Paying taxes is a legal obligation for all companies. However, Singapore has a complex corporate tax framework that requires specialist expertise to fully comply with. This article explains what corporate tax compliance means, how it works, key rules, benefits of using external specialists, services offered, and factors to consider when hiring tax compliance help.
What is Corporate Tax Compliance?
Corporate tax compliance refers to procedures and processes that enable companies to correctly calculate, file, and pay corporate income taxes on time. This primarily involves filing the annual corporate income tax return within the November deadline based on a company’s financial year-end. Additional obligations like tax registration, quarterly instalment payments, withholding tax, and record keeping must also be fulfilled.
How Corporate Tax Compliance Works
– Companies must register for corporate tax and obtain a Tax Reference Number upon incorporation.
– Corporate income tax is 17% of annual profit exceeding S$200,000. An exemption scheme up to 75% is also available for qualifying new startups.
– Quarterly instalment payments are required based on prior year’s income or current year estimates.
– Withholding tax must be deducted from payments to foreign contractors and companies without Singapore tax residence.
– Detailed financial records must be maintained for 5 years to support the tax return. These may be requested during an IRAS audit.
– The annual corporate income tax return is e-filed based on the company’s financial year-end. The deadline is November 30.
Key Singapore Corporate Tax Compliance Rules
Important rules include:
– All Singapore-incorporated companies must file a corporate tax return regardless of whether they made a profit.
– Returns must be filed and taxes paid electronically.
– Supporting documents like financial statements must be retained for 5 years.
– Instalment payments are due in January, April, June and September based on prior year taxes.
– Late payment penalties are 5% of tax owed, increasing to 2% monthly.
– Incorrect returns can incur penalties up to 200% of underpaid tax.
Benefits of External Corporate Tax Compliance Specialists
Given the complexity, most companies engage corporate services firms or accounting specialists for tax compliance. Key benefits include:
– Keeping updated on the latest regulations and deadline changes. This avoids penalties from non-compliance.
– Accurately calculating corporate taxes and utilizing available rebates, exemptions, and deductions.
– Providing audit support if the company is investigated by IRAS.
– Advising on tax planning strategies to minimize liabilities.
– Handling e-filing submission and payments to meet deadlines.
– Ensuring proper documentation is maintained for the mandatory 5 year period.
Services Offered by Corporate Tax Compliance Firms
Specialist tax compliance services include:
– Registration for corporate tax and fulfilling other tax obligations upon company incorporation.
– Preparing and filing the annual corporate income tax return based on a company’s financial statements.
– Making quarterly instalment payments of estimated taxes to IRAS.
– Applying for corporate tax rebates, exemptions, and schemes the company qualifies for.
– Advising on tax deductions, capital allowances and exempted incomes that can reduce taxable profit.
– Assisting with IRAS record requests and handling corporate tax audits.
– Providing ongoing tax planning advice to minimize future tax liabilities.
Considerations When Hiring Corporate Tax Compliance Help
Things to evaluate when selecting external tax compliance specialists:
– Experience assisting companies in your specific industry. Different rules apply.
– Range of services offered – from tax registration to return filing and audit support.
– Use of software tools for e-filing, record keeping, and data security.
– Qualifications of tax professionals – look for accountants, lawyers, accredited tax advisors.
– Feedback from current clients on responsiveness, expertise and costs.
– Advisory capabilities for legal tax reduction strategies.
– Support for ad-hoc tax questions and planning needs.
– Pricing model – fixed fee, hourly rates, or hybrid options.
Accurate corporate tax compliance reduces risk, saves money, and provides peace of mind. Hiring seasoned tax specialists lifts the administrative burden so you can focus on your business. With changing rules and strict penalties, their guidance is key to staying compliant in Singapore’s tax regime.
