Operating a business in Singapore requires the payment of taxes to the Inland Revenue Authority of Singapore (IRAS). This means that all corporate taxes must be paid on time by the business owners. Additionally, individual taxpayers, including company directors, are required to settle personal income tax liabilities. Dealing with these tax matters may appear to be quite challenging, but professional taxation services in Singapore are there to help.

For Tax Residents
Calculating Personal Income Tax: Individuals who are tax residents of Singapore can therefore determine their personal income tax based on progressive tax rates depending on income that arises in Singapore.

For Non-Resident Foreign Company Owners and Directors
Understanding Taxation: Owners and directors of foreign companies who are not residents have various challenges associated with taxation. They must understand whether they are exposed to income tax liability and, if so, whether to use the flat tax rate or the higher/tailor-made rates that apply to residents.

Sole Proprietorships and Partnerships

  • ‍Exemptions from Corporate Tax: Sole proprietorships and partnerships are not liable to corporate tax since they are regarded as unincorporated entities.‍
  • Tax Treatment: Partnerships and single-owner proprietorships are considered self-employed individuals and are taxed as personal income earned by the taxpayer on personal income tax.‍
  • Tax Reporting: Self-employed individuals must report their income to IRAS. An efficient method to do so is through the Pre-filling of Self-Employed Income scheme.‍
  • Reviewing Tax Information: Individuals who have filed their income can view their prefilled tax information on my Tax Portal under Income => Deductions and Reliefs statement (IDRS).

Navigating Income Tax for Company Directors in Singapore
‍As a company director you assume the dual role of an employee and a leader within your organization. Therefore, you are required to pay personal income tax arising from gross salary. Engaging in the services of a professional taxation services firm in Singapore helps prepare Form IR8A and submit it to IRAS more efficiently. They can also help you navigate the details of Appendix 8A, which covers various forms of employee benefits like allowances, accommodation, and fringe benefits provided by the company.

Essential Information for Tax Reporting
‍To facilitate accurate reporting, you'll need to furnish the following details:

  • Place of Residence provided by Employer
  • Period of occupation (No. of days)
  • Number of employee(s) sharing the premises
  • Annual Value (AV) of Premises for the period
  • The Value of Furniture & Fittings
  • Rent paid by the employer
  • Total Taxable Value of Place of Residence
  • Details of Utilities, Telephone, Pager, Suitcase, Golf Bag & Accessories, Camera, Electronic Gadgets
  • Expenses related to Driver, Servant, Gardener, Upkeep of Compound
  • Taxable Value of Hotel Accommodation
  • Costs associated with home leave passages and incidental benefits
  • Interest payments made by the employer on behalf of an employee
  • Insurance premiums borne by the employer
  • Free or subsidized holidays
  • Educational expenses
  • Fees and annual subscription to social or recreational clubs
  • Gains from assets
  • Full cost of motor vehicles provided to the employee

Calculation of Corporate Income Tax
‍Corporate income tax in Singapore is calculated by subtracting any allowable deductions from the gross income of your business. This process gives the actual corporate tax which your company is liable to pay.

Understanding the Accounting Period
‍Accounting period for a Singapore company means the period of time used for accounting purposes. It refers to the period in which the company undertakes its financial dealings. It is also important to keep up-to-date books of accounts such as receipts, invoices, vouchers and other relevant documents.

Normally, the accounting period is one year for a business. At the end of this period, most business owners hire the services of accounting services in Singapore to provide them with financial statements such as profit and loss accounts and balance sheets. One of the main advantages of outsourcing these tasks is that it saves time and money that could be used on core business functions and also helps to meet Statutory requirements.

Territorial-Based Taxation System
‍Singapore has a territorial system of taxation where the income generated from that country is taxed. Income derived from overseas is also taxable in some instances where the income is remitted to Singapore through partners or where the person’s job requires travel overseas for work.

Personal Income Tax for Company Directors
‍Identifying tax residency is an important issue for company directors in Singapore. Tax residency determines the personal income tax rate that applies. Tax residents in Singapore are liable to tax at progressive rates which depend on their chargeable income. On the other hand, foreign non-resident company directors are at liberty to choose between the flat tax rate of 22% and the progressive tax rates for computing their income tax.

If you are a tax resident company director, you should consider the following table when calculating your tax rate using the chargeable income.

Chargeable Income ($) Tax Rate (%) Gross Tax Payable ($)
On the first $20,000 0 0
On the next $10,000 2 $200
On the first $30,000 - $200
On the next $10,000 3.5 $350
On the first $40,000 - $550
On the next $40,000 7 $2,800
On the first $80,000 - $3,350
On the next $40,000 11.5 $4,600
On the first $120,000 - $7,950
On the next $40,000 15 $6,000
On the first $160,000 - $13,950
On the next $40,000 18 $7,200
On the first $200,000 - $21,150
On the next $40,000 19 $7,600
On the first $240,000 - $28,750
On the next $40,000 19.5 $7,800
On the first $280,000 - $36,550
On the next $40,000 20 $8,000
On the first $320,000 - $44,550
In excess of $320,000 22 -

 

How and When To File Your Singapore Taxes?
Personal Income Tax Returns Filing
‍Ensuring compliance with Singapore's tax regulations is crucial for individuals and companies to adhere to Singapore’s tax laws. The first is the timely submission of personal income tax returns which differ depending on income levels and whether they are residents or non-residents.

Those whose personal annual income is more than S$22,000 are expected to submit a personal income tax return. The paper submission deadline is the 15th of April and the e-filing submission deadline is the 18th of April. However, if your income is $0, you need to file the required tax form to meet your tax obligations.

In this case, seeking the help of taxation services in Singapore is highly advised when it comes to dealing with the tax filing process. These experts can help you navigate the complexities of tax forms and assist you with the submission process – be it online or by mail.

Tax residents, self-employed individuals, and non-residents have specific forms to complete:

  • Tax residents should fill out Form B1.
  • Self-employed individuals are required to complete Form B.
  • Non-residents must submit Form M.

After submission, people can receive a Notice of Assessment or a tax bill from May to September for the declared tax amount. The tax liability should be settled as soon as possible, normally 30 days from the date of receipt of the notice to avoid penalties or interest.

How to Pay Your Taxes in Singapore?
‍Efficient tax payment methods streamline the process for individuals and businesses, ensuring timely settlement of tax obligations. In Singapore, the Government Infrastructure Group (Giro) is the preferred method of payment, offering convenience and reliability.

Taxpayers can use Giro to facilitate tax payments through various channels, including:

  • myTax Portal: The online portal developed by the Inland Revenue Authority of Singapore (IRAS) that offers taxpayers an easier and safer means of managing their tax-related matters.
  • Internet Banking: There are many major banks in the country that are offering internet banking facilities to the taxpayers for setting up their Giro payment facilities from their bank accounts.
  • Electronic Payments: Dedicated electronic payment platforms provide additional flexibility for tax payments, accommodating various payment methods and currencies.
  • Credit Card: Another method of paying taxes that taxpayers may consider is through credit cards, although it may attract additional processing fees.
  • Telegraph Transfer from Overseas: For taxpayers residing in other countries, telegraphic transfer enables the remittance of tax payments from such other countries’ bank accounts.

Enhancing Tax Compliance with Professional Support
‍Balancing work and life is challenging for business owners, but employing the services of tax consultants in Singapore is a wise decision. Tax matters for businesses are handled by registered filing agents like SBS Consulting Pte Ltd who help in filing annual corporate taxes and other tax compliance.

By entrusting tax compliance tasks to experts, relieves the owners from the burden of developing a business strategy for expansion. Outsourcing tax services is therefore not only essential in avoiding statutory violations but also in relieving the mind from worrying about tax issues.

In conclusion, it is critical for individuals and companies to understand the process and timelines for filing and paying taxes in Singapore. Tax professionals and quick payment methods can facilitate the tax compliance process, making it faster and easier for taxpayers to meet their obligations.