Corporate Income Tax

Why is Corporate Income Tax important for Singapore?

Located at the crossroads between the East and West, Singapore is an attractive location for global businesses and startups to access new and emerging markets in Asia. Businesses choose Singapore because of:

• Our excellent infrastructure,

• Robust and transparent regulatory environment,

• Political stability,

• Skilled workforce, and

• A stable and efficient tax regime which includes our Corporate Income Tax system.

These strengths make Singapore a trusted hub for many businesses.

What is Singapore’s Corporate Income Tax rate?

A flat rate of 17% applied on a company’s chargeable income.

How is foreign income treated?

Foreign-Sourced Income Exemption (FSIE) regime

In Singapore, taxes are imposed on income derived from or accrued in Singapore, as well as foreign-sourced income received in Singapore. Businesses may claim foreign tax credit to offset the taxes payable on foreign-sourced income.

Foreign-sourced dividends, branch profits and service income (collectively "specified foreign-sourced income") derived by any person who is a tax resident in Singapore is exempted from tax under the FSIE regime if the following conditions are met:

• The specified foreign-sourced income has been subjected to tax in the foreign jurisdiction from which the income is received;

• The headline tax rate of the foreign jurisdiction from which the specified foreign-sourced income is received is at least 15% at the time the foreign income is received in Singapore; and

• The Comptroller of Income Tax is satisfied that the tax exemption would be beneficial to the person resident in Singapore.

The FSIE regime is a proxy for the normal foreign tax credit regime and simplifies compliance for businesses. Where the above conditions are not met, tax exemption may be granted under section 13(12) of the Income Tax Act for foreign-sourced income under the scenarios specified in the IRAS e-tax guide. Otherwise, any exemption may only be granted on a case-by-case basis, upon application to MOF. The application form can be found here.

💡 Please refer to IRAS' website for more information on the FSIE regime.

Foreign Tax Credit Pooling

Foreign Credit Tax Pooling was introduced in 2011 to give businesses greater flexibility on their claims for foreign tax credit.

Businesses can claim Foreign Tax Credit Pooling if the following conditions are met:

• Income tax is paid on the income in the foreign jurisdiction from which the income is derived;

• The headline tax rate of the foreign jurisdiction from which the income is received is at least 15% at the time the foreign income is received in Singapore; and

• There is Singapore income tax payable on the foreign income and the taxpayer is entitled to claim for foreign tax credit under the Income Tax Act.

💡 Please refer to IRAS' website for more details on the Foreign Tax Credit Pooling system.

Tax Incentives

Tax incentives is part of our suite of tools to encourage new and high-growth activities. Singapore’s tax incentives are legislated and reviewed regularly to ensure they remain relevant.

Tax incentives are administered by Singapore’s economic agencies. The incentives are judiciously granted for a limited period to businesses that conduct substantive activities or have substantive business plans to establish or expand their operations in Singapore, for income arising from qualifying activities. Income arising from non-qualifying activities will be taxed at the prevailing Corporate Income Tax rate.

💡Read more on tax incentives on IRAS’ website.

Incentive recipients are:

• required to significantly contribute to the deepening of activities and/or creation of new capabilities and high-value skilled employment in Singapore; and

• subject to regular reviews of their economic contributions for the qualifying activities.

All incentive recipients need to meet their committed contributions to continue enjoying their incentive awards.

Tax Deduction for Donations

To continue encouraging Singaporeans to give back to the community and to provide strong support for the charity sector, the Minister for Finance announced in Budget 2023 that 250% tax deductions for qualifying donations will be extended for another three years until 31 December 2026.  

Table 1 below further elaborates on the types of donations that will be granted the 250% tax deduction.

💡 Please refer to IRAS' website for more information on donations and tax deductions.

Tax deductions for corporate volunteerism

At Budget 2023, the Minister for Finance announced the enhancement to the Business and Institution of a Public Character (IPC) Partnership Scheme – now rebranded as the Corporate Volunteer Scheme (CVS) - to further encourage corporate volunteerism. Under the CVS, businesses may claim 250% tax deductions on qualifying expenditure incurred between 1 July 2016 and 31 December 2026 when they send their employees to volunteer and provide services, including secondments, to IPCs.

With effect from 1 January 2024, the scope of qualifying activities was also expanded to include activities which are conducted virtually or outside of the IPCs’ premises. The qualifying expenditure cap per IPC was also increased from $50,000 to $100,000 per Calendar Year.

💡 Please refer to IRAS' website for more information on CVS.

Will tax deductions be granted for overseas donations?