SINGAPORE Law and Practice Contributed by: Azmul Haque, Ashley Chew, Hu Yutong and Aaron Leong, Collyer Law LLC
• file employee income information with the IRAS and may be required to withhold tax in certain cas - es, such as when a non-citizen employee ceases employment and leaves Singapore; and • pay the Skills Development Levy (SDL) for all employees, calculated as a percentage of month - ly wages, subject to minimum and maximum amounts. Other Taxes Foreign employees are generally not subject to CPF contributions. However, employers may be required to pay foreign worker levies for certain categories of work pass holders. Companies carrying on business in Singapore may be subject to corporate income tax, Goods and Services Tax (GST), where applicable, and certain withholding taxes, regardless of where they are incorporated. A company is subject to Singapore tax if it is tax resi - dent or derives Singapore-sourced income. A com - pany is regarded as tax resident if its control and management are exercised in Singapore – ie, typically where board decisions are made. 5.2 Taxes Applicable to Businesses Tax Residence and Scope of Taxation Singapore operates a territorial tax system, under which income sourced in Singapore is taxable and foreign-sourced income is generally not taxed unless received in Singapore, subject to exemptions. Corporate Income Tax The prevailing corporate income tax rate is 17% of chargeable income. Various tax incentives and exemptions, including start-up and industry-specific schemes, may reduce the effective tax rate. Capital Gains Tax Singapore does not impose capital gains tax. How - ever, gains may be taxed where they are revenue in nature, based on the facts and circumstances. GST GST is a broad-based consumption tax on imports and most local supplies of goods and services. The prevailing rate is 9%.
GST registration is compulsory where a business exceeds the SGD1 million taxable turnover threshold under either the retrospective test or the prospective test. Under the retrospective test, a business must register if its taxable turnover for the past 12 months exceeds SGD1 million. Under the prospective test, a business must also register if it is reasonably expected that its taxable turnover will exceed SGD1 million in the next 12 months. Registration must generally be completed within 30 days of meeting either threshold. Exemptions and zero-rating apply to specified trans - actions, including certain financial services, residential property supplies, exports and qualifying international services. Withholding Tax Withholding tax may apply to specified Singapore- sourced payments made to non-residents, including certain interest, royalty, technical assistance, manage - ment fee and service payments. Rates depend on the nature of the payment, and may be reduced under applicable double taxation agreements. Singapore does not impose withholding tax on divi - dends. Stamp Duty Stamp duty may apply to instruments relating to Sin - gapore immovable property and transfers of shares. Share duty is generally 0.2% of either the purchase price or the value of the shares transferred, whichever is higher. Transfer Tax Singapore does not impose a general transfer tax on Singapore has implemented Pillar Two of the OECD’s Two-Pillar solution through the introduction of an Income Inclusion Rule (IIR) and a domestic minimum top-up tax (DTT). These rules apply to multinational enterprise groups with annual consolidated revenue of at least EUR750 million, for financial years beginning on or after 1 January 2025. business assets. OECD Pillar Two
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