In Singapore, tax is imposed in two circumstances. It is imposed on income “accruing in/ derived from Singapore (“Territorial Basis”) or received in Singapore” (“Remittance Basis”).
Under the Territorial Basis, income will be taxable if the source of income is in Singapore. Meanwhile, under the Remittance Basis, income from a source outside Singapore will be liable to Singapore tax only if such income is received in Singapore, unless such income is specifically exempt from tax.
Companies incorporated in Singapore and foreign companies which have registered branches in Singapore are liable for tax at 17 per cent of the chargeable income accruing, derived or received in Singapore unless their business qualifies for and are granted tax relief for a period under the Economic Expansion Incentives (Relief from Income Tax) Act 1967 (“EIA”) or enjoy concessionary tax benefits by virtue of the EIA or the Income Tax Act 1947.
There are different types of taxes which may be payable in Singapore.
Income Tax
Income tax is generally payable on gains or profits from business or investments.
Goods and Services Tax (“GST”)
GST is a tax imposed on any supply of goods or services made in Singapore if it is a taxable supply made by a taxable person. It is mandatory for businesses to register for GST in the event that their turnover exceeds S$1 million at the end of the calendar year. The prevailing rate for GST is 9 per cent. Although GST is imposed on nearly all supplies of goods and services, GST is not chargeable for the export of goods and the provision of prescribed international services.
Stamp duty is a tax imposed on executed documents relating to interest in properties and interest in shares. If the documents were signed in Singapore, documents are required to be stamped and paid within 14 days from the date of execution. Meanwhile, it will be required to be stamped and paid within 30 days in Singapore if the document was executed overseas.
Tax on Branch of Foreign Company
Taxation is application on a branch of a foreign company. Taxation will be in the same manner as a company on its gains/ profits from business activities. A branch may remit its tax profits to its headquarters without such tax profit being subject to further tax obligations.
Withholding tax will apply when a person in Singapore makes payment to a non-Singapore resident. A person who makes payment of a specified nature to a non-resident company or individual must withhold a percentage of the payment and pay IRAS.
Source: Barandbench
