Year of assessment (YA)
Income earned by Singapore companies in one financial year will be assessed and taxed the following year, which we commonly refer to as the Year of Assessment.
You can choose any fiscal year closing period to determine the company’s fiscal year, and most companies choose December 31 as their closing date.
The tax return website of the Inland Revenue Authority of Singapore (IRAS) will be recorded directly through the ACRA system to ensure that the IRAS is alerted to the company’s tax returns in a timely manner for the financial year in which it is located.
Note that if the company’s fiscal year close lasts longer than 12 months, it must be noted at the time of income tax filing and taxed as two years.
For example, the company was established on August 1, 2020, with a selected fiscal year closing date of December 31, 2021.
For the fiscal year from 1 August 2020 to 31 December 2021, when filing your Singapore tax return, you must declare your company’s income based on the following 2 years of taxation:
- The 2021 tax year covers the fiscal year from 1 August 2020 to 31 December 2020
- The 2022 tax year covers the fiscal year from 1 January 2020 to 31 December 2021
Estimated Chargeable Income (ECI)
Estimated chargeable income is the total amount of income you receive after deducting permissible expenses and approved contributions, including:
- Trade income for the fiscal year
- Employment income
- Other income, such as rental income, royalty income, etc
The Estimated Chargeable Income (ECI) is the Company’s estimate of taxable income for a year of assessment (YA). You must file the ECI with IRAS, Singapore’s tax authority, within 3 months of the end of your company’s financial year (FYE).
The company may file an estimated taxable income statement (ECI) at the end of the fiscal year if:
- Your annual income for the current fiscal year does not exceed S$5 million
- Your estimated taxable income is zero (NIL)
Form C/C-S/C-S Lite
Annual Tax Return (C/C-S/C-S Lite) is a report of your company’s actual income. It provides more detailed information about the company’s financial position than the ECI report.
At the end of the financial year, there will be at least 11 months to prepare and submit this form to the IRAS.
Form C-S
Help small businesses simplify their corporate tax returns in Singapore, meeting the following criteria:
- Singapore is incorporated
- Annual turnover of no more than 5 million
- 17% corporate tax on all sources of income
- The Company did not claim any of the following in the tax year:
– Carry forward losses or capital relief for the year
– Relief
– Investment allowance
– Foreign tax credits and source tax credits.
*When a company receives a preferential tax rate for certain types of income, it should not submit form c-s lite
Form C-S Lite
To further ease the burden on small companies to report in Singapore, the government introduced Form C-S Lite in 2020, the simplest Singapore tax return available.
The Company is eligible to submit Form C-S Lite if:
- Your company meets all of Form C-S’s criteria
- Its annual income does not exceed S$200,000
Form C
If your company does not qualify for Form C-S or Form C-S Lite, you must submit Form C for your Singapore tax return.
In addition to such forms, you will be required to submit audited or unaudited financial statements, tax calculations, and other supporting documentation.
From 2020 onwards, Singapore tax returns will be filed electronically. After your tax return is filed, IRAS will send you an assessment notice by May 31 of the following year. The company will then have a month to pay.
If the taxable income reported in Form C-S/C differs significantly from the taxable income reported in ECI, IRAS may require an explanation.
Please note that delays in submission in Singapore may result in directors being fined or subpoenaed for tax liability.
Summary
For corporate tax returns in Singapore, companies must submit ECI and Form C/C-S/C-S (Lite) to the Inland Revenue Department.
ECI is due within 3 months of the end of the fiscal year, while form C/C-S/C-S Lite is on November 30 of the tax year.
From 2020 onwards, Singapore tax returns will be filed electronically. Upon successful submission, IRAS will issues an assessment notice. Then, pay your company’s taxes within one month.
If you have any questions about Singapore tax, please contact us for an answer.
