Corporate Taxation Structure and Auditing in Singapore

Corporate Taxation Structure and Auditing in Singapore

The process of corporate taxation and auditing is a complex subject, which requires you to hire professional and experienced accountants and internal auditors to do the job. However, you must know some of the basics and the principles governing corporate taxation in Singapore.

If you aren't much aware of it, then this complete guide is going to fill all the gaps and would provide you with all the relevant & necessary information regarding the taxes that you need to pay as a company.

Corporate income tax services in Singapore:

Singapore is amongst the most business-friendly countries all around the world with multiple benefits for the companies operating and incorporated in the Singaporean territory. A professional corporate tax service Singapore would be able to help you with a customized estimate depending on your individual income.

However, here are some of the principles that you should keep in mind:

Structuring of Singapore Tax:

There are four main streams of Singapore tax. These include:

  1. Corporate tax
  2. Personal tax
  3. Goods and service tax
  4. Property tax

Within each of these categories, the tax rate applied is moderate, helping the businesses and individuals to grow while providing the necessary income stream for the government as well, thus creating a win-win scenario.

The main tax collecting body in the country is the Inland Revenue Authority of Singapore (IRAS), which is also responsible for representing Singapore in international treaties, mutual agreements, and drafting new taxation laws with time.

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Individual tax planning:

When we are talking about the corporate tax services in Singapore, we cannot ignore the individual tax planning from the scenario. It is a different branch of tax; however, your income from a corporation would ultimately be converted to the personal taxation that you might have to pay.

As an individual, you'll have to determine your current residency status. In Singapore, foreigners residing in the country temporarily or permanently are treated as foreigners and would have to be evaluated on their residency status to determine the tax liability on the income.

The current residency status for tax purposes is 183 days. If you have stayed in Singapore for 183 days or more, then your income would be liable for the tax.

Corporation tax planning:

The corporate tax rate is 17%. It is charged on the profits earned by the company and not on the revenue generated. For each tax year, the income statement of the company for the last year is taxable. This means that for the tax year 2020, your income from the year 2019 would be entitled to the tax payment.

To calculate the profit liable to tax, you need to include the revenues and expenses attributed to the particular financial year under analysis. Any sort of income earned during the period should be adjusted against the expense incurred to fulfill the matching concept.

For people who want to register their company under Singaporean law, then you should get the incorporation services.

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Filing and calculating GST:

General Sales Tax in Singapore is the value-added tax. It is charged at 7%. The companies providing the goods and services charge this tax from the consumers on behalf of the government. The best part about this particular tax is that it is only required to be paid by the registered firms.

In Singapore, a company is registered for tax purposes if its annual taxable turnover reaches S$1 million. Even if you don't touch this revenue, you can still register, but that would be included under the voluntary registration category. Getting help from the incorporation service company will prove to be beneficial in this regard.

Framing compliance on GST

There are certain mandatory requirements that you'll need to provide to the incorporation services if you want to register for the GST. In the past 12 months, your taxable turnover should exceed S$1 Million, or you must expect to have a turnover over this amount in the next 12 months.

You'll have to be registered for at least the next two years if you have chosen to register. As a company, you'll have to monitor your status after three months. A 30-day period is available for the companies to register once it has been determined that you are obligated to file for the registration.

The companies that are selling zero-rated supplies are not required to register under Singaporean law.

The companies that are non-registered or are zero-rated would not get the VAT refund.

How to pay tax in Singapore?

A resident individual under is Singaporean law required to pay the taxes unless the tax authorities have explicitly provided an exemption. These exemptions are provided in the situation when the earning of an individual is less than SGD 22,000 for a financial year.

My online tax portal is the major medium through which individuals have to file and pay their income taxes. You might also choose the paper tax return filing method. The accounting services employed by businesses and individuals also use the same forums, so you might decide to hire these services or pay on your own.

You need to actively look for the filing status to find if your return has been processed and approved. IRAS is the only department that deals with the tax applications, so it can take some time for the approval process to complete.

After the approval of the application, now comes the time to pay taxes. Usually, an accounting service company advises its clients to avail GIRO (General Interbank Recurring Order). Within this payment option, you can pay your taxes in 12 monthly installments. These installments are interest-free and can be of great benefit if you have a significant amount payable.

Additionally, you also have an opportunity to go for a yearly deduction from your account. Both these methods make the tax payment hassle-free.

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GST audits by IRAS in Singapore:

Accounting services can also be beneficial in situations where GST Audits have to be completed by IRAS. IRAS conducts these audits are conducted to ensure that the businesses are complying with the guidelines set. These audits can be random or specific.

Random audits are part of the routine checking of the department. However, a specific audit is conducted when there is a discrepancy highlighted in the tax documents submitted to the authorities.

These audits can help ensure that you are complying with the policies and regulations of the government in the right manner.

What is the FTC?

FTC is a special department in Singapore that provides investment, treasury, and financial services to specific companies and offices, which are approved for this purpose.

To make Singapore one of the preferred locations for businesses, the government often introduces new schemes and policies.

So, to help the businesses and companies, FTC can pay loans on behalf of the companies, make an investment, and assist in other financial matters, so that the industry would be attracted to Singapore and goodwill would be established between the business owners and the Singaporean government.

Singapore corporate income tax rebate 2020

In 2020, the global environment for businesses has not remained very smooth. The lockdowns in the entire world have pushed the governments to bail out the companies and industries. The Singaporean government has decided to provide a tax rebate to the businesses too.

Here are some of the major features as a result of the Singaporean corporate Income Tax Rebate 2020:

  1. The tax payment for the three months would be deferred automatically for the self-employed individuals and companies. This exemption was available for April to June 2020.
  2. For the employees whose income tax was due for May to July would have to apply for the deferment.
  3. Besides, an extension in the deadline for filing the taxes has also been provided to different businesses and entities. You might want to go through the complete document issued by the authorities in this regard.
  4. For companies, an enhanced corporate rebate scheme has been offered where the taxable amount would be rebated by 25%.
  5. The companies, which have monthly interest payment due, can have interest free opportunity to pay their dues extended over to two months.

Conclusion:

If you are actively seeking corporate tax services in Singapore, then BT Consultants Singapore is ready to help. You can hire our expert consultants and accountants to manage your book of accounts, accounting services, and tax filing & payment services.

With our expert professional, you'll be able to get the best advice when it comes to financial and taxation matters, making it easier for you to grow.

We can answer all your queries and concerns. Email us your contact details or fill up the contact form and we can get back to you as soon as possible.