Let’s talk about tax.
By May of each year, you should receive a notification letter from the Inland Revenue Authority of Singapore (IRAS) informing you about your company’s filing duties. Private Limited Companies in Singapore are required to submit two corporate income tax forms to IRAS annually:
- Estimated Chargeable Income (ECI); and
- Corporate Income Tax Returns (known as Form C-S/C).
Dormant companies with no income for the Financial Year (FY) are exempted from filing any of the above, although they need to apply for a waiver of income tax return filing.
Now, let’s look at the details of ECI and corporate income tax returns.
What is Estimated Chargeable Income (ECI)?
ECI is an estimate of the company’s taxable income (after deducting tax-allowable expenses) for a Year of Assessment (YA). The YA refers to the year in which income tax is calculated and charged.
For details of company tax-deductible & non-deductible expenses, refer to our article here.
Does Your Company Need to File ECI?
Not all companies need to file ECI even if they have received a filing notification from IRAS. If your company fulfils the following conditions under the administrative concession, you don’t need to submit its ECI:
- Annual revenue less than SGD5 million; and
- Estimated Chargeable Income is nil.
Do note that companies must meet both criteria to qualify for the waiver. Otherwise, you need to file the ECI form with IRAS within three months of your company’s Financial Year End.
How Do I Know If My Company Qualifies for a Waiver to File ECI?
According to IRAS, companies need to do a self-assessment on whether they meet the criteria for the waiver to file ECI. New companies that have yet to file their first Corporate Income Tax Return (Form C-S/ C) can use the New Company Start-Up Kit to better understand their corporate tax obligations, including whether they can waive the filing of ECI.
Corporate Income Tax Form
After declaring your company’s ECI, your company must file an income tax return (which provides a calculation of the actual tax you need to pay) by 30 November of each year for paper filing or 15 December for e-filing. Regardless of whether your company makes a profit or loss, you need to make a declaration. Do note that from 2021, all companies will be required to e-File their Corporate Income Tax Returns by 30 November 2021.
To file your company’s actual income, you must submit either one of the two types of corporate income tax form: Form C-S or Form C. Singapore follows the “preceding year basis” for taxation (read our article How Does the Singapore Corporate Taxation System Work? for details on preceding year basis).
Form C-S – Filing Made Simpler
Form C-S was introduced by IRAS to simplify the filing procedure for small companies. It is a shorter (3 pages) than Form C with fewer fields to fill in, and hence, much easier to complete.
However, companies need to meet the following qualifying conditions to submit Form C-S:
- Incorporated in Singapore;
- Has an annual revenue of not more than SGD 5 million;
- Derives only income taxable at the prevailing corporate tax rate of 17%; and
- Is not claiming any of the following in the YA:
- Carry-back of Current Year Capital Allowances/Losses;
- Group Relief;
- Investment Allowance;
- Foreign Tax Credit and Tax Deducted at Source.
If a company is eligible to file Form C-S, it does not need to submit its financial statements and tax computation. However, these documents should be still prepared and be readily available for submission should IRAS ask for them.
Form C-S (Lite) – Filing Made Even Simpler
IRAS has recently introduced Form C-S (Lite) for small companies with annual revenue of not more than $200,000 and that meets the existing Form C-S qualifying conditions. It is a simplified version of Form C-S, comprising only six essential fields to be completed for companies with straightforward tax matters. Click here to find out more about Form C-S (Lite).
If your company is filing Form C-S (Lite), it is not required to submit its financial statements and tax computations. However, you should still prepare these documents in the event that IRAS requests for them.
Who is Responsible for Filing of Annual Corporate Income Tax Return?
Two parties in your company are responsible here:
- The Company Secretary should ensure that the company complies with the filing of various statutory reports.
- The Company Director(s) should ensure that the financial statements are accurately prepared and comply with the Singapore Accounting Standards.
Any person authorised by the company can sign off the Form C-S/C. However, the Director or principal officer of the company is ultimately responsible for the company’s tax affairs.
What If I Fail to File My Company’s Annual Corporate Income Tax Return?
IRAS may issue a Notice of Assessment (NOA) based on an estimation of your company’s C-S/C if you don’t file your tax returns by the due date. Suppose you don’t agree with the estimated assessment. In that case, you can e-file an objection via the Revise/ Object to Assessment e-Service at myTax Portal within two months from the date of the NOA, together with your company’s Income Tax Return (Form C-S/C). Otherwise, the estimated assessment cannot be revised, even if an objection has been filed later. The tax on this assessment must still be paid within one month from the date of the NOA notwithstanding any objections.
When Do I Pay My Company’s Corporate Tax?
You need to pay your company’s tax within 30 days from the date indicated on its Notice of Assessment. A penalty of 5% will be imposed on late payment of any unpaid tax amount, and subsequently an additional 1% every month, up to a maximum of 12 months.
Your company must keep proper records of its business transactions for at least five years from the relevant YA and ensure that they are readily available upon IRAS’s request. For example, your records for the FY 1 January 2015 to 31 December 2015 (YA 2016) should be archived until 31 December 2020.
Documents that must be archived include:
- Source documents, e.g. invoices, receipts and vouchers;
- Accounting records and schedules, e.g. general ledger and sales listings;
- Bank statements and bank-in slips; and
- Any other business transaction records.