When it’s time to file your corporate tax return in Singapore, there are many ways you can do it. Different entities require different tax form on which they report their revenues and expenses. It doesn’t matter the tax form you use since you all you need is to calculate your revenues in similar ways. In Singapore, it’s mandatory for every company to file its annual tax returns, particularly with the Inland Revenue Authority (IRA). In regards to that, here are some tips on how to file your yearly tax returns in Singapore.
1. Preparation of Tax Return in Singapore
It’s very important to know how to prepare annual tax return for your company. You can either prepare your tax returns through a tax preparation program or manually. The latter requires you to calculate the taxable income in writing and submit or send it manually to the Singapore’s Inland Revenue Authority. Because of its high risk of errors, however, manual tax preparation isn’t preferred these days.
On the other hand, preparing and filing your tax returns online with the help of software comes with many benefits. For instance, the software helps you to calculate taxable profits by simply adjusting your accounting profits. After preparing your financial accounts online, you can use the IRAS portal to file your tax returns. This process is commonly known as E-filing.
Additionally, the basic tax calculator is also a great tool for calculating your taxable income. This tool helps you to make the necessary adjustments to the company’s accounting profit to determine the taxable profit. Income schedules and capital allowances are also other things you need to deal with when preparing and filing corporate tax return in Singapore.
For corporations, this kind of preparation is important when filing tax returns for your company. So, when calculating your taxable income/profit from the accounting income, make sure to make the necessary adjustments before submitting.
2. Calculation of Singapore Corporate Tax
After knowing how to prepare corporate tax returns, knowing how to calculate corporate tax in Singapore is the next step to filing your tax returns. In this case, make the necessary adjustments to the company’s net profit to determine its taxable income. This is important because some of the business income isn’t taxable while some expenses aren’t deductible as well. Also, keep in mind that some business income may need to be separately taxed.
In Singapore, all companies are required to deduct their non-taxable income from the company’s net profit. The business income often includes revenues from foreign exchange particularly on capital transactions, sale of fixed assets, capital gains and other business incomes exempt from tax. In this case, non-tax deductible include depreciation, write-off of fixed assets, fines, income tax and private expenses just to mention a few. All you are required to do is to add these expenses to the company’s net profit. Since its easier to use the basic tax calculator for corporate, you may want to use it to calculate your tax payable than doing it manually.
3. Reduce Singapore Corporate Tax with Professional Tax Planning
It’s also important to know how to minimize corporate tax through tax planning before filing your tax returns in Singapore. There are so many ways a company can use to minimize the amount of tax it’s supposed to pay. Establishing your business in a location with tax subsidies and rebates is actually one of those ways you can consider because you will definitely pay less taxes compared to establishing a company in a location without tax subsidies.
In Singapore, there are several different tax incentives a company can take advantage of to minimize its tax liability. For instance, you can decide to claim your capital allowance for repair and maintenance of some company assets until further notice when the company would like to lower the payable tax amount. This means that you can delay your income generation activities to the next financial year.
Alternatively, a company may decide to change the business location to take full advantage of better corporate taxes. For example, you can establish your business where sale of fixed assets and capital gains aren’t taxed and the location has a relatively tax rate for corporate.
4. File Company Tax Return to IRAS
According to IRAS, all companies are required to file their tax returns each year. In Singapore, the filing tax returns consists of form IRIN 301, form C, the unaudited or audited financial accounts and tax computation statement (accompanied with supporting schedules). However, if you are running a small business, you only need to file form C-S and you may be required to file and submit the rest of other documents upon request.
Conclusively, these are the most important steps you need to follow when filing corporate tax return in Singapore. To get started with taxation process, correct your financial records and always pay more attention to deadlines.
SingaporeAccounting.com provides tax filing services for companies in Singapore. Find out more regarding tax rebate from our friendly consultants.