Singapore is a strategically placed country in the Asian continent. This makes it an ideal place for businesses seeking to invest in Asia. Most companies are attracted to do business in this area because of the city-state’s quasi-territorial tax system. Hence, do not expect any withholding of tax on dividends or capital gaining of tax in this country.
The country promotes business by having no substantial constraints on foreign exchange transactions and the capital movements with flexible tax return Singapore. The SGD (Singapore Dollars) can furthermore be loaned to people and non-financial institutions, unlike the restrictions that are put in place to restrict lending to non-resident financial institutions.
Corporate Tax Rates
The corporate income tax is 17%, but it is reached after assessment of the chargeable income of the company. This can be termed to be among the lowest taxes in the world and can be even relatively lower if the company can take advantage government schemes, incentives, and other subsidies given.
Corporate Tax Residency
Furthermore, the Inland Revenue Authority of Singapore is the body that determines the corporate tax residency of the companies in the country. Control and Management is the process of making decisions on strategic matters like the policy and strategy of the company. The IRAS uses this Control and Management decision before giving any organization an exemption regarding its foreign-sourced amenity revenue.
Determining Fiscal Year
Singapore advises all companies to keep their financial end year within 365 days. This is the only way they can enjoy zero tax for the new companies that are just beginning their activities. The companies need to determine their FYE and submit them.
Annual Filling Requirements
The Accounting and Corporate Regulatory Authority requires annual returns from every company that is in Singapore. They have also provided a date, November 30th, which should not be exceeded by any company in providing tax returns. Companies are also allowed to carry forward the unabsorbed trade losses and allowances to the following years. This is to counterbalance the future years until when the loss will be totally exploited.
This is an important form that companies must fill in their returns regardless of whether they are making profits or losses. There is, however, some conditions those companies should meet before filling this form. These are the conditions that should be met by these companies before filling in the form — have an annual revenue equating 5 million dollars or below and lastly get income taxable at the ongoing rate of 17% per annum.
The Process of Taxable Income Calculation in Singapore
Knowing this process is crucial for any company as there are various conditions involved. The conditions include:
Expenses are considered as revenue and not as assets in some countries
The Income Tax Act of the state does not prohibit expenses from being deducted from taxable income calculation
Expenses should be sustained especially in income production of the company
You cannot assume expenses to be a contingent liability
If you want to know more about tax return Singapore, you can consult a reputable tax services company like Ace Financial Accounting Pte Ltd.