To encourage local entrepreneurship, Singapore Government has declared a tax exemption for newly incorporated companies.The corporate income tax rate is 17% for both Singapore tax resident and non-Singapore tax resident companies.

Singapore adopts a territorial basis of taxation. Income accruing in or derived from Singapore is subject to Singapore tax. Foreign source income is not taxable unless received in or remitted into Singapore. There is no precise definition of “source” in the Singapore Income Tax Act (Cap. 134) (“the Act”) and consequently, each commercial activity has to be carefully examined to determine the source from which it generated income.

A dormant company is one that does not carry on business and has no income for the whole of the financial period under review. Even if the company has incurred such costs as bank charges, secretarial fees, and other expenses in maintaining the office. A dormant company must submit its Income Tax Return (Form C-S/ C) unless it has been granted a waiver to file the Income Tax Return by the Inland Revenue Authority of Singapore (IRAS).