Tax Glossary

These are useful summarised explanation of some tax terms that are seen in Singapore. They are not to be fully considered as the same interpretation as that of any tax authorities.

Avoidance of Double Taxation Agreement (DTA)

An Avoidance of Double Taxation Agreement ("DTA") between Singapore and another jurisdiction serves to prevent double taxation of income earned in one jurisdiction by a resident of the other jurisdiction. A DTA also makes clear the taxing rights between Singapore and her treaty partner on different types of income arising from cross-border economic activities between the two jurisdictions. The agreements also provide for reduction or exemption of tax on certain types of income.

Basis Period

'Basis period' refers to the period of income relevant to the YA. Refer to Preceding Year Basis for more information

Capital Allowances

Capital allowances are deductions that you can claim on the wear and tear of fixed assets bought and used in trade or business.
Capital allowances are given in place of depreciation and other capital expenditure, which are not deductible for income tax purposes.
'Capital Gains Tax' is a tax on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a cost amount that was lower than the amount realized on the sale. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property. Not all countries implement a capital gains tax and most have different rates of taxation for individuals and corporations.

In Singapore capital gains are not taxable. However, if a person is deemed to be trading in such assets for example properties, the gains from the sale of the asset in Singapore is considered taxable income. Whether a person is deemed to be carrying on a trade will depend on individual circumstances.

Some criteria used to assess if you are trading are as follows:
  • Frequency of transactions
  • Reasons for acquiring and selling
  • Financial means to hold the asset for long term
  • Holding period
A dormant company is one that does not carry on business and has no income for the whole of the preceding year.
Taxes imposed on the transfer of property on account of a person's death.
In Singapore, there is no estate duty payable for deaths on and after 15 Feb 2008. A Schedule of Assets identifying the property comprising the estate will still have to be filed for the grant of probate.
e-Stamping or electronic stamping was introduced by IRAS in 1999. The e-Stamping system was further enhanced in July 2010 to allow stamping of documents from anywhere. There is no need to pay any subscription or transaction fee. All documents liable to Stamp Duty in Singapore will have to be stamped through the e-Stamping system.

With e-Stamping, the system will automatically calculate the amount of Stamp Duty you need to pay with the input of document details online.
Payment can be made through eNETS or interbank GIRO(Registered Users). Once full payment is made, the Certificate of Stamp Certificate can be printed immediately.

Form C/Form C-S

The Form C/ Form C-S is a declaration form for a company to declare its income to IRAS. All companies carrying on a trade or business in Singapore need to file Form C annually to report their income even if the company is making losses.
A dormant company must also submit its Form C/ Form C-S* unless it has been granted waiver of Income Tax Return (Form C/ Form C-S) submission.
Form C-S is a implified version of Form C that qualify companies are allowed to file their tax return with IRAS from Year of Assessment (YA) 2012.
GST is a broad-based consumption tax levied on the import of goods (collected by Singapore Customs), as well as nearly all supplies of goods and services in Singapore. The only exemptions are for the sale and lease of residential properties, the importation and local supply of investment precious metals and the provision of most financial services. Export of goods and international services are zero-rated. In some countries, GST is known as the Value Added Tax (VAT)
Tax imposed on certain transactions, goods or events. Examples include GST, VAT, sales tax, excise duties, stamp duty, services tax, registration duty and transaction tax
Inland Revenue Authority of Singapore
Inland Revenue Authority of Singapore (IRAS) is the tax authority of Singapore.

Notice of Assessment (NOA)

'Notice of Assessment' refers to the company's tax bill. It shows the types of income and amount of income subject to tax, calculates the tax amount the company needs to pay and shows the deductions given, as well as the credit balance to be refunded to you.
In Singapore, Income is assessed on a preceding year basis. This means that the basis period for any Year of Assessment (YA) is the financial year ending in the year preceding the YA. The examples below illustrate the concept of basis period and YA:

Examples
  • If your financial year end is 31 Mar of each year, the basis period for YA 2012 is 1 Apr 2010 to 31 Mar 2011.
  • If your financial year end is 31 Dec of each year, the basis period for YA 2012 is 1 Jan 2011 to 31 Dec 2011.
Stamp Duty is a tax on documents relating to immovable properties, stocks or shares.
See Indirect Tax.
 A broad term commonly used to describe the arrangement of a taxpayer's affairs that is intended to reduce his tax liability and that although the arrangement could be strictly legal it is usually in contradiction with the intent of the law it purports to follow.
See Tax Evasion for comparison
Tax equalisation can be a human resource policy of a MNC. It is the offsetting of any tax effects by a company for his employee who is sent to work in a different tax jurisdiction from his home country. The result of tax equalisation would be that the employee would pay the same taxes as if he is still in his home country. This applies even if the tax to be pay is lower in the foreign jurisdiction.See Tax Protection for comparison.
A broad term commonly used to describe illegal arrangements where liability to tax is hidden or ignored, i.e. the taxpayer pays less tax than he is legally obligated to pay by hiding income or information from the tax authorities.
See Tax Avoidance for comparison.
Tax protection can be one of a human resource policy of a MNC. It benefits the employee of the company where they will either enjoy the lower tax rate in a foreign tax jurisdiction they were sent to work in or pay the same tax as if they are working in their home country with the company paying for any tax that is above that of what they would have paid in their home country.
See Tax Equalisation for comparison.

Tax Residence

Tax Residence is a concept used by tax authorities to decide on the tax liability a person or entity.

Territorial Basis of Taxation

Singapore uses the Territorial Basis of Taxation, where only Singapore sourced income is taxed. However, foreign sourced income will be taxed when it is remitted or deemed remitted into Singapore unless the income was already subjected to taxes in a jurisdiction with headline tax rates of at least 15%. Unless there is a tax agreement.

Transfer Pricing

Transfer price is the price charged by a company for goods, services or intangible property to a subsidiary or other related company. Abusive transfer pricing occurs when income and expenses are improperly allocated for the purpose of reducing taxable income.

Withholding Tax

Tax on income imposed at source, i.e. a third party is charged with the task of deducting the tax from certain kinds of payments and remitting that amount to the tax authorities. Withholding taxes are found in practically all tax systems and are widely used in respect of dividends, interest, royalties and similar tax payments. The rates of withholding tax are frequently reduced by tax treaties.

'Year of Assessment' (YA) refers to the year in which income tax is calculated and charged. Refer to Preceding Year Basis for more information.

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