If you set up a Singapore company, your company will be liable for corporate taxes and the individuals who are employed in the company will have to pay personal income taxes on the salaries that are paid to them.
In Singapore, corporate tax rates are a flat 17%. However, there are common tax reliefs that will help to reduce the tax bill for new start-up companies.
For Year of Assessment 2020 (YA 2020)
This is for financial years which closed in 2019.
- 75% exemption on the first $100,000 of normal chargeable income; and
- A further 50% exemption on the next $100,000 of normal chargeable income.
New start-up companies will also be eligible for Corporate Income Tax Rebates
All companies will receive a corporate income tax rebate of the following:
- 20% corporate income tax rebate, capped at $10,000 for YA 2019
(Normal chargeable income refers to income to be taxed at the prevailing corporate tax rate.)
This is the Resident Tax Rates in Singapore (From Year of Assesment 2017)
| 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 | |||
Here is an example of the tax bill which start-up companies will need to pay.
Profit: SGD$100,000
75% exemption means that taxes only need to be paid on SGD$25,000
17% of $25,000 = $4,250
20% corporate tax rebate means that the actual tax paid is 80% of $4,250 = SGD$3,400
In this instance, the corporate tax bill is SGD$3,400 for the first SGD$100,000 of profit.
If a director earns SGD$96,000 per annum, his personal income tax will be SGD$5,190
First $80,000: $3,350
11.5% of $16,000 = $1,840
Please note that dividends that are received by shareholders are not taxable. Dividends are paid out on the profit after tax. Therefore, in the first instance, the SGD$100,000 profit will incur a corporate tax bill of $3,400. The remaining profit can be declared and paid out as dividends to the shareholders of the company. These dividends that are received by the shareholders do not have to be declared as income by the shareholders nor will they incur any further tax.
When in doubt, seek legal advice or consult an experienced ACRA Filing Agent.
Yours Sincerely,
The editorial team at Acra Filing Agent
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Common Tax Reliefs that will help to reduce the tax bill for New Start-Up Companies