Goods and Services Tax (GST) is similar to Valued Added Tax (VAT) in other countries and is a relatively new form of tax in Singapore. GST was implemented on 1st April 1994 in Singapore. The Singapore GST Act is modelled on the UK VAT legislation and New Zealand GST legislation. The Inland Revenue Authority of Singapore (IRAS) acts as the agent of the Singapore government and administers, assesses, collects and enforces payment of GST.

Singapore has one of the lowest tax rates in the developed countries and is considered as “a global legal tax haven”. Singapore’s low tax rate, and its favourable tax policies, stable living environment have made the Singapore business environment even more attractive to global investors. The highest corporate income tax rate in Singapore is 17%, the highest Individual Income Tax rate is 22%, and there are no capital gains or inheritance taxes.

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).