Preparing a Tax Computation and Submission for Your Business

Navigating the tax landscape can be daunting for small business owners and entrepreneurs. However, preparing a tax computation and ensuring timely submission is crucial for compliance and financial health. This guide will walk you through the essential steps to prepare and submit your tax computation in Singapore, tailored specifically for SMEs.

Understanding Tax Computation

Tax computation is the process of determining the taxable income of a company and the corresponding tax payable. This involves several steps, including gathering financial data, making necessary adjustments, and calculating the final tax amount. Here’s a comprehensive approach to preparing your tax computation.

Step-by-Step Guide to Preparing a Tax Computation

1. Gather Financial Data

• Income statements
• Balance sheets
• Cash flow statements
• Supporting documents such as invoices, receipts, and bank statements

2. Start with Net Profit or Loss

Begin with the net profit or loss from your company’s financial statements, which must be prepared according to Singapore’s Financial Reporting Standards (FRS).

3. Make Adjustments to Arrive at Taxable Income

Non-Taxable Income:

• Subtract non-taxable income such as foreign income not subject to tax, non-business source income (e.g., interest earned, property income), and capital gains.

Disallowed Expenses:

• Add back disallowed expenses, capital expenses, and depreciation.

Capital Allowances and Losses:

• Subtract capital allowances (current and carried forward) and carried forward losses.

Non-Business Source Income:

• Add back non-business source income.

Other Deductions:

• Subtract approved donations, investment allowances, and any further deductions allowed through government incentives.

Tax Exemptions:

• Apply any applicable tax exemptions.

The resulting figure after these adjustments is your company’s taxable income.

4. Calculate Tax Payable

Apply the Corporate Tax Rate: Singapore’s corporate tax rate is a flat 17%. Apply this rate to your taxable income to compute the tax payable.

Tax Rebates and Deductions: Subtract any applicable tax rebates and tax deducted at source to arrive at the net tax payable.

✅ Move away from accounting services that surprise you with unexpected fees. We focus on your savings and efficiency. Our expert team efficiently manages everything from multicurrency accounting and unlimited transaction, to tax filing. Explore our all-in-one accounting plans here.

Filing the Tax Computation

1. Choose the Correct Form

Depending on the size and complexity of your company, you will file either Form C-S, Form C-S (Lite), or Form C.

• Form C-S (Lite): For companies with revenue of $200,000 or less.
• Form C-S: For companies with revenue of $5 million or less.
• Form C: For companies with revenue above $5 million or those with complex tax matters.

2. Prepare Supporting Documents

Ensure all relevant documents, such as the financial statements, detailed profit and loss accounts, and supporting schedules, are ready for submission.

3. Submit via myTax Portal

Online Submission: File your tax returns electronically through the Inland Revenue Authority of Singapore’s (IRAS) myTax Portal. Ensure you meet the filing deadlines to avoid penalties.

Tips for a Smooth Tax Computation and Submission

1. Keep accurate and organised financial records throughout the year to simplify the tax computation process.

2. Stay informed about the latest tax rules to ensure compliance.

3. Seek Professional Assistance: The actual tax computation can be complex, especially for companies with various income sources, deductions, and incentives. Many businesses in Singapore engage professional accountants or tax advisors to prepare their tax computations.

4. The Inland Revenue Authority of Singapore (IRAS) provides a Basic Corporate Tax Calculator (BTC) to assist with calculations.

5. Corporate income tax in Singapore is assessed on a preceding year basis. This means income earned in one financial year is taxed in the following year, known as the Year of Assessment (YA).

Summary

Preparing a tax computation and ensuring timely submission is essential for the financial health and compliance of your business. By following the steps outlined in this guide, SMEs can navigate the tax landscape with confidence. 

Try Counto accounting service 

Counto exists to help small businesses like you save time and money throughout the year. Get direct access to a dedicated Customer Success Manager, who’s backed by a team of accountants and tax specialists. Discover a smarter way to outsource your accounting with confidence. Speak to us directly on our chatbot, email us at [email protected], or contact us using this form.

Here are some articles you might find helpful:

Financial Year End 

Filing requirements for Pte Ltd companies

ECI filing