Taxable and Non-Taxable Income for Companies in Singapore

‍Income Received In Singapore From Outside Singapore

Generally, income accrued in or derived from Singapore, or received from outside Singapore, is taxable. Under Section 10(25) of the Income Tax Act 1947, income from outside Singapore is considered received in Singapore when it is:

• Remitted to, transmitted or brought into Singapore.
• Used to satisfy any debt incurred in respect of a trade or business carried on in Singapore.
• Used to purchase any movable property (such as equipment, raw material, etc.) brought into Singapore.

Section 10(25) is applied to tax foreign income received in Singapore only if the income belongs to an individual* who is resident in Singapore or an entity that is located in Singapore.

Non-resident individuals and foreign businesses that are not operating in or from Singapore can remit their foreign income to Singapore without being taxed on the income.

As an administrative concession, foreign income that is reinvested overseas without being repatriated to Singapore is not considered received in Singapore at the point of reinvestment. This means that the taxation of the foreign income is deferred until the investment is sold and the proceeds are brought into Singapore.

If the foreign-sourced income is subject to tax in Singapore and overseas, tax reliefs may be available to alleviate the double taxation suffered.

What Is Taxable

Your company has to pay tax in Singapore on taxable income that is:

• Accrued in or derived from Singapore; or
• Received in Singapore from outside Singapore.

For example, the income from a business carried on in Singapore is regarded as accrued in or derived from Singapore.

For Singapore tax purposes, taxable income refers to:

• Gains or profits from any trade or business.
• Income from investment such as dividends, interest, and rental.
• Royalties, premiums, and any other profits from property.
• Other gains that are revenue in nature.

Deductions such as business expenses, capital allowances, and reliefs can be claimed to reduce taxable income, leading to lower taxes.

What Is Not Taxable

Capital Gains: Capital gains are not taxable. These include:

• Gains on sale of fixed assets.
• Gains on foreign exchange on capital transactions.

Income Exempted from Tax

Certain types of income are specifically exempted from tax under the Income Tax Act 1947, subject to conditions. These include:

• Certain shipping income derived by a shipping company under Section 13A and Section 13E.
• Foreign-sourced dividends, branch profits, and service income received by a resident company under Section 13(8).
• Gains derived by a company on the disposal of equity investments under Section 13W.

Tax Treatment of Grants/Payouts Commonly Received by Companies

• A grant or payout is taxable if it supplements trading receipts or defrays a company's operating expenses (revenue in nature). Conversely, it is not taxable if it's for acquiring capital assets (capital in nature).
• Tax deductions and allowances (capital allowances, writing-down allowances, and investment allowances) are no longer provided on expenditure funded by capital grants from the Government or Statutory Boards approved on or after 1 Jan 2021. For partially funded expenditure by capital grants, tax deductions and allowances are only allowed on the net amount.

Tax Treatment of Digital Tokens

Businesses that accept or trade in digital tokens, such as Bitcoins, are subject to standard income tax rules.