Guide to Singapore Corporate Tax

In Singapore, corporate income tax is levied on the taxable income of companies and certain associations at a rate of 17%. This rate applies to both resident and non-resident companies.
Resident companies are taxed on their worldwide income, while non-resident companies are taxed only on income that is derived from or arose in Singapore.

Taxable income is calculated by deducting allowable expenses from the company’s gross income. Allowable expenses include expenses that are incurred in the production of the company’s income and expenses that are not capital in nature.

In addition to corporate income tax, companies in Singapore may also be subject to other taxes, such as goods and services tax (GST) and property tax.

Payroll laws in Singapore

In Singapore, the laws governing payroll and the payment of wages to employees are contained in the Employment Act and the Income Tax Act.

Under the Employment Act, employers in Singapore are required to pay their employees at least the minimum wage, which is currently $1,300 per month for employees who are above the age of 21 and have completed at least three months of continuous service with their current employer. Employers must also pay their employees on a regular basis, typically on a monthly or fortnightly basis.

In addition to the minimum wage, employers in Singapore are also required to pay their employees other entitlements, such as overtime pay and holiday pay. Overtime pay is calculated at 1.5 times the employee’s normal hourly rate for hours worked beyond the normal working hours of 44 hours per week. Holiday pay is calculated at the employee’s average daily wage for each day of leave taken.

Under the Income Tax Act, employers in Singapore are required to withhold income tax from their employees’ wages and pay it to the Inland Revenue Authority of Singapore (IRAS). The amount of income tax that is withheld depends on the employee’s income and tax rate. Employers are also required to make mandatory contributions to the Central Provident Fund (CPF) on behalf of their employees. The CPF is a retirement savings scheme that provides employees with financial security in old age.

Employers in Singapore must also comply with other laws and regulations, such as the Workplace Safety and Health Act and the Employment of Foreign Manpower Act, which regulate the working conditions of employees and the employment of foreign workers, respectively.

How to incorporate in Singapore

To incorporate a company in Singapore, you will need to follow these steps:

1. Choose a business name

   The first step in incorporating a company in Singapore is to choose a business name. The name must be unique and cannot be the same as or confusingly similar to the name of another business. You can check the availability of a business name by searching the Singapore Companies Registry database.

2. File articles of incorporation

   To incorporate a company in Singapore, you will need to file articles of incorporation with the Singapore Companies Registry. The articles of incorporation must include the name of the company, the purpose of the company, the names and addresses of the directors, and the authorized share capital of the company.

3. Appoint directors

   The articles of incorporation must also include the names and addresses of the initial directors of the company. The directors are responsible for managing the affairs of the company and making major business decisions.

4. Adopt bylaws

   The company’s bylaws set out the rules and procedures for managing the company, such as the powers and duties of the directors and the procedures for holding meetings and taking votes. The company’s board of directors is responsible for adopting the bylaws.

5. Issue stock

   The company must issue stock to its shareholders. The articles of incorporation must specify the authorized share capital of the company and the classes of shares that will be issued.
   Hold organizational meetings: The directors must hold organizational meetings to adopt the bylaws, appoint officers, and transact other business.

6. Register with the Inland Revenue Authority of Singapore

   All companies in Singapore are required to register with the Inland Revenue Authority of Singapore for tax purposes.

By following these steps, you can successfully incorporate a company in Singapore. It’s important to be familiar with the laws and regulations governing companies in Singapore to ensure compliance and protect the interests of the company and its shareholders.

The above is for informational purposes only and should not be taken as tax advice or professional advice. Please consult a licensed professional. 

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