Navigating COVID-19 Part 1: New Tax Measures for Every Business in Singapore

Singapore business

Businesses in Singapore will soon ease their cash flow following a series of tax-related support measures as announced in the Resilience Budget on 26 March 2020 and Solidarity Budget on 6 April 2020. From extended filing deadlines to tax rebates, here are the new tax measures with the greatest impact on your business.

  1. Extended Filing Deadlines

    1. Goods and Services Tax (GST)If your business is a GST-registered one, your business is required to submit its GST return for the accounting period ending Mar 2020 by 30 Apr 2020. However, in view of the COVID-19 situation, the Inland Revenue Authority of Singapore (IRAS) has extended this deadline to 11 May 2020.
    2. Income Tax for Trusts, Clubs and AssociationsIf you are running a trust, club or association, you are required to submit an income tax return by 15 April 2020. This deadline has been extended to 31 May 2020.
    3. Estimated Chargeable Income (ECI)If your company’s Financial Year ends in Jan 2020, your company is required to submit its Estimated Chargeable Income (ECI) by 30 Apr 2020. To allow more time for affected businesses, IRAS has extended this deadline to 31 May 2020.
    4. S45 Withholding Tax FormsIn light of the latest measures to manage the COVID-19 situation, the filing due date for all S45 Withholding Tax Forms due in April 2020 will be automatically extended to 15 May 2020. The payment due date will also be automatically extended to 15 May 2020.
    5. Tax ClearancesIn general, if your non-Singapore Citizen employee ceases employment with you in Singapore, goes on an overseas posting or plans to leave Singapore for more than three months, you must notify IRAS at least one month in advance and withhold all monies due to the employee until tax clearance is obtained.

    If you are required to seek tax clearance for your employee(s) in the month of April, you will be given 1 month’s extension to file Form IR21. Your employee(s) will be allowed to leave the country in the meantime.

  2. Deferment of Corporate Income Tax Payment

    Does your company have Corporate Income Tax (CIT) payments due in April, May and June 2020? These payments will be automatically deferred for three months, which means CIT payments will next be collected in July, August and September 2020. This aims to ease your business cash flow.

  3. Tax Residency for Companies

    Your company is considered a tax resident if the control and management of your company is exercised in Singapore. However, there are companies with just a nominee local director, with the other directors based outside Singapore.

    Thus, if there is no Board of Directors meeting held in Singapore, or if there is no strategic decision made by the local director, the control and management of a business is considered to be not exercised in Singapore.

    However, due to the travel restrictions relating to COVID-19, IRAS is prepared to consider such companies as Singapore tax residents for Year of Assessment (YA) 2021 if it meets certain conditions.

    In addition, your company should keep relevant documentations and records (e.g. board minutes stating why the directors were attending board meetings from their respective locations), and to provide the relevant information to IRAS upon request.

    Unlike tax resident companies, non-tax residents will not be able to enjoy:

    1. tax benefits provided under Singapore’s Avoidance of Double Taxation Agreements (DTAs);
    2. tax exemption on foreign-sourced dividends, foreign branch profits, and foreign-sourced service income; and
    3. tax exemption for new start-up companies.

    To navigate these evolving tax rules in Singapore in the face of COVID-19 and maximise tax benefits for your company, consider engaging a professional services firm such as Corporate Services Singapore. Getting help from a team of professional accounting and taxation specialists in Singapore can help you maximise your company’s tax deductions and smoothen the entire tax compliance process.

  4. Property Tax Rebates

    If you own a non-residential property, you will be granted a Property Tax rebate for the period 1 January 2020 to 31 December 2020:

    1. If you own a commercial property such as a hotel, serviced apartment, tourist attraction, shop or restaurant, you will receive a 100% rebate. This is equivalent to more than one month’s rental.
    2. If you own a non-residential property such as an office or industrial property, you will receive a 30% rebate.

    The Government has passed a new law that requires landlords such as yourself to fully pass on the rebate to your tenants in the form of a monetary payment or reduction in rentals in a timely manner and without conditions. This will help directly ease the cash flow and cost pressures faced by your tenants. Failure to properly pass on the rebate is an offense.

    To find out if you will be receiving a 100% or 30% rebate, please refer to the list below:

    100% rebate
    • Hotel
    • Serviced apartment
    • Backpackers’ hostel
    • Boarding house
    • Guest house or students’ hostel
    • Shop or warehouse retail building
    • Restaurant
    • Sports and recreation building
    • Amusement centre
    • Cinema or theatre
    • Medical clinic, hospital, nursing homes, etc
    • Childcare centre or kindergarten
    • School
    • Driving school
    • Purpose-built workers’ dormitory
    • Tourist attraction (e.g. Singapore Zoological Gardens, Singapore Flyer and Haw Par Villa)
    • Suntec Singapore Convention and Exhibition Centre
    • Singapore EXPO
    • Changi Exhibition Centre
    • Changi Airport
    • Singapore Cruise Centre
    • Marina Bay Cruise Centre Singapore
    • Tanah Merah Ferry Terminal
    30% rebate
    • Offices
    • Business or science park
    • Petrol station
    • Warehouse
      Premises used for an industrial or agricultural purpose

For more tips on tackling cash flow, cost, and credit, look out for Part 2 of Corporate Services Singapore’s “Navigating COVID-19” series.

At Corporate Services Singapore, we help companies with strategic tax planning and provide business owners a peace of mind when we navigate the complex tax landscape for them. Whether you are looking for assistance on tax matters or the above latest initiatives, give us a call at 6602 8286 or email us at info@corporateservicessingapore.com to get started today.

Posted in Taxation.