Exchange of information (EOI)
Generally, Singapore’s tax treaties and EOI arrangements include provisions for the exchange of information for tax purposes. Treaty partners may make a request to the Comptroller of Income Tax for information, or the exchange may take the form of spontaneous EOI or automatic EOI.
Singapore has committed to spontaneously exchange certain rulings under the agreed framework for the compulsory spontaneous EOI set out in the BEPS Action 5 Report ‘Countering Harmful Tax Practices More Effectively, taking into Account Transparency and Substance’.
International Tax Compliance Agreements
Singapore has also concluded the following international tax compliance agreements and will exchange information pursuant to those agreements as follows:
Foreign Account Tax Compliance Act (FATCA)
Singapore has a Model 1 FATCA intergovernmental agreement (IGA) with the United States in place to help ease the compliance burden of Singapore-based financial institutions (SGFIs). All Reporting SGFIs must submit a FATCA Return to the IRAS, setting out the required information in relation to every US Reportable Account.
Common Reporting Standard (CRS)
SGFIs are required to establish the tax residency of all their account holders. Further, they will need to report to the IRAS the requisite information for each Reportable Account relating to tax residents of jurisdictions with which Singapore has a Competent Authority Agreement to exchange information.
Adoption of International Financial Reporting Standards (IFRS)
Companies incorporated in Singapore and Singapore branches of foreign companies are required by the Companies Act to prepare and present financial statements that comply with the Singapore Financial Reporting Standards (SFRS). In Singapore, the Accounting Standards Council (ASC) has the statutory authority to issue SFRS for adoption.
The SFRS is principally based on and substantially similar to IFRS that are issued by the International Accounting Standards Board (IASB). Full convergence of the SFRS with IFRS for Singapore-listed companies was the strategic direction of the ASC set in 2009, and, on 29 December 2017, the ASC issued Singapore Financial Reporting Standards (International) (SFRS(I)s), Singapore's equivalent of the IFRS. Singapore-incorporated companies that have issued, or are in the process of issuing, equity or debt instruments for trading in a public market in Singapore are required to apply SFRS(I)s for annual periods beginning on or after 1 January 2018. Non-listed companies may voluntarily apply the new framework.
Companies are required to submit financial statements as part of their tax return filing. The IRAS generally accepts financial statements prepared for statutory filing, although companies that have been allowed to prepare their financial statements using standards other than SFRS, such as IFRS or the Generally Accepted Accounting Principles (GAAP) adopted by the United States, may be required to explain and/or account for any differences and make the necessary tax adjustments, if any.
Sample corporate tax calculation
Accounting period ended 31 December 2019 (year of assessment 2020).
|Net profit before tax per accounts||5,857,500|
|Singapore dividend (exempt)||1,500|
|Foreign-sourced dividend (exempt)||2,200|
|Foreign-sourced interest (unremitted)||1,600|
|Profit on sale of fixed assets||34,000|
|Capital exchange gain||6,750||(46,050)|
|Foreign pension contribution||100,000|
|Medical expenses (non-deductible)||500|
|Legal fees (capital in nature)||15,500|
|Penalties and fines||2,000||810,985|
|Adjusted profit before capital allowances||6,622,435|
|Unutilised capital allowances brought forward||1,152,000|
|Capital allowances (current year)||3,000,000|
|Adjusted profit after capital allowances||2,478,135|
|Less: Unutilised losses brought forward||(67,500)|
|Adjusted profit after capital allowances and unutilised losses brought forward||2,410,635|
|Less: Approved donations (250% deduction)||(22,500)|
|Chargeable income before partial exemption||2,388,135|
|Less: Partial exemption|
|75% of first SGD 10,000||7,500|
|50% of the next SGD 290,000||145,000||(152,500)|
|Chargeable income after partial exemption||2,235,635|
|Tax thereon at 17%||380,057.95|
|Corporate tax rebate (capped at SGD 15,000)||(15,000.00)|
|Tax payable after tax rebate||365,057.95|