Singapore taxes income on a preceding year basis i.e., income for financial year-end 2023 will be subject to tax in Year of Assessment (“YA”) 2024. The tax year is referred to as YA.

Singapore taxes income on a preceding year basis i.e., income for financial year-end 2023 will be subject to tax in Year of Assessment (“YA”) 2024. The tax year is referred to as YA.

Estimated Chargeable Income (ECI)

All companies are required to file ECI unless they fall within category (a) or (b) below:

(a) ECI filing waiver

Both criteria must be met:

• • Annual revenue is S$5 million or below for the financial year; and

• • ECI is nil for the Year of Assessment (“YA”). The ECI should be the amount before deducting the exempt amount under the partial tax exemption scheme or the tax exemption scheme for new start-up companies.

(b) The following types of companies are not required to file ECI:

• • Foreign ship owners or charterers whose local shipping agent has submitted / will submit the Shipping Return

• • Foreign universities

• • Designated unit trusts and approved CPF unit trusts

• • Real estate investment trusts that have been granted the tax treatment under Section 43(2) of the Income Tax Act 1947

• • Cases specifically granted the waiver to furnish ECI by the Inland Revenue Authority of Singapore (“IRAS”)

Form C-S / Form C-S (Lite) / Form C

All Singapore companies must file the Form C-S / C-S (Lite) / C by the filing due date, except for dormant companies that have been granted waiver from the IRAS to file Form C-S / C-S (Lite) / C.

A dormant company may apply for waiver from tax filing if it satisfies all the following conditions:

• • It must be dormant and must have filed its Form C-S / C-S (Lite) / C, financial statements and tax computation(s) up to the date of cessation of business.

• • It must not own any investments (e.g., shares, real properties, fixed deposits). If the company owns investments, it must not derive any income from these investments.

• • It must have been de-registered for Goods and Services Tax (GST) purposes prior to this application if it had previously been a GST-registered company.

• • It must not have the intention to recommence business within the next 2 years.

If Estimated Chargeable Income (ECI) is not filed

If a company is late in filing or fails to file its ECI, an estimated Notice of Assessment may be issued by the Inland Revenue Authority of Singapore (“IRAS”) based on the company’s past years’ income or other information available to the IRAS.

The company must pay the full tax amount within 1 month from the date of the Notice of Assessment.

• • No instalment payment will be granted by the IRAS.

• • Payment must be made based on the estimated Notice of Assessment even if the company files an objection. If the assessment is subsequently revised, any excess payment will be refunded to the company.

• • Late payment penalties will be imposed and enforcement actions may be taken if payment is not received by the due date.

If Form C-S / C-S (Lite) / C is not filed

IRAS may take the following enforcement actions if Form C-S / C-S (Lite) / C is not filed by the due date of 30 November:

• • Issue an estimated Notice of Assessment. The company must pay the estimated tax within 1 month.

• • Offer to compound the offence.

• • Issue a Section 65B(3) notice to the company’s director/s to submit the required information in the corporate income tax returns to the IRAS.

• • Summon the company or persons responsible for running of the company (including the directors) to Court.

The company must file an objection to the IRAS within 2 months from the date of the Notice of Assessment. If no objection is received within that period, the assessment will be treated as final.

The Inland Revenue Authority of Singapore (IRAS) audits tax returns and imposes penalties when there are errors, omissions and discrepancies.

Under the Income Tax Act 1947, taxpayers may face the following consequences depending on whether there is evidence indicating intention to evade taxes:

Without intention to evade taxes

• A penalty of up to 200% of the amount of tax undercharged and a fine of up to S$5,000; and / or

• Imprisonment of up to three years.

With intention to evade taxes

• A penalty of up to 400% of the amount of tax undercharged and a fine of up to S$50,000; and / or

• Imprisonment of up to five years.

Under the Income Tax Act 1947 in Singapore, employers are required to prepare an annual return (i.e., Form IR8E¹ / Form IR8A²) of remuneration and taxable benefits-in-kind provided to their employees working in Singapore by 1 March of the following year for each calendar year (i.e., if an employee started work in Singapore in 2023, he / she should receive a Form IR8A by 1 March 2024 for employment income earned in Calendar Year 2023).

¹ Employers who have 5 or more employees for the entire calendar year (including employees who had left the organisation during the year) or who have received the “Notice to File Employment Income of Employees Electronically” must submit their employees’ income information to the Inland Revenue Authority of Singapore (IRAS) electronically by 1 March of each following year (i.e., Form IR8E).

² Employers who are not in the Auto-Inclusion Scheme (AIS) for Employment Income must provide all existing employees and employees who ceased employment during the calendar year (other than those for whom tax clearance had been obtained), with their respective Forms IR8A by 1 March of each following year, to file their income tax returns.

All income derived from employment including benefits-in-kind are taxable unless specifically exempted under the Income Tax Act 1947 or covered by an existing administrative concession.

All employees are required to file their individual tax returns unless they have received the No-Filing Service (NFS) notification letter or SMS from the IRAS.

Under the Income Tax Act 1947 (“ITA”), the employer is required to:

• Withhold all monies due to the foreigner as soon as the employer is aware of the foreigner’s impending cessation of employment or departure from Singapore;
  

• File the Form IR21 at least 1 month before the earlier of: (a) the last day of employment, or (b) the date of departure from Singapore; and

• Ensure that tax clearance is obtained from the Inland Revenue Authority of Singapore (“IRAS”) and all outstanding amounts due to the IRAS have been paid, before issuing the final salary payment.

  If tax clearance is not obtained from the IRAS when the foreigner leaves Singapore, he / she may be held up at immigration at the airport. If he / she manages to leave Singapore without paying his / her personal taxes due to the IRAS, IRAS will seek to recover the unpaid taxes from his / her employer if the employer had failed to withhold the monies as required under the ITA.

Under Section 94 of the Income Tax Act 1947, employers who fail to comply with the deadline shall be liable on conviction to a fine not exceeding S$5,000 and in default of payment to imprisonment for a term not exceeding 6 months.

Under Section 95 of the Income Tax Act 1947, any person who gives any incorrect information in relation to any matter affecting the tax liability of any other person shall be guilty of an offence, and may be liable to:

• A penalty of up to two times the amount of tax undercharged and also to a fine not exceeding S$5,000; or

• Imprisonment for a term not exceeding 3 years; or

• Both

An entity is required by law to register for GST where the revenue exceeds or is expected to exceed the threshold of S$1 million over a 12-month period. Voluntary registration is also allowed although there may be additional requirements by the Comptroller of GST such as the need for a bankers’ guarantee.

Once registered, the entity is required to charge its customers output GST at the standard-rate, currently at 9% (with effect from 1 January 2024). Certain supplies such as international services or export of goods are zero-rated (i.e., 0% GST). The entity is entitled to claim a credit for input GST paid on its qualifying purchases so that only the net amount is payable to / refundable by the Comptroller of GST. GST returns are due to be submitted on a quarterly basis.