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What is Corporate income tax and what are the rates

Corporate tax is a tax on the profits of a corporation. The taxes are paid on a company’s taxable income, which includes revenue minus cost of goods sold (COGS), general and administrative (G&A) expenses, selling and marketing, research and development, depreciation, and other operating costs.

 

Corporate tax rates vary widely by country, with some countries considered to be tax havens due to their low rates. Corporate taxes can be lowered by various deductions, government subsidies, and tax loopholes, and so the effective corporate tax rate, the rate a corporation actually pays, is usually lower than the statutory rate; the stated rate before any deductions.

 

In Singapore, companies are taxed at a flat rate of17% of their taxable income. This applies to all companies registered in Singapore. 

 

However there are corporate tax rebates given to ease their business costs and to support their restructuring, such as for new startup companies. Tax reliefs are given to such companies to reduce their tax bills. Below is an example of how tax relief is provided to new startup companies.

 

Example

 

My company’s normal chargeable income before tax exemption for YA 2022 is $290,000. How do I compute the exempt amount under the partial tax exemption scheme and tax payable for YA 2022?

 

YA 2022

 

The exempt amount on normal chargeable income of $290,000 is computed as follows:

 

All SGD UNO

Normal chargeable income before exempt amount  % exempted Amount exempted
First 10,000 75% 7,500
Next 190,000 50% 95,000
Total 200,000   102,500

The company’s tax payable for YA 2022 is therefore computed as follows:

 

Chargeable income before exempt amount – 290,000

Less: Exempt amount – 102,500

Chargeable income after exempt amount – 187,500

Tax payable @ 17% – 31,875

Speak to us about estimating your tax expenses

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