SINGAPORE Law and Practice Contributed by: Yang Shi Yong, Drew & Napier LLC
3.2 Individual and Corporate Rates Individual professionals have the prerogative to deter - mine their business structure. This is subject to the anti-avoidance provision under the Act. Where the arrangement to earn income by setting up a com - pany is carried out for bona fide commercial reasons and does not have as one of its main purposes the avoidance or reduction of tax, the anti-avoidance pro - vision is unlikely to apply. Otherwise, the Comptroller can disregard or vary the arrangement and make any appropriate adjustment to counteract any tax advan - tage obtained 3.3 Restrictions on Retention of Earnings by Closely Held Corporations There are no rules preventing closely held corpora - tions from accumulating earnings for investment pur - poses in Singapore. 3.4 Taxation of Individuals on Shares in Closely Held Corporations Dividends Individuals are exempted from tax on dividends paid by any Singapore tax resident company. Gains on the Sale of Shares If the gains on the sale of shares arose from the car - rying on of a trade, such gains will be considered revenue in nature and will be taxable. Conversely, if the gains are capital in nature, this will not be taxable unless, subject to certain exemptions, it is the sale of a foreign share, and the gains are received in Singapore by an entity of a relevant group. Where employees derive any gains from a right to acquire shares by reason of their employment, such gains will be taxable at the time of the exercise and are computed based on the open market price, less any amount paid for the shares. Where there is a restriction on the sale of the shares, the gains will be taxable when the restriction ceases to apply, and are computed based on the open market price, less any amount paid for the shares. For a foreign employee who ceases employment before the right to acquire shares is exercised, or before the restriction on sale has lifted, the gains will
tered persons in the course or furtherance of their business; (b) any business-to-business (ie, supplies made to GST-registered persons) supplies of imported services under the reverse charge regime; and (c) any business-to-consumer (ie, supplies made to non-GST registered persons) supplies of imported services under the overseas vendor registration regime; • stamp duty on agreements for the sale of shares, and the purchase or disposal of immovable proper - ties; and • additional conveyance duty for the purchase or disposal of shares in property-holding entities own - ing primarily prescribed immovable properties. 2.9 Other Notable Taxes In addition to the taxes that an incorporated business may pay on a transaction (see 2.8 Other Taxes on Transactions ), it may also be subject to property tax. Property tax is imposed on the owners of properties based on the annual value of the properties. The annu - al value of a property is the estimated annual rental value based on market rents of similar or compara - ble properties, excluding furniture, furnishings, and maintenance fees. It is independent of actual rental income. Residential properties are taxed progressively at 0% to 32% (for owner-occupied residential properties) or 12% to 36% (for non-owner-occupied residential properties) whereas non-residential properties are taxed at 10% of the annual value. 3. Corporations and Non-Corporate Businesses 3.1 Form of Closely Held Local Businesses According to statistics collated by the Accounting and Corporate Regulatory Authority, as at November 2025, there are about 465,137 local and foreign com - panies in Singapore compared to about 134,586 sole proprietorships and partnerships. While there is no further breakdown available of whether most closely held local businesses operate in corporate or non- corporate form, the data suggests the former.
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