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  • 26 Oct, 2022
  • 4 min read

5 Ways to File Your Corporate Income Tax in Singapore Accurately

5 Ways to File Your Corporate Income Tax in Singapore Accurately

Singapore is renowned for its status as a tax haven with one of Asia’s most attractive corporate tax systems.

However, it does not eliminate the need to file their corporate taxes correctly and accurately.

Every year, companies in Singapore need to file their corporate income tax returns while adhering to the prevailing compliance measures. How can these companies file their returns properly for a smooth filing experience?

Engage Tax Professional

We take a closer look at some useful information to know!


What is Corporate Income Tax in Singapore?

All corporations in Singapore must pay corporate tax as stipulated under the Income Tax Act regardless of their tax residency.

Corporate tax is paid on chargeable income obtained from Singapore or income from overseas that is remitted into the country.

Companies in Singapore are taxed at the prevailing corporate tax rate of 17%.


Why is it Important to File Your Corporate Taxes Correctly?

Corporate tax compliance is extremely important in Singapore.

It is important to file your corporate taxes correctly while adhering to compliance requirements because IRAS can impose penalties for incorrect or late filings. 

These penalties can be significant, so it is important to make sure your filings are accurate and on time.


How Can You File Your Corporate Income Tax Accurately?

There are a few measures that may help to ensure that you file your corporate income tax correctly and avoid penallties.

Understand Taxable and Non-Taxable Income, Deductibles and Non-Deductibles

What falls under taxable and non-taxable income? What business items can be deducted? 

Understanding the items categorised under each section will help you to better derive an accurate tax figure.

Taxable income refers to:

  • Gains from trade or business
  • Investment income
  • Property-derived royalties and premiums
  • Other income-based profits

Non-taxable income refers to:

  • Capital gains
  • Profits on foreign exchange on capital transactions
  • Shipping income from a shipping company that is exempted from taxes
  • Service income obtained by a resident business
  • The sale of fixed assets
  • Other types of tax-exempt income as stated under the Singapore Income Tax Act 1947

Deductibles include:

Applicable Business Expenses Capital Allowances  Unused Losses and Donations
  • Wages
  • Service fees
  • R&D expenses
  • Office rental fees
  • Deductions on fixed asset wear and tear
  • Deductions on qualified losses arising from ongoing business
  • Deductions that have not been previously used
  • Losses can be carried forward indefinitely (subject to conditions) if they are not adjustable in the assessment year
  • Donations made to approved institutions can be deducted 
Non-Deductible Business Expenses Non-Deductible Capital Allowances
  • Fines
  • Income tax
  • Writing off fixed assets
  • Private and domestic expenses
  • Expenditure on purchase of fixed assets
  • Depreciation on fixed assets

 

Related Read: 6 Ways to Lower Your Corporate Taxes in Singapore Legally »

Determine Whether You Must File Your Corporate Tax Return

Unsure whether you have to file your corporate tax return? Here are examples of companies that must also file them:

  • Newly incorporated company in 2021 that has started a business or obtained income, and closed their first set of accounts in 2021
  • Company had a loss position for FY2021
  • Dormant company in FY2021
  • Company with YA 2021 tax assessment under IRAS’ review

Companies that have incorporated in 2021 or 2022 but closed their first set of accounts in 2022 and did not start their business or gained income in the same year need not file their corporate tax return.

Determine if You Need to File a Form C, Form C-S, or Form C-S (Lite) Corporate Income Tax Return

Which type of corporate tax return do you need to file yours under?

Here are the characteristics of companies that fall under each type of return:

Form C-S

  • For businesses incorporated in Singapore
  • Have a yearly revenue of S$5 million or below
  • Taxable income is at the rate of 17%
  • Is not claiming these:
    • Group relief
    • Investment allowance
    • Carry-back of capital allowances or losses in the current year
    • Foreign tax credit and tax deducted at their source

Form C-S (Lite)

  • For businesses that qualify to file Form C-S (Lite) with yearly revenue of S$200,000 or below

Form C

  • For businesses that do not qualify for Form C-S or Form C-S (Lite)
  • Companies filing Form C must file their financial statements, supporting schedules, and tax computations together

File Your Corporate Income Tax Return Before it is Due

In May 2022, IRAS announced that this year’s corporate tax filing deadline for the Year of Assessment (YA) 2022 is on 30 Nov 2022.

It is advised that companies file their corporate tax returns before this due date to ensure that they are accurate.

Know the Common Filing Mistakes to Avoid

There are several commonly seen filing mistakes that IRAS has recognised.

They are:

  1. Understating your income i.e. not including receipts or invoices or cash transactions
  2. Failing to keep adequate accounts or records, therefore leading to understated sales or overstated expenses
  3. Making inaccurate claims for non-deductible expenses, such as s-plated cars purchased for business use
  4. Abusing tax exemption schemes for businesses
  5. Inaccurate transfer pricing by failing to price related party services according to the arm’s length principle
  6. Industry-specific errors, like omission in Form IR8A for family-owned firms

What Are the Penalties for Filing Incorrect Corporate Tax Returns in Singapore?

Your corporate tax returns are audited by IRAS and if there are inaccuracies or omissions found, your company may receive a penalty.

The type of penalty is classified accordingly:

With Tax Evasion Intention Without Tax Evasion Intention
  • Penalty of up to 400% of the undercharged tax
  • Fine of up to S$50,000, and/or
  • Up to 5 years of imprisonment
  • Penalty of up to 200% of the undercharged tax
  • Fine of up to S$5,000, and/or
  • Up to 3 years of imprisonment

Penalties for Late Filing or Failing to File Tax Returns

Companies that do not file their corporate taxes or do not file them before the deadline are liable to certain consequences. 

They include:

  • Issuing an estimated Notice of Assessment (NOA)
  • Compounding of Offence

Your Corporate Income Tax Returns Are in Good Hands With InCorp

Treading the complicated corporate taxation landscape in Singapore can be especially difficult for those who are unfamiliar or have not filed their taxes before.

Corporate taxation advisors like InCorp’s team of reliable and experienced professionals can help you file your corporate tax properly.

We take the utmost care to make sure that your corporate tax filing goes smoothly and successfully!

 

Contact our team

Jervis Lau

Jervis Lau

Associate Director

Tax Advisory & Compliance

FAQs

  • If you did not obtain any income and did not close your first set of accounts in 2022, you need not file your corporate taxes.
  • The prevailing corporate tax rate for 2022 is 17%.
  • While you can file your corporate tax yourself, it is advised to seek the help of a taxation expert to avoid incorrect corporate tax filing.

File Tax Returns Correctly

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InCorp Content Team

InCorp's content team includes talented copywriters from our regional group and globally. We contribute informative, thought leadership, and market-trending articles to guide aspiring business entrepreneurs to a higher level across the Asia-Pacific region.

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