Whether you’re a local or foreign entrepreneur hoping to establish a new business in Singapore, understanding how much you’ll pay in income tax can be illuminating. The amount of taxable income you generate will be a key concern once the company is up and running, so even being able to get a rough idea of how much you’ll be liable to pay each year is valuable.
This guide is intended to give business owners and entrepreneurs some general guidelines on calculating their taxable income as a Singapore company. For the specifics of how corporate income is taxed in Singapore, please refer to our guide on company income tax. To estimate your taxes and contrast them with those of other countries, use our online tax calculator.
It’s important to note that in general a company’s net income will not be the same as its taxable income. Calculating a company’s taxable income always begins with the net profit or loss recorded in the business’ accounts, after which a number of adjustments are made to give the taxable income for the given accounting year. These adjustments are made to reflect the fact that many of the expenses incurred by the operation of the business are not deductible for tax purposes, and a portion of the income received may not be taxable or may be required to be taxed separately as non-trade source income.
Companies in Singapore are taxed on income derived from or accrued in Singapore as well as income received in Singapore from outside the country (subject to exemptions and tax reliefs).
The Inland Revenue Authority of Singapore (IRAS) considers income to include:
To calculate a company’s taxable income, the following adjustments are made to their net profit and loss data:
Note that this only an example and your unique circumstances may differ:
|Net Profit as per
Profit and Loss
required to be
|Subtract||Foreign income not
subject to tax
|X||Such as property
income or interest
|Special deductions||X||E.g. qualified
|Depreciation||X||For the purposes of
may not deduct
(current and carried forward)
|Carried forward losses||X|
|Such as interest
|Further deductions||X||Additional, one-off
|Tax exemptions||X||Full or partial tax
applicable to the company
|Tax payable @ prevailing corporate tax rate||X||Current corporate
tax rate in
Singapore is 17%.
|Subtract||Tax rebates||X||Any tax rebates
applicable to the
|Tax deduction at
|X||Any taxes deducted
|Net tax payable||X|