Singapore continues to attract the attention of global companies and investors with its unique tax system design and preferential policies. As Asia’s financial center and international business hub, Singapore’s tax system is known for its simplicity, transparency, fairness and reasonableness, efficiency and convenience, providing enterprises with a highly competitive business environment. Singapore’s tax system adopts a single-layer corporate income tax system, which avoids the problem of double taxation. It also implements the principle of territorial jurisdiction. Income generated abroad and not remitted back to Singapore is usually exempt from tax. Not only that, Singapore also provides comprehensive tax incentives, including diversified tax reduction programs such as new business plans and partial tax exemption plans, and has a complete electronic tax management system, which greatly improves tax efficiency.

Singapore is known as the “Tax Paradise of Asia” and it’s easy to see why. Its corporate income tax rate is only 17%, which is much lower than that of most developed countries. At the same time, its personal income tax adopts a progressive tax rate system with a maximum tax rate of 22%, giving it a significant advantage in the Asia-Pacific region. Singapore has also established an extensive tax treaty network and has signed double taxation avoidance agreements with more than 90 countries and regions. More importantly, Singapore implements tax exemption policies in many areas such as foreign income and capital gains, which provide companies and individuals with great tax incentives.

From the perspective of international competitiveness, Singapore’s tax system has significant advantages. Its policy adjustments are usually gradual and highly predictable, which is conducive to long-term planning by enterprises. Singapore provides targeted tax incentives for enterprises of different types and stages of development. From start-ups to multinational companies, from manufacturing to the digital economy, you can find preferential measures suitable for your own development. The Inland Revenue Authority of Singapore (IRAS) implements a “paperless” office and provides efficient tax services through a digital platform, significantly reducing corporate compliance costs. As an important global business center, Singapore’s tax system is in line with international standards and is constantly being optimized and upgraded to adapt to the needs of global economic development. Its tax regulations are clear and unambiguous, and its implementation standards are unified, which greatly reduces the tax compliance risks of enterprises.

As the digital transformation of the global economy and regional economic integration accelerate, Singapore is actively adjusting and improving its tax system. For example, measures such as the introduction of a digital services tax and adjustments to the goods and services tax rate all reflect Singapore’s determination to actively respond to new trends in global economic development while maintaining tax competitiveness. For companies that plan to invest or set up companies in Singapore, an in-depth understanding of Singapore’s tax system can not only help companies plan their tax burdens reasonably, but also make full use of various preferential policies to achieve sustainable development in Singapore.

Overview of Singapore’s tax system

In Singapore’s tax management system, the Inland Revenue Authority of Singapore (IRAS), as the highest tax management agency, is responsible for the collection, management and services of various taxes across the country. IRAS was established in 1960. After years of development, it has become one of the most efficient tax management organizations in the world. In fiscal year 2023, IRAS collected a total of S$56.5 billion in taxes, of which 92.3% was collected electronically, showing a very high level of digital management.

IRAS adopts the management philosophy of “service first, equal emphasis on supervision” and provides a full range of electronic tax services through myTax Portal (my tax portal). Taxpayers can use this platform to declare taxes, pay taxes, inquire tax records, apply for tax incentives and other services. It is worth noting that starting from 2024, IRAS has further optimized the electronic declaration system, and enterprises can directly access tax services through the Corppass single sign-on system, greatly simplifying the certification process. At the same time, IRAS has also launched a mobile application that supports convenient functions such as scanning QR codes to pay taxes and make appointment consultations.

In terms of tax year, Singapore adopts a unique Year of Assessment (YA) system. A company’s tax year is usually consistent with its financial year, and companies can decide the start and end of their financial year. For example, if the business’s financial year is from January 1, 2023 to December 31, 2023, then the corresponding tax year is 2024 (YA 2024). Businesses must submit their income tax returns before November 30 of the tax year, which is a crucial time.

For individual taxpayers, the tax year is uniformly from January 1 to December 31 of each year, and the following year is the tax assessment year. Taking the tax year 2024 (YA 2024) as an example, it corresponds to the income obtained in 2023. Individuals must complete their income tax return for the previous year of assessment by April 15 of each year. Starting from 2024, the Singapore Inland Revenue Authority has also launched an expanded service under the “No Filing Service” program. Eligible taxpayers do not need to declare after receiving the notification, and the system will automatically assess the tax amount.

The important tax time nodes are as follows (taking 2024 as an example):

• Personal income tax return: before April 15, 2024
• Self-employed income tax return: before April 18, 2024
• Corporate income tax return: before November 30, 2024
• GST Quarterly Return: Within one month after the end of each quarter
• Employer Annual Return (IR8A): Before March 1, 2024

IRAS has also launched various convenience service measures. For example, taxpayers who need to pay taxes in installments can apply for a 12-month installment plan; if an enterprise needs to extend its declaration under special circumstances, it can apply for an extension through the electronic platform before the deadline. The “intelligent assistant” service added in 2024 will be able to answer common questions for taxpayers 24 hours a day and provide real-time tax consulting services.

In order to improve tax compliance, IRAS has established a comprehensive risk management system. Through big data analysis, taxpayers’ declaration information is intelligently screened to identify potential tax risks. At the same time, IRAS also focuses on taxpayer education, regularly holds online and offline training lectures, and issues tax guides to help taxpayers accurately understand and fulfill their tax obligations.

Detailed explanation of main tax types

2.1 Corporate income tax

Singapore’s current standard corporate income tax rate is 17%, which is one of the most competitive rates in the world. In order to further reduce corporate tax burdens, the Singapore government has implemented multi-level preferential policies. In the year of assessment 2024, the first S$10,000 of taxable income is eligible for 75% tax relief, and the subsequent S$190,000 of taxable income is eligible for 50% tax relief. This means that a company with an annual taxable income of S$200,000 will have an actual tax burden of only about S$17,000.

Singapore’s Partial Tax Exemption scheme provides additional benefits to businesses. Specifically, the first S$10,000 of taxable income is exempted from 75%, and the subsequent S$190,000 of taxable income is exempted from 50%. The portion above S$200,000 is taxed at the standard rate. This policy particularly benefits the development of small and medium-sized enterprises.

For new start-ups, Singapore has launched a special tax incentive plan (Start-up Tax Exemption, SUTE for short). Eligible start-ups are eligible for a 75% exemption on the first S$100,000 of taxable income in each of the first three tax years, and a 50% exemption on the subsequent S$100,000. It should be noted that the company must be incorporated in Singapore, with no more than 20 shareholders, and at least one individual shareholder holding no less than 10% of the shares.

In terms of industrial transformation, the Singapore government has launched the Industrial Transformation Program, which provides tax credits of up to 70% for enterprises’ digital transformation and automation upgrades. The new green transformation support plan in 2024 will provide additional tax incentives for companies to invest in environmentally friendly technologies.

In terms of the R&D incentive plan, companies can enjoy a 250% tax exemption on qualified R&D expenditures, and unused R&D expenditures can be carried forward to subsequent years. Starting from 2024, the government will further expand the scope of qualified R&D activities to include research in the fields of artificial intelligence and sustainable development into the scope of support.

Regarding deductible expenses, income-related expenses generated by companies in Singapore can generally be deducted, including employee salaries, rent, marketing expenses, etc. Capital expenditures are deducted through depreciation, and Singapore allows companies to choose accelerated depreciation. Of particular note is that starting from 2024, companies can enjoy a 400% tax deduction on employee training expenditures to support talent development.

In terms of loss carry forward policy, a company’s unused tax losses can be carried forward indefinitely, but must meet the equity continuity test. Capital allowances can also be carried forward indefinitely, giving businesses greater tax planning scope.

2.2Personal income tax

Singapore adopts a progressive tax rate system, with the tax rate range for the tax year 2024 being 0-22%. The specific tax rate table is as follows: the first S$20,000 is tax-free; the tax rate for S$20,000 to S$30,000 is 2%; the tax rate for S$30,000 to S$40,000 is 3.5%; and so on, until the portion exceeding S$320,000 is subject to 22% Top tax rate.

Taxpayer types are divided into tax residents and non-residents. The criteria for identifying tax residents include: having actually resided in Singapore for 183 days; being in Singapore for two consecutive tax years; or having a fixed residence and frequently traveling to and from Singapore. Tax residents enjoy comprehensive tax benefits, while non-residents are taxed at higher rates.

In terms of income taxation, wages, salaries, business income, rental income, etc. all need to be taxed. A special reminder is that starting from 2024, the taxation rules for remote working income will be adjusted. Even if you work overseas, as long as the service provider is a Singaporean company, the income may need to be taxed in Singapore.

There are abundant personal tax reduction preferential policies, including parental support discounts, child discounts, further education discounts, etc. In 2024, a new discount for digital skills improvement has been added to encourage individuals to participate in digital training.

In terms of overseas income, Singapore adopts the territorial principle. Income obtained by individuals from overseas and not remitted back to Singapore is usually tax-free. However, it should be noted that if the foreign income is obtained through a partnership in Singapore, tax may still be required even if it is not repatriated.

2.3 Consumption tax (GST)

Singapore’s Goods and Services Tax (GST) rate has been raised to 9% from January 1, 2024. According to government plans, this will be a stable tax rate for the next few years. In order to reduce the burden on the people, the government has launched a GST subsidy voucher program that will last until 2026.

The GST registration threshold is that businesses with an annual turnover of more than S$1 million, or businesses that are expected to have a turnover of more than S$1 million in the next year, must register. The threshold for voluntary registration has been lowered to S$500,000 to support the development of small and medium-sized enterprises.

The taxable scope includes most goods and services. The zero tax rate mainly applies to international exports of services and goods. Exemptions include financial services, residential property rentals and sales, etc. New digital payment services added in 2024 will also be included in the scope of GST collection.

The tax refund policy is mainly aimed at tourists and businesses. The Tourist Refund Scheme allows tourists to apply for a refund of GST on purchases when leaving the country. Enterprises can deduct input tax through regular declaration.

2.4 Withholding income tax

Withholding income tax applies to certain income paid to non-residents, including interest, royalties, technical service fees, etc. Standard tax rates range from 10% to 17%, depending on the type of income.

Singapore has double taxation treaties with more than 90 countries, which may reduce withholding tax rates. For example, the agreement with China stipulates that the withholding tax rate on royalties is capped at 10%.

The filing process requires the withholding agent to declare and pay the tax to IRAS before payment is made, which usually needs to be completed within 15 days of the payment date. From 2024, electronic filing will become mandatory.

2.5 Real estate tax

The residential property tax rate adopts a progressive system: the tax rate for owner-occupied property is 4%-16%, and the tax rate for non-owner-occupied property is 12%-36%. Starting from 2024, the tax rate for high-value residential properties will be further increased, reflecting the principle of progressive taxation.

Commercial properties adopt a flat tax rate of 10%. All tax rates are calculated based on the annual value of the property, which is assessed annually by IRAS and reflects the estimated annual rental income of the property.

The payment procedure supports monthly installments, and taxpayers can pay through the GIRO automatic deduction system or electronic payment methods. The option to pay using PayNow has been added in 2024 to provide more convenience to taxpayers.

Special reminder: The above tax policies and data are based on the latest regulations in 2024. It is recommended that taxpayers regularly pay attention to official policy updates issued by IRAS and consult professional tax advisors when necessary to ensure compliance.

Special tax policies

3.1 International tax treaties

As an international financial and trade center, Singapore has signed Avoidance of Double Taxation Agreements (DTA) with more than 90 countries and regions by 2024. These agreements not only effectively prevent double taxation, but also provide a clear tax treatment framework for cross-border investment and trade. It is worth noting that in 2024, Singapore added new tax treaties with several emerging market countries, further expanding the tax treaty network.

In terms of major trading partners, Singapore has established in-depth tax cooperation relationships with important economies such as China, the United States, the European Union, and Japan. Take the China-Singapore Tax Agreement as an example, which stipulates lower withholding tax rates: dividend income is usually 5%-10%, interest income is 7%-10%, and royalties are 10%. These preferential tax rates are significantly lower than the statutory tax rates, providing substantial tax benefits for cross-border investments by enterprises from both countries.

Singapore also pays special attention to the implementation of tax treaties with ASEAN countries. In the latest revision in 2024, Singapore signed a supplementary protocol to the Tax Information Exchange Agreement with a number of ASEAN countries, further strengthening regional tax cooperation. When companies apply for treaty benefits, they need to provide documents such as a Certificate of Residence and a Beneficial Owner Certificate. These documents can be applied online through myTax Portal.

3.2 Transfer pricing rules

Singapore’s transfer pricing system follows the OECD Transfer Pricing Guidelines, requiring transactions between related enterprises to comply with the arm’s length principle (Arm’s Length Principle). In 2024, IRAS updated its transfer pricing guidelines to further clarify related party identification standards and comparability analysis requirements.

In terms of related transaction regulations, when one party directly or indirectly holds more than 25% of the equity of the other party, or has substantial control over the management of the other party, the two parties will be recognized as related parties. The scope of related party transactions is quite broad, mainly involving various commercial transactions in the daily operations of enterprises. This includes commodity transactions between enterprises, such as raw material procurement, finished product sales, etc.; various service transactions, including management services, technical support, marketing and other professional services; the transfer and use authorization of intangible assets such as intellectual property rights; and inter-enterprise transactions. Various financing arrangements, such as loans, guarantees and other financial services. In addition, cost-sharing arrangements between enterprises, such as the sharing of research and development expenses, the allocation of expenses for common service centers, etc., also fall into the category of related transactions.

Contemporaneous documentation requirements are a core component of transfer pricing compliance. From 2024 onwards, companies will need to prepare corresponding contemporaneous materials based on the size of the transaction. Specifically, when the annual purchase and sale of goods exceeds S$15 million, service transactions exceed S$1 million, financing transactions exceed S$15 million, or other types of transactions exceed S$1 million, companies must prepare complete contemporaneous information. These documents must be prepared before the corporate income tax filing deadline.

The content of the contemporaneous information should fully reflect the overall situation of the enterprise and specific transaction details. At the group level, it is necessary to detail the organizational structure, business operation model, holding and use of intangible assets, internal financing arrangements of the group, and overall financial status. At the enterprise level, it is necessary to clarify the specific management structure, business strategic planning, market competition situation, and details of related-party transactions. At the same time, in-depth functional risk analysis and economic analysis must be conducted to prove the rationality of transaction pricing.

In terms of compliance requirements, IRAS adopts a risk-oriented management approach. New regulations in 2024 require companies to disclose detailed related transaction information when filing income tax returns. Companies that fail to properly prepare contemporaneous documentation may not be able to obtain support from the mutual agreement process, face more stringent transfer pricing scrutiny, and may be fined up to S$10,000. For transfer pricing adjustments, the penalty amount can be up to 5% of the adjustment amount.

To ease the compliance burden on small businesses, IRAS has introduced simplified transfer pricing documentation requirements. Enterprises with an annual turnover of no more than S$10 million and which only have regular transactions with related parties in Singapore can adopt the simplified documentation model. However, companies engaged in complex transactions such as royalties and R&D services still need to prepare complete documentation.

In 2024, IRAS placed special emphasis on transfer pricing issues in the context of the digital economy. This includes how to set reasonable prices for digital services, how to evaluate the value of data and user contributions, and how to reasonably divide functions and risks under digital business models. If enterprises have any questions, they can make an appointment with IRAS for consultation, and they can also refer to the various transfer pricing guides and practice manuals provided by IRAS.

In practice, enterprises should establish a sound transfer pricing management system, update relevant policies in a timely manner, regularly evaluate the rationality of related party transaction pricing, and properly preserve various supporting documents. For significant related-party transactions, companies may also consider applying for advance pricing arrangements to obtain greater tax certainty. It is recommended that enterprises continue to pay attention to policy updates and seek the assistance of professional tax consultants when necessary.

Tax Compliance

4.1 Tax declaration

Singapore’s tax declaration system is characterized by electronicity, precision and convenience. According to the latest regulations in 2024, the deadline for corporate income tax returns is November 30 of the following year of income. For example, the filing deadline for the 2024 tax year (i.e. the 2023 income year) is November 30, 2024. It is worth noting that from 2024, companies with annual revenue of more than S$10 million must use electronic filing, and this requirement will be extended to all companies in 2025.

The declaration method has been comprehensively upgraded to mainly electronic. Enterprises can submit declaration materials through the myTax Portal, the official platform of the Singapore Inland Revenue Authority. The system supports 24-hour online services and realizes data docking with the enterprise’s financial software. The new version of myTax Portal in 2024 adds an intelligent reporting function, which can automatically identify related transactions and pre-fill commonly used information, greatly improving reporting efficiency. For simple cases, small businesses can use the simplified version of the return form, Form CS, while for complex cases, the full version of Form C is required.

Common reporting errors in practice mainly focus on several aspects. The first is the misjudgment of the timing of revenue recognition, especially the handling of inter-temporal contracts and advance payments. Secondly, the fee deduction vouchers are incomplete, especially the supporting documents for related-party transactions and overseas payments are often missing. The third is the misuse of tax preferential policies, such as misunderstanding of the applicable conditions of preferential policies such as super deduction of R&D expenses and accelerated depreciation of fixed assets. To avoid these problems, it is recommended that enterprises establish a strict internal audit system and conduct professional review before filing.

4.2 Tax audit

The Inland Revenue Authority of Singapore (IRAS) adopts a risk-based audit approach. The focus of audits in 2024 mainly includes the following areas: transfer pricing compliance in cross-border transactions, income integrity in the digital economy, tax treatment of emerging business models, and compliance with the use of various tax preferential policies. Data shows that in 2023, IRAS recovered more than S$350 million in taxes and fines through tax audits, of which transfer pricing adjustments accounted for 40%.

To effectively respond to tax audits, companies need to be fully prepared. First of all, a sound tax risk management system should be established, including tax assessment of transaction links, standardized processes for document management, and regular internal tax review mechanisms. Secondly, after receiving the audit notice, a dedicated team must be organized immediately to ensure that complete and accurate information can be provided within the specified time. During the audit process, it is recommended to designate a designated person to be responsible for communicating with tax personnel to maintain the consistency and accuracy of information transmission.

It is particularly noteworthy that IRAS has recently strengthened its inspection of electronic data. Enterprises must ensure the integrity and traceability of financial system data, and it is recommended to keep electronic records for at least 5 years. For enterprises using cloud services, they need to ensure that data storage meets tax compliance requirements and may consider saving local backups if necessary.

In terms of penalty provisions, IRAS adopts a graded penalty system. For minor violations such as late declaration, a fine of S$200 will be imposed for the first violation, which will gradually increase with the delay. For serious violations such as underreporting income or falsely reporting expenditures, in addition to backpayment of taxes, a fine of up to four times the amount of tax evaded will be imposed. If there is intentional tax evasion, the person responsible may also face up to 7 years in prison. From 2024, IRAS will implement stricter penalties for recurring compliance breaches.

To improve tax compliance, IRAS has launched a voluntary disclosure scheme. Companies that proactively disclose violations and correct them in a timely manner may receive reduced penalties. Specifically, those who voluntarily disclose before the tax inspection begins can be exempted from fines by up to 90%; those who voluntarily disclose after the inspection begins can also be exempted from fines by up to 50%. However, this preferential policy only applies to unintentional violations.

Best practices for preventing tax risks include: conducting regular tax health checks to discover and correct problems in a timely manner; establishing a complete invoice management system to ensure compliance with input VAT deductions; conducting tax demonstrations in advance for major transactions and seeking professional advice when necessary ; Maintain good communication with tax authorities and actively participate in training and consulting activities organized by tax authorities.

Practical Tip: Enterprises should pay special attention to the new compliance requirements in 2024, such as the mandatory use schedule of electronic invoice systems, the filing requirements for new versions of tax returns, and new regulations on taxation of the digital economy. At the same time, it is recommended that enterprises make full use of the various online tools and guides provided by IRAS to improve compliance efficiency. For complex tax issues, it is recommended to consult professional tax advisors in a timely manner to ensure that compliance risks are effectively controlled.

Practical information

5.1 Tax planning advice

In terms of legal tax savings, companies can make full use of Singapore’s comprehensive tax preferential system. The first priority is to optimize the company structure. Data for 2024 show that by properly setting up a holding structure, companies can enjoy Singapore’s tax exemptions on dividends distributed abroad. Especially when the dividends come from countries that have signed tax treaties with Singapore, the withholding income tax rate can be reduced to 5%-10 %. In practice, it is recommended that enterprises carry out overall tax planning in the early stages of establishment to avoid additional costs caused by later adjustments.

Singapore provides differentiated tax preferential policies based on the characteristics of different industries. In the field of innovation, companies can apply for a 250% super deduction of R&D expenses. This policy will last until 2025. Data shows that about 2,800 companies will benefit from this policy in 2023, with each company saving about S$150,000 in taxes on average. Intellectual property income can also enjoy preferential tax rates. By establishing an intellectual property development plan (IPD), the actual tax rate on related income can be reduced to 5%-10%.

In terms of international business, Singapore’s Global Trader Program (GTP) provides qualifying companies with a preferential tax rate of 5%-10%. The newly revised GTP conditions in 2024 focus more on substantive requirements. The applicant company must have sufficient business personnel in Singapore and undertake actual operating functions. In addition, companies may also consider taking advantage of Singapore’s offshore trade policy, which exempts trading activities entirely outside Singapore from income tax if certain conditions are met.

Tax incentives in the financial services sector also deserve attention. The Financial and Treasury Center (FTC) plans to provide qualified enterprises with a preferential tax rate of 8%, which is applicable to businesses including internal corporate financing, investment management, etc. The 2024 policy update emphasizes substantive operational requirements, and companies need to establish actual decision-making and management centers in Singapore.

However, tax planning also carries potential risks. The first thing to do is to be wary of anti-avoidance rules, especially in cross-border transactions. The Singapore Inland Revenue Authority has recently strengthened its review of “conduit companies” and requires companies to have substantive operations. Secondly, some tax preferential policies are exclusive, and companies need to carefully evaluate the pros and cons of each policy. Third, policy changes may affect the planning effect, and it is recommended to regularly review the rationality of the existing structure.

5.2 Practical tools and resources

Tax calculation tools are a powerful assistant for corporate financial personnel. The official IRAS website provides multiple online calculators, including corporate income tax calculator, withholding income tax calculator, etc. The artificial intelligence-assisted calculation function added in 2024 can automatically identify applicable tax benefits based on corporate financial data, with an accuracy of more than 95%. It is recommended that companies use these tools to make preliminary calculations before making major business decisions.

In terms of document management, it is recommended that enterprises establish a standardized tax filing system. Core files include:

• Company registration documents and board resolutions
• Tax resident certificate and related approval documents
• Application materials and approvals for various tax incentives
• Transfer pricing contemporaneous information
• Important commercial contracts and invoices
• Annual financial statements and audit reports
• Tax returns and payment vouchers

In order to improve efficiency, it is recommended to adopt an electronic document management system. The electronic archiving method approved by IRAS can reduce the burden of storing paper documents. Starting in 2024, enterprises can use blockchain technology to ensure the authenticity and integrity of electronic documents.

Practical suggestions: Regularly check the expiration date of tax preferential policies and plan renewal or alternatives in advance ; establish a tax compliance calendar and set reminders for important times . Maintain regular communication with tax advisors and obtain timely policy updates ; participate in training courses organized by IRAS to improve tax management capabilities . Establish an internal tax risk early warning mechanism ; regularly evaluate the effectiveness of tax planning plans .

Special reminder: Enterprises should pay attention to the new digital service tax regulations in 2024. Enterprises involved in e-commerce need to pay special attention to compliance requirements. It is recommended that enterprises make full use of the electronic services provided by IRAS to improve tax management efficiency. At the same time, for complex tax arrangements, it is recommended to hire professional agencies to provide consulting services to ensure compliance while optimizing tax burdens.

Case analysis

6.1 Corporate tax cases

Tax planning case for new start-ups: Take a technological innovation company established in 2023 as an example. The company is mainly engaged in the development of artificial intelligence software. It has a large investment in the start-up period and unstable income. Through carefully designed tax planning plans, the company successfully achieved tax burden optimization. First, using the Singapore Start-up Enterprise Program (STEP), a company’s first S$100,000 of taxable income is 75% tax-free, and the next S$150,000 is 50% tax-free. Secondly, if the research and development expenditure reaches S$3 million, by applying for the 250% super deduction policy, the taxable income is actually deducted by S$7.5 million.

The company also made clever use of its intellectual property development plan, patenting its core technology and registering it in Singapore. Related income enjoys a 5% preferential tax rate. At the same time, the establishment of an employee equity incentive plan not only reduces the pressure on cash expenditures, but also enables pre-tax deductions for expenses. In 2023, through the comprehensive use of various preferential policies, the company’s actual tax rate was only 5%, saving a lot of money in the early stage of the company’s development.

Multinational company tax optimization case: A manufacturing multinational company established a regional headquarters in Singapore to be responsible for business management in the Asia-Pacific region. The company implemented a comprehensive tax restructuring plan in 2024. First, set up the regional procurement center in Singapore and enjoy a 10% preferential tax rate through the Global Trader Program (GTP). Secondly, a regional treasury center is established to coordinate and manage the group’s internal financing, and a preferential tax rate of 8% is applied.

In terms of transfer pricing, the company adopted the cost-plus method to determine the price of related-party transactions and prepared complete contemporaneous documentation, which successfully passed the strict review of the tax bureau. Through reasonable planning of the supply chain structure, the company’s actual operating activities in Singapore met the substantive requirements and avoided the risk of being identified as a “conduit company.” This optimization plan will help the company save approximately S$2 million in taxes in 2024, while significantly improving operational efficiency.

6.2 Personal tax cases

Tax planning case for foreigners: A senior executive of a multinational company transferred to Singapore in early 2024, with an annual salary of S$800,000 and stock option income. Through reasonable tax planning, personal tax burden has been successfully reduced. First, by taking advantage of Singapore’s Not Ordinarily Resident (NOR) scheme, part of their overseas performance income is exempt from personal income tax. Secondly, convert part of your salary into housing subsidies and children’s education subsidies to enjoy preferential tax treatment.

In terms of stock options, a deferred exercise strategy is adopted to spread the exercise time to different tax years, effectively reducing the marginal tax rate. At the same time, by rationally arranging overseas investment time, we ensure that investment income is subject to Singapore’s more favorable capital gains policies. Through these measures, the executive’s actual tax burden in 2024 was reduced by approximately S$150,000 compared to unplanned.

Example of tax treatment of investment income: An individual investor engages in stock, real estate and cryptocurrency investments in Singapore. In the 2024 portfolio, there is a profit of S$1 million from stock trading, a profit of S$500,000 from real estate rentals, and a profit of S$300,000 from cryptocurrency trading. Through professional tax planning, the following measures are taken:

For stock investments, capital gains are exempt from income tax as they are investment in nature and not recurring transactions. In terms of real estate, by reasonably arranging the recognition time of decoration expenditure, the taxation time of rental income has been optimized. At the same time, taking advantage of the pre-tax deduction policy for mortgage interest and property depreciation effectively reduces taxable income.

In terms of cryptocurrency investment, in view of Singapore’s new virtual asset trading guidelines in 2024, the trading frequency is controlled within a reasonable range, and the income is successfully recognized as capital gains rather than business income, thus avoiding high tax burdens. Through these strategies, the investor’s overall tax burden is reduced by approximately S$400,000 compared with the original plan.

Practical implications: Corporate tax planning should focus on integrity and comprehensively apply various preferential policies . Multinational enterprises need to pay special attention to substantive requirements and transfer pricing compliance ; personal tax planning must consider long-term impacts and avoid short-term actions ; investments in emerging fields should pay close attention to policy changes and adjust strategies in a timely manner .

Special reminder: All tax planning plans should be based on legal compliance and avoid radical operations. It is recommended to seek professional advice before implementing major tax arrangements to ensure the feasibility and compliance of the plan. At the same time, we must continue to pay attention to policy changes and make timely adjustments to optimization plans.

Frequently Asked Questions

tax policy

Q 1 : What taxes will be required to set up a company in Singapore in 2024? What is the tax rate?

A 1 : Mainly related to corporate income tax, the standard tax rate is 17%. For new start-ups, special discounts are available for the first three years: the first S$100,000 of taxable income is 75% tax-free, and the next S$150,000 is 50% tax-free. There may also be a Goods and Services Tax (GST) involved, which will be 8% in 2024, but only businesses with an annual turnover of more than S$1 million need to register. In terms of employee salaries, personal income tax and provident fund withholding need to be considered.

Q2 : After setting up a company in Singapore, under what circumstances can foreign income be tax-free ?

A2 : Overseas income can enjoy tax exemption if it meets the following conditions: first, the income has been taxed in the place of source; second, the tax rate in the place of source is at least 15%; finally, the income is used for investment or investment when repatriated to Singapore . business purposes. However, it should be noted that if the overseas income is earned through the management or operation of a Singapore company, tax will still be required even if it is not remitted back to Singapore. From 2024, new identification standards will apply to overseas income related to the digital economy.

Declaration process

Q 1 : This is the first time I file a tax return in Singapore. How should I proceed with the entire process?

A 1 : First, you need to register an account on the IRAS website and obtain unique login credentials. The annual declaration is usually conducted from April to May each year, and it is recommended to start preparing materials two months in advance. Basic application materials include audited financial statements, tax calculation sheets and relevant attachments. If an application for preferential policies is involved, additional supporting documents need to be prepared. From 2024, all declarations must be completed through the electronic system, and paper declarations will no longer be accepted. It is recommended that enterprises filing for the first time hire professional tax consultants to assist them to ensure compliance.

Q2 : What should I do if I find errors or omissions in my declaration ?

A2 : If you discover an error in your declaration, the best way is to proactively report it to the tax office through the Voluntary Disclosure Program (VDP). As long as you voluntarily disclose it before the tax office initiates an inspection, you can usually get a larger penalty reduction. The specific operation is to log in to the IRAS system to submit a correction application, explain the cause of the error, and provide correct data and supporting documents. After review, the tax bureau will inform you of the amount of back tax that needs to be paid, and you just need to pay it in time. It is recommended to take action as soon as problems are discovered, as delay may increase the risk of penalties.

Preferential policies

Q 1 : What tax incentives does Singapore have for technological innovation companies? How to apply?

A 1 : Technological innovation enterprises can enjoy a number of preferential policies. The most important thing is the 250% super deduction for R&D expenses, which is applicable to R&D activities conducted in Singapore, including labor costs, material expenses, etc. Detailed R&D plans and cost details are required when applying. In addition, there is a preferential tax rate policy for intellectual property income. Qualified intellectual property income can enjoy a preferential tax rate of 5%-10%. A new digital transformation support plan was added in 2024, providing additional deductions for investments in new technologies such as artificial intelligence and cloud computing. Applying for these offers needs to be done through the GoBusiness portal, and it is recommended to plan well before the project starts.

Q2 : What tax planning advice are there for foreign executives working in Singapore?

A2 : Foreign executives may consider applying for Not Ordinarily Resident (NOR) status, which allows some of their overseas work income to be tax-free. At the same time, part of the salary can be structured into housing allowances and overseas travel allowances, which can receive tax benefits if qualified. For stock option income, the tax burden can be optimized by reasonably arranging the exercise time. The 2024 policy places special emphasis on the overseas talent introduction plan, and qualified executives can enjoy special personal income tax benefits. It is recommended to consult a professional tax advisor to make an overall plan before signing an employment contract.

Policy dynamics tracking

The Singapore government has launched a series of important tax policy adjustments in fiscal year 2024. First, in response to the digitalization trend of the global economy, Singapore has expanded the scope of digital services tax to include cross-border digital services, e-commerce platforms and digital payment services. For digital service providers with an annual turnover of more than S$1 million, they are required to pay consumption tax at a rate of 8%. The implementation of this policy marks an important transformation of Singapore’s tax system into the digital economy era.

In terms of corporate income tax, the government has introduced more targeted preferential measures. To support the innovative development of local enterprises, the super deduction rate for R&D expenses has been increased to 250%, and the application procedures have been simplified. At the same time, tax incentives for green technology investments have been strengthened, and investments in qualified environmental protection equipment can be deducted as a one-time pre-tax deduction in the year of purchase. These measures fully demonstrate Singapore’s determination to promote innovation and sustainable development.

According to the policy plan of the Singapore Ministry of Finance, the tax policy in the next three years will show the following trends: First, it will continue to deepen international tax cooperation and actively respond to the OECD initiative on the global lowest corporate tax rate of 15%. Singapore plans to introduce a supplementary minimum tax rate mechanism in 2025 to ensure that the actual tax burden of multinational enterprises in Singapore is not lower than the global minimum standard.

Secondly, the digital economy tax system will be further improved. It is expected that more detailed digital asset taxation guidelines will be issued to clarify the tax treatment principles for new digital assets such as cryptocurrencies and NFTs. At the same time, it is planned to establish a more complete digital transaction supervision system and strengthen tax management of cross-border e-commerce.

In terms of green development, the carbon tax rate will be gradually increased and is expected to reach S$80 per ton of carbon emissions by 2026. At the same time, the government will increase its support for green technology research and development and plans to introduce more preferential tax policies for environmental protection industries.

These policy changes will have a profound impact on business operations. For traditional manufacturing companies, it is necessary to accelerate the pace of green transformation. It is recommended that enterprises plan in advance, incorporate environmental protection investment into future development strategies, and make full use of relevant tax preferential policies. Taking a leading manufacturing company as an example, by deploying green technology transformation in advance, it not only obtained considerable tax benefits, but also improved its competitiveness in the international market.

For technology companies, increasing investment in R&D will receive more policy support. It is recommended to make full use of the super deduction policy for R&D expenses and pay attention to tax benefits related to intellectual property protection. For example, a local technology startup company achieved significant tax savings in 2024 through reasonable planning of R&D expenditures, providing strong support for the company’s continued innovation.

Multinational enterprises need to pay special attention to the impact of global minimum tax policies. It is recommended to conduct tax impact assessments as early as possible and adjust the global tax structure if necessary. A multinational company successfully achieved a reasonable distribution of global tax burdens through advance planning, ensuring compliance while maintaining the competitiveness of the overall tax burden.

Digital economy companies need to pay close attention to the specific implementation details of the digital service tax. It is recommended to improve transaction record management and upgrade the financial system to adapt to new collection and management requirements. An e-commerce platform has realized automatic calculation and declaration of digital service tax by updating its system in a timely manner, greatly improving tax compliance efficiency.

In order to help enterprises better respond to policy changes, it is recommended to establish a policy tracking mechanism to keep abreast of the latest policy developments . Assess the impact of policies and formulate response strategies ; strengthen communication with tax authorities and professional institutions . Timely adjust business strategies and seize policy opportunities ; focus on compliance management and prevent tax risks .

Overall, Singapore’s tax policy is moving in a more modern, digital and environmentally friendly direction. Enterprises should actively adapt to these changes and make full use of various preferential policies to promote their own development while ensuring compliance. At the same time, it is recommended that enterprises maintain close communication with tax consultants to ensure that various new policies can be accurately understood and implemented.