Overview of Corporate Income Tax

In tax terms, using the same example as above, 2020 is the Year of Assessment (YA). In other words, the YA is the year in which your income is assessed to tax.

To assess the amount of tax, IRAS looks at the income, expenses, etc. during the financial year. This financial year is known as the "basis period".

The basis period is generally a 12-month period preceding the YA.

Examples Based on Different Financial Year Ends

The same rule applies to new companies.

With effect from YA 2010, a company is taxed at a flat rate of 17% on its chargeable income regardless of whether it is a local or foreign company.

(1) Tax Exemption Scheme for New Start-Up Companies

Under the scheme, qualifying new companies are given the following tax exemption for the first three consecutive YAs where the YA falls in:

YA 2020 onwards

• 75% exemption on the first $100,000 of normal chargeable income; and
• A further 50% exemption on the next $100,000 of normal chargeable income.

YA 2010 to 2019

• Full exemption on the first $100,000 of normal chargeable income; and
• A further 50% exemption on the next $200,000 of normal chargeable income.

For more details on the tax exemption scheme for new start-up companies and the qualifying conditions, please refer to Common Tax Reliefs That Help Reduce The Tax Bills. 

(2) Partial Tax Exemption for all companies

All companies including companies limited by guarantee can enjoy the following tax exemption:

YA 2020 onwards

• 75% exemption on the first $10,000 of normal chargeable income; and
• A further 50% exemption on the next $190,000 of normal chargeable income.

YA 2010 to 2019

• 75% tax exemption on the first $10,000 of normal chargeable income; and
• A further 50% exemption on the next $290,000 of normal chargeable income.

 For more details on the partial tax exemption scheme, please refer to Common Tax Reliefs That Help Reduce The Tax Bills.

 (3) Corporate Income Tax Rebate

Corporate income tax rebate is given to all companies to ease business costs and support restructuring by companies and is applicable for YA 2013 to YA 2020.

All companies will receive a corporate income tax rebate of the following: 

• ^New! 25% corporate income tax rebate, capped at $15,000 for YA 2020;
• 20% corporate income tax rebate, capped at $10,000 for YA 2019;
• 40% corporate income tax rebate, capped at $15,000 for YA 2018;
• 50% corporate income tax rebate, capped at $25,000 for YA 2017;
• 50% corporate income tax rebate, capped at $20,000 for YA 2016; and
• 30% corporate income tax rebate, capped at $30,000 per YA for YA 2013 to YA 2015.  

Corporate income tax rebate is computed on the tax payable after deducting tax set-offs (e.g. foreign tax credit).

For more details on corporate income tax rebate and how the corporate income tax rebate is computed, please refer to Corporate Tax Rates, Corporate Income Tax Rebates and Tax Exemption Schemes.

All companies need to submit two corporate income tax returns to IRAS every year:

• Estimated Chargeable Income (ECI) within three months from the company's financial year end except for (a) companies that fulfil the conditions under the Administrative Concession; and (b) certain entities that are not required to file ECI; and
• Corporate Income Tax Returns commonly known as Form C-S or Form C by 15 Dec 2020 for YA 2020, and 30 Nov from YA 2021 onwards except dormant companies for which IRAS has waived the requirement to file.

Watch this video to learn more about the different types of Corporate Income Tax Returns.  

To watch the full video on Corporate Tax Filing Obligations and Basis of Assessment (12m 42s), please click here.