CORPORATE TAXES
SIGNIFICANT DEVELOPMENTS
For year of assessment 1999 there is a tax rebate for corporate income other than that from Singapore dividends, and another rebate is granted for property tax on commercial and industrial properties up to June 30,2000.
TAXES ON CORPORATE INCOME
Tax on corporate income is imposed at a flat rate of 26%. There are no state or municipal taxes on income. The full imputation system is adopted in taxing corporate profits. There is a 10% tax rebate for year of assessment 1999, but it excludes Singapore dividends.
CORPORATE RESIDENCE
The tax residence of a corporation is determined by the place where management and control are exercised. This is generally taken to mean where the directors meet and exercise de facto control.
OTHER TAXES
Goods and services tax/GST, or VAT, is charged at 3%. There are few exemptions; the main ones are financial services, life insurance and the sale or lease of residential properties.
Foreign workers levy/In certain industries there is a levy not exceeding S$ 470 per month for each foreign employee.
Property tax/Property tax is levied at 12% of the annual value of all houses, lands, buildings, and tenements. There is a 55% tax rebate for commercial and industrial properties up to June 30,2000.
Stamp taxes/Stamp taxes are levied only on written documents relating to stock, shares and immovable properties. The rates vary according to the nature of the document and the values referred to in the document.
BRANCH INCOME
Tax rates on branch profits are the same as on corporate profits, and no tax is withheld on remittance of profits to the head office.
INCOME DETERMINATION
Inventory valuation/There are no special rules as to which basis of valuation of inventories (stock-trade) should be adopted in the case of a continuing business, as long as the basis is consistent from one year to another. However, the LIFO basis of valuation is not permitted for tax purposes. Generally, tax reporting conforms with book reporting.
Capital gains/There is no tax on capital gains. Where there is a series of transactions, the tax authorities may take view that a business is being carried on and attempt to assess the gains as trading profits of the corporation.
While capital gains are not taxed, profits from real property sold within three years of purchase are taxable as income. The proportion taxable decreases by a third with each year added to the holding period. Besides real property the tax applies to short-term gains from the sale of shares in a private company that holds 75% or more of its assets in the form of real property or shares in real property companies. The special rules apply only to properties located in Singapore.
Intercompany dividends/ There are no special concessions on Intercompany dividends, which are taxable in the hands of the recipient with credit for Singapore tax expressed as deducted therefrom.
Foreign income/ A corporation, whether resident or nonresident in Singapore, is taxed on foreign income when received in Singapore. Legislative provisions govern the basis of treating foreign income as received in Singapore. There are no special rules for taxing undistributed income of foreign subsidiaries. For treaty countries,double taxation is avoided by means of foreign tax credits granted under the various tax treaties. For nontreaty countries, unilateral tax credits are given in respect of foreign tax on branch profits, dividends and employment income derived therefrom and prescribed service income received form certain countries.
Stock dividends/ Stock dividends are not taxable.
Deemed dividends/ Certain distributions to shareholders under a
capital-reduction scheme or a share by-back exercise are treated as distributions of dividends.
DEDUCTIONS
Depreciation and depletion/ Tax depreciation is allowable on industrial buildings used for qualifying activities at specified rates, and on machinery and equipment on a straightline basis over their specified working life for all types of business. In lieu of the straight-line basis, accelerated tax depreciation allowances can be claimed by all
businesses on all machinery and equipment, except for motorcars, motorcycles and light-goods vehicles, in equal installments over three consecutive years. A 100% depreciation allowance is available on capital expenditure incurred on computers, robots, standby generators, pollution control and energy-efficient equipment, and prescribed automation
equipment. Tax depreciation is not required to conform with book depreciation. Gains on tax depreciable property are taxed as ordinary income to the extent that tax depreciation has been allowed, i. e.. clawback of tax depreciation is
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