To answer this question, we will need to know the tax rates and we will also need to set a few assumptions.
Here is the Singapore Resident Tax Rate:
| Service | Description | Fee (Ad hoc) | Fee (For clients who subscribe to our packages) |
|---|---|---|---|
| Directors Resolution in Writing (1) Drafting resolution (2) Circulation of resolution to obtain signatures (digital) (3) Update changes to ACRA Bizfile where necessary | - Opening and/or Closing Company Accounts with Bank - Change of Authorised Bank Signatory - Appointment and/or removal of auditor - Declaration of interim dividends - Addition/Change of Primarily and/or Secondary Business Activities - Change of Company Officers (Directors and Secretaries) - Change of Company Registered Address - Change of Company Financial Year End - Extension of AGM deadline for 60 days (excludes fee payable to ACRA) - Redemption of Preference Shares as prescribed in Company Constitution - Declaration of Solvency - Directors' declaration for Annual General Meetings - Other Ordinary Resolutions at Board Level | $150 | $100 |
| Members; Resolution in Writing (1) Drafting resolution (2) Circulation of resolution to obtain signatures (digital) (3) Update changes to ACRA Bizfile where necessary | - Addition/Changes to Company Board Membership - Transfers of Ordinary Shares involving individual persons (including share certificates) - Transfers of Preference Shares involving individual persons (including share certificates) - Transfers of Ordinary Shares involving Corporate Entities (including share certificates) * - Transfers of Preference Shares involving Corporate Entities (including share certificates) * - Allotment of new shares in cash (including share certificates) - Adoption of new Constitution/Memoramdi, and Article of Associations ** - Change of Company Name - Striking off Company - Shares buyback or setting up Treasury shares - Other Ordinary/Special Resolutions to be approved by Members | $500 | $300 |
| Administrative Services (1) Update changes to ACRA Bizfile where necessary | - Completion of Bank forms | $100 | $80 |
| - Changes in Contact Information for Company Officers and/or Members | $100 | Free | |
| - Update where Company Registers are kept | $100 | Free | |
| - Send dispatch services for ad-hoc documentation services | from $250 per trip | from $80 per trip | |
| - Issue new share certificates | $100 per Certificate | $40 per Certificate | |
| - Witness for Agreements | from $100 per agreement | from $50 per agreement | |
| - Certified True Copy of documents | $50 per document | $20 per document | |
| - Signing Bank documents at our office | $50 per document | $20 per document | |
| - Liaise with auditor for annual statutory audit on secretarial records | N.A. | $100 per visit | |
| - Purchase of updated Business Profile | $10 | $10 | |
| - Purchase of updated People Profile | $100 | $100 | |
| - Registration of alternate address for Company Officer/Member (excluding fee payable to ACRA) | SGD$150 per officer | Free | |
| - Filing Annual Return | $300 | $60 | |
| - Certificate of Corporate Representative* | $150 | $100 | |
| - Handover of Corporate Secretarial Files from our firm to the new Corporate Secretary | N.A. | $100 | |
| On-site Services (1) Travelling within Singapore only | - Signing documents at Bank | from SGD$250 per trip | from SGD$80 per trip |
| - Attending Meeting by Corporate Secretary or representative | from SGD$700 per hour | from SGD$200 per hour | |
| Other Non-routine Services | - Drafting of Agreements | on request | on request |
| - Recording of Meeting Minutes | from SGD$500 per hour | from SGD$200 per hour | |
| - Drafting of Constitutions/Memorandum and Articles of Association** | on request | on request | |
| - Notarising documents | on request | on request | |
| Notes: * requires Certificate of Corporate Representative, ** excludes drafting of documents | |||
Singapore has a flat rate of 17% for Corporate Taxes. Here are some Common Tax Reliefs for companies. You should be familiar with the tax reliefs as they help to reduce the tax liabilities of your company. If you are thinking of setting up a company in Singapore, Singapore has one of the lowest corporate tax rates in the world and these tax reliefs help to lower the tax rates further.
Common Tax Reliefs that will help to reduce the tax bill for New Start-Up Companies
Common Tax Reliefs that will help to reduce the tax bill for Companies
Example 1: Year of Assesment 2019 (For financial years that closed in 2018)
We are assuming that the person who posted the question is the sole shareholder and is the director of the company. Let us also assume that ABC Pte Ltd is a newly incorporated startup. We will be focusing on Year of Assesment 2019 in this instance.
Company Name: ABC Pte Ltd
Director: Mr Tan
Shareholder: Mr Tan
Scenario A:
ABC Pte Ltd has a revenue of $100,000 and incurs costs of $70,000 which includes a salary of $50,000 to Mr Tan. Therefore company profits are $30,000.
Corporate Tax to be paid = $0 (Full exemption on the first $100,000 of normal chargeable income)
Personal Income Tax (Mr Tan) = $400 (First 40,000) + ($10,000 x 7%) = $1,100
Dividends can be paid out of the company profits of $30,000 to Mr Tan. Dividends are not taxable.
Total tax paid: $1,100
Scenario B:
ABC Pte Ltd has a revenue of $100,000 and incurs costs of $20,000. Mr Tan does not draw a salary. Therefore company profits are $80,000.
Corporate Tax to be paid = $0 (Full exemption on the first $100,000 of normal chargeable income)
Personal Income Tax (Mr Tan) = $0
Dividends can be paid out of the company profits of $80,000 to Mr Tan. Dividends are not taxable.
Total tax paid: $0
Example 2: Year of Assesment 2020 (For financial years that closed in 2019)
We are assuming that the person who posted the question is the sole shareholder and is the director of the company. Let us also assume that XYZ Pte Ltd is a newly incorporated startup. We will be focusing on Year of Assesment 2020 in this instance.
Company Name: XYZ Pte Ltd
Director: Mr Wong
Shareholder: Mr Wong
Scenario A:
XYZ Pte Ltd has a revenue of $100,000 and incurs costs of $70,000 which includes a salary of $50,000 to Mr Wong. Therefore company profits are $30,000.
Corporate Tax to be paid = 25% of $30,000 x 17% = $1,275
There is a 20% corporate tax rebate, capped at $10,000 for YA 2019. Rebate = $1,275 x 20% = $255
Final Corporate Tax to be paid = $1,020
Personal Income Tax (Mr Wong) = $400 (First 40,000) + ($10,000 x 7%) = $1,100
Dividends can be paid out of the company profits of $30,000 to Mr Wong. Dividends are not taxable.
Total tax paid: $2,120
Scenario B:
XYZ Pte Ltd has a revenue of $100,000 and incurs costs of $20,000. Mr Wong does not draw a salary. Therefore company profits are $80,000.
Corporate Tax = 25% of $80,000 x 17% = $3,400
There is a 20% corporate tax rebate, capped at $10,000 for YA 2019. Rebate = $3,400 x 20% = $680
Final Corporate Tax to be paid = $2,720
Personal Income Tax (Mr Wong) = $0
Dividends can be paid out of the company profits of $80,000 to Mr Wong. Dividends are not taxable.
Total tax paid: $2,720
Example 3: Year of Assesment 2020 (For financial years that closed in 2019)
We are assuming that the person who posted the question is the sole shareholder and is the director of the company. Let us also assume that DEF Pte Ltd is a newly incorporated startup. We will be focusing on Year of Assesment 2020 in this instance.
Company Name: DEF Pte Ltd
Director: Mr Goh
Shareholder: Mr Goh
Scenario A:
DEF Pte Ltd has a revenue of $130,000 and incurs costs of $100,000 which includes a salary of $80,000 to Mr Goh. Therefore company profits are $30,000.
Corporate Tax to be paid = 25% of $30,000 x 17% = $1,275
There is a 20% corporate tax rebate, capped at $10,000 for YA 2019. Rebate = $1,275 x 20% = $255
Final Corporate Tax to be paid = $1,020
Personal Income Tax (Mr Goh) = $3,350
Dividends can be paid out of the company profits of $30,000 to Mr Goh. Dividends are not taxable.
Total tax paid: $4,370
Scenario B:
DEF Pte Ltd has a revenue of $130,000 and incurs costs of $20,000. Mr Goh does not draw a salary. Therefore company profits are $110,000.
Corporate Tax = (25% of $100,000 x 17%) + (50% of $10,000 x 17%) = $4,250 + $850 = $5,100
There is a 20% corporate tax rebate, capped at $10,000 for YA 2019. Rebate = $5,100 x 20% = $1,020
Final Corporate Tax to be paid = $4,080
Personal Income Tax (Goh) = $0
Dividends can be paid out of the company profits of $110,000 to Mr Goh. Dividends are not taxable.
Total tax paid: $4,080
There are instances whereby some directors are also holding full-time employment outside of the company and thus if they were to be paid further salary from the company, it would push them further up into the higher tax brackets. In these instances, the directors may prefer to not draw a salary and instead be paid dividends.
Proper tax planning can help to reduce the overall tax liability of the company and individuals. Please note that tax planning is different from tax evasion where there is a deliberate attempt to evade tax by hiding income from the tax authorities. Our company can assist you in structuring and planning your corporate tax liabilities.
When in doubt, seek legal advice or consult an experienced ACRA Filing Agent.
Yours Sincerely,
The editorial team at Acra Filing Agent
For more useful articles and videos, visit the ACRA Filing Agent Useful Articles Page.
If you would like to submit a question or would like us to do an article on certain topics, please email us at [email protected]