxable is deducted from chargeable income. Examples include capital gains, sales of fixed assets, foreign exchange gains from capital transactions, exempt shipping income from shipping companies, foreign-sourced dividends, branch profits & service fees received by local companies that meet qualification requirements, and other income which is exempt from tax under the provisions of the Singapore Income Tax Act.
Deduct investment income
Investment income is non-trading income, including interest income, dividend income, and rental income. Investment income to calculate income tax is assessed separately because excess expenses of income received from one investment source cannot be claimed against surpluses arising from other investment sources. For example, extra costs attributable to rental income are not deductible against dividend or interest income.
Deduct qualified business expenses
Expenses incurred entirely and exclusively in the production of trade income are deductible. Deductible qualified business expenses include salary, office rent, service fees, R&D fees, and so on. Non-deductible qualified business expenses include fines, write-off of fixed assets, income tax, personal and domestic expenses, motor vehicle expenses incurred in connection with private passenger cars, etc.
Deduct capital allowances
Expenses incurred on the purchase of fixed assets are not deductible for tax purposes because they are capital in nature. Depreciation of fixed assets is also not deductible for tax purposes. However, in exchange for depreciation, companies can request a reduction for the damage to their fixed assets which is known as a “capital allowance.”
Deduct unutilized losses
Unutilized losses incurred are deductible from income in Singapore. An unutilized loss means a) it must arise from carrying the business; b) it has never been used before. The deduction of losses follows a “previous year” basis, i.e., the deduction is allowed in the year(s) following the year the loss occurred. If losses cannot be fully adjusted in the relevant year of assessment (YA), the remaining portion can be carried over to the next YA.
Deduct unutilized donations
Only donations made to approved public institutions can be deducted to calculate corporate income tax.
Subject to qualifying conditions, unutilized capital allowances and trading losses can be carried forward indefinitely, while unutilized donations can be carried forward up to 5 YAs.
Steps to Corporate Tax Filing
To stay compliant with the Inland Revenue Authority of Singapore (IRAS), every company incorporated in Singapore is required to file:
- Annual corporate tax returns, using Form C-S/C.
- Estimated Chargeable Income (ECI) if the company’s annual revenue exceeds S$1 million.
Filing Form C-S/C
Companies that meet the following criteria are eligible to file Form C-S, the condensed version of Form C:
- Established in Singapore.
- Have an annual income of S$5 million or less.
- Taxed at 17% on chargeable income.
- Do not claim any of the following in the YA:
-Carry-back of capital allowances/losses for the current year,
-investment allowance, and
-foreign tax credit and tax deducted at the source.
Documents required for filing Form C-S:
- Audited/unaudited financial statements.
- Tax calculations and supporting schedules.
- Other documents such as claim forms for claiming tax deduction/benefits.
Additional documents to prepare for filing Form C:
- Form IRIN 301 (additional information on income and deductions).
- Detailed income statement.
- Form GR-A and Form GR-B (Group relief forms).
- Research & Development claim form.
- Declaration form to claim writing-down allowances for Intellectual Property Rights (IPR).
- A capital contribution form and others.
Dec 15 extended filing deadline, which was initially introduced in 2012 to encourage companies to file their SPT e-Files, is no longer be available in 2021. Starting from the YA 2021, all companies must e-File their Corporate Income Tax Returns by 30 Nov 2021.
Filing an Estimated Chargeable Income (ECI) Form
ECI is an estimate of a company’s annual taxable income, net of tax-allowable expenses. Every company incorporated in Singapore must submit an ECI to IRAS within three months after the financial year ends.
Waivers to apply for ECI are granted to companies that meet the following two criteria:
- Annual revenues do not exceed S$ 5 million.
- Nil ECI for the YA.
After IRAS processes the ECI application, the company will issue a Notice of Assessment (NOA), in which the amount of tax to be paid has been determined. The amount must be paid in full within one month from the date of issue unless payment by installments has been arranged.
You don’t have to waste precious time and energy on the complex and extensive paperwork that tax filing entails. As an authorized accounting service provider in Singapore, Biz Atom can assist you in preparing unaudited financial statements, ECI, and Form C-S/C. Contact us for more information about Singapore tax filing and our accounting services.