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                                                                                                                                                                                                                                          SINGAPORE PHARMBIO GUIDE 2021/2022
ADMINISTRATION STARTUP
TAXES
Details of Singapore’s tax regime can be found at the Inland Revenue Authority of Singapore’s (IRAS) website at www.iras.gov.sg. The website provides comprehensive coverage on tax matters and is a valuable online resource. Some of the more relevant types of taxes are summarised below:
Corporate Income Tax
Generally, companies are taxed on Singapore income and overseas income received in Singapore. The tax structure is straight forward, and the tax rate is presently a flat rate of 17%. Various tax rebates and exemption schemes are also available for SMEs and start-up companies.
Personal Income Tax
Foreigners are considered Singapore tax residents if they spend 183 days or more in Singapore during the calendar year or if they have been working in Singapore for 3 consecutive years. Tax rates for residents depend on their total taxable income during the calendar year and are on an escalating rate from 0% for the first S$20,000 of chargeable income to 22% for income in excess of S$320,000.
Non-residents are taxed only on income earned in Singapore. The applicable tax rate is the higher of
15% (without personal reliefs) or the corresponding resident’s rate (with personal reliefs). Director’s fees and other incomes are generally taxed at 22%. On the other hand, non-resident professions (e.g. consultants) may opt to be taxed at 15% of their gross income or 22% of their net income. Information including details on personal reliefs can be found at the IRAS website.
From Year of Assessment 2021, companies with 6 or more employees must submit the employment income information of their employees to the Inland Revenue Authority of Singapore (IRAS) electronically before 1st March each year under the Auto-Inclusion Scheme for Employment Income.
Goods and Services Tax (GST)
The Goods and Services Tax (GST) is a domestic consumption tax that is levied on all goods and services supplied by GST-registered businesses. The current GST rate is 7%. Companies and businesses with or reasonably expecting an annual taxable turnover exceeding S$1 million are required to register for GST. After registration, companies and businesses must charge and account for GST in their sales but may also claim for GST incurred on goods and services purchased for the business or as part of the business operation. Amount claimable
may be significant for new companies during the startup phase, especially due to new facility fit-out and equipment procurement. More information may be found at the IRAS website.
Withholding Tax
Payments to foreign companies and non- resident professionals for the following services rendered in Singapore are subject to withholding tax:
i. Interest, commission, fee or any other payment in connection with any loan or indebtedness
ii. Royalty or other payments for the use of or the right to use any movable property
iii. Payment for the use of or the right to use scientific, technical, industrial or commercial knowledge or information,
iv. Technical assistance and service fees v. Management fees
vi. Rent or other payments for the use of
any movable property vii. etc
The applicable rate depends on the nature of the payments and can be up to 22% of gross income. The withheld amount is to be submitted to IRAS by the 15th of the month following the payment date.
Withholding tax can be significant to technology companies where international
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