Month: July 2024

Tax Strategies for Every Stage: Navigating the Business Lifecycle from Inception to Growth and Exit

Tax Strategies for Every Stage: Navigating the Business Lifecycle from Inception to Growth and Exit

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Tax Strategies for Every Stage: Navigating the Business Lifecycle from Inception to Growth and Exit

Welcome to this month's Asia Tax Insights. In this issue, we explore key tax strategies for each stage of the business cycle, i.e. from setting up an optimal tax structure at inception to leveraging tax incentives for growth and planning for a tax-efficient exit. We hope you find this edition both informative and practical as you steer your business through its various business cycles. 

To learn how strategic tax planning can propel your business forward, download our comprehensive report and discover how efficient tax planning can help enhance your business growth and profitability.

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Time for Transparency: Examining Your Supply Chain

ESG Time for Transparency

Time for Transparency: Examining Your Supply Chain

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Welcome to the July issue of Boardroom’s Think ESG Newsletter. This month, we share more on the recently adopted EU's Corporate Sustainability Due Diligence Directive ("CSDDD") and its impact on Singapore companies.

We will shed light on the intricacies of the directive, identifying which Singaporean companies fall within its scope, and provide an analysis of current performance and areas for improvement.

Additionally, we will share more on why Singaporean companies not affected by this directive should comply with the regulation and consider mapping their supply chain in accordance. All this and also actionable insights for implementing an efficient process to manage supply chain ESG risks in this month’s report.

 
 
 

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ESG in Focus: What SG Companies Need to Know About ESG Reporting

ESG in Focus: What SG Companies Need to Know About ESG Reporting

ESG in Focus: What SG Companies Need to Know About ESG Reporting

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Welcome to the June issue of BoardRoom's Think ESG Newsletter. This month we look at the evolving global ESG reporting landscape and what implications it has on Singaporean Companies.
 

Navigating the Evolving Global ESG Reporting Landscape

As the global focus on Environmental, Social, and Governance (ESG) reporting intensifies, companies worldwide are adapting to new and emerging standards. This trend is driven by major frameworks such as:

  1. the International Sustainability Standards Board (ISSB) Integrated Framework
  2. the US Securities and Exchange Commission (SEC) regulations, and 
  3. the European Union's Corporate Sustainability Reporting Directive (CSRD)

These frameworks aim to create a unified approach to ESG reporting, ensuring that companies sustainability efforts are consistent, transparent, and comparable across different regions.

In Singapore, this evolving landscape poses both challenges and opportunities. The Singapore Exchange (SGX) has introduced mandatory climate-related reporting for listed companies, and the Monetary Authority of Singapore (MAS) has provided guidelines to help companies align with international standards. 

Companies must now navigate these local requirements while also considering global frameworks like the ISSB to ensure compliance and competitiveness.

 

 

Quality & Consistency of ESG Data

One of the primary challenges for Singaporean companies is managing the quality and consistency of their ESG data. Often, data related to sustainability is fragmented across various departments, making it difficult to gather accurate and comprehensive insights.

To address this issue, companies need to deploy advanced data management platforms that can consolidate information from multiple sources. Additionally, engaging with external ESG consultants can help companies standardise their reporting practices and meet diverse regulatory requirements.
 

 

Be Future-ready with a Strong ESG Reporting Plan

The recent survey results highlight a significant gap in ESG readiness among Singaporean executives. A striking 68% of CEOs in Singapore believe their current ESG progress is insufficient to withstand stakeholder scrutiny, while only 8% feel they have the necessary capability to meet new reporting standards.

This underscores the urgent need for companies to build their internal capacities and capabilities in ESG reporting. The survey also revealed that higher costs and difficulties in raising finance are major concerns for companies that fail to meet stakeholder expectations regarding ESG performance.

From the investor's perspective, the integration of sustainability information into fundamental analyses has grown substantially, with 83% of investors now incorporating such data. This trend reflects a broader recognition of the importance of ESG factors in assessing long-term corporate value and risk. Regulatory measures are expected to further enhance investor confidence by addressing current data challenges, thereby fostering a more reliable and transparent sustainability reporting environment.

 

Disclosures at the Core of Your Business

Singapore's regulatory landscape for ESG reporting is becoming increasingly stringent. Climate-related disclosures will be phased in for listed issuers, starting with high-risk industries such as financial services, agriculture, energy, materials, and transportation.

By 2025, these requirements will align with the ISSB standards, reflecting a commitment to international best practices. This phased approach allows companies to gradually build their reporting capabilities while adhering to global standards.

The European Union's CSRD, in conjunction with the EU Taxonomy and Sustainable Finance Disclosure Regulation (SFDR), represents a comprehensive framework for sustainability reporting. The CSRD introduces rigorous reporting requirements and mandates double materiality assessments, compelling companies to disclose not only the financial impact of sustainability risks but also their broader impact on people and the planet.

This directive has significant implications for EU-based companies and their non-EU subsidiaries, including those in Singapore, which will need to comply with these stringent standards.

 

Be Up to Date on ESG Reporting in Singapore

For Singaporean businesses, the implications of these global and local regulations are profound. Companies must integrate environmental considerations into their strategic planning, ensuring that product designs are environmentally attentive.

Boards of directors are increasingly taking direct oversight of environmental pledges, key performance indicators (KPIs), and targets. Transparency and traceability in supply chains are also becoming critical, with companies required to monitor and mitigate the environmental impacts of their upstream suppliers.

To prepare for future reporting requirements, Singaporean companies should conduct thorough gap assessments to identify areas needing improvement. Standardising data collection and reporting practices according to international frameworks like the ISSB and TCFD will be crucial. Engaging stakeholders and verifying reports through external audits can further enhance credibility and compliance.

By adopting active measures, companies can showcase their sustainability achievements, build stakeholder trust, and set new goals for continuous improvement.

 

The evolving ESG reporting landscape presents a complex but essential journey for Singaporean companies. Embracing these changes will not only ensure regulatory compliance but also position businesses as leaders in sustainability, driving long-term value and resilience in an increasingly scrutinised corporate environment.

 
 
 
 
 
 

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Your Guide to Corporate Tax Filing in Singapore

Your Guide to Corporate Tax Filing in Singapore

Your Guide to Corporate Tax Filing in Singapore

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Managing your corporate tax obligations and ensuring their timely filing is a crucial part of conducting and operating your business in Singapore. The Singapore government has specific regulations in place regarding corporate taxes, and while it offers a business-friendly environment, it’s important to learn the steps involved to navigate the process more easily. This guide provides the essential information you need to file your taxes accurately and on time.

What Is Corporate Tax Filing?

Corporate tax filing is the process of declaring your company’s income to the Inland Revenue Authority of Singapore (IRAS) and paying any taxes owed. It’s a mandatory annual process that ensures businesses contribute their fair share to the nation’s development.

Why Is Corporate Tax Filing Important?

Corporate tax filing is important for several reasons, and they include the following:

Ensuring Compliance
Filing corporate tax ensures that your business complies with Singapore’s tax regulations, avoiding any late filing penalties and potential legal issues with IRAS. It protects your business and helps you maintain a good standing with the authorities.
Maintaining Accurate Records
Corporate tax filing plays a vital role in giving you a clear and comprehensive financial picture of your business, detailing records of your income, expenses, and tax liabilities. With these details, you can easily track your business performance and identify areas for improvement.
Eligibility for Incentives
Accurate corporate tax filing allows your company to benefit from various tax deductions or exemptions offered by IRAS. These incentives can significantly reduce your overall tax burden and contribute to your business’s financial health

Who Needs to File Corporate Income Tax in Singapore?

According to IRAS, companies that must fulfil corporate tax obligations include:

  • A business entity incorporated or registered under the Companies Act 1967 or any law in force in Singapore. It usually has the words ‘Pte Ltd’ or ‘Ltd’ as part of its name
  • A foreign company registered in Singapore such as a branch of a foreign company
  • A foreign company incorporated or registered outside Singapore

However, sole proprietorships and partnerships have separate filing requirements. Sole proprietors report their business income under their personal income tax filing, while partnerships file a separate partnership tax return.

Understanding the Singapore Corporate Tax System

Singapore’s corporate tax system revolves around the concept of the Year of Assessment (YA). The YA refers to the calendar year for which you’re filing your taxes. It’s important to note that corporate tax is levied on income earned in the preceding year. For example, in 2024 (which is also your YA2024), you’ll file your corporate tax return for income generated in 2023.

Singapore boasts a flat corporate tax rate of 17%, applicable to both local and foreign companies. This rate is applied to your company’s “chargeable income,” which is essentially your taxable income after deducting allowable expenses from your gross income.

Filing Corporate Income Tax

Key Corporate Tax Filing Requirements

Before filing your corporate tax return, you must understand the requirements to complete the following two Corporate Income Tax (CIT) returns annually at different times:

Estimated Chargeable Income (ECI)
The ECI is an estimate of your company’s taxable profits for a particular YA. You must file your ECI with IRAS within three months of your financial year-end. For instance, if your financial year ends on December 31, 2023, the ECI filing deadline would be March 31, 2024. Some companies may qualify for an ECI filing waiver.

Your company does not need to file ECI in the YA when both the criteria are met:

  • Annual revenue is $5 million or below for the financial year; and
  • ECI is nil for the YA. The ECI is the amount before deducting the exempt amount under the partial tax exemption scheme or the tax exemption scheme for new start-up companies
Form C-S/ Form C-S (Lite)/ Form C
These forms are the official tax return documents submitted to IRAS. The specific form depends on your company’s revenue and other conditions.

Form C-S and Form C-S (Lite) are for companies with income taxed at the 17% Corporate Income Tax rate and not claiming certain deductions or credits in the Year of Assessment (YA), such as Carry-back of Current Year Capital Allowances/Losses, Group Relief, Investment Allowance, Foreign Tax Credit, and Tax Deducted at Source. If your company’s annual revenue is $5 million or below, you will use Form C-S. If your company’s annual revenue is $200,000 or less, you will use Form C-S (Lite).

Companies that do not meet the above criteria must file Form C.

The filing deadline for these forms is typically 30 November of the YA.

Penalties for Late or Inaccurate Corporate Tax Filing

Late or inaccurate filings can result in penalties from IRAS. The penalties can be significant and include:

  • Late filing penalty: If you fail to file your corporate tax by the due date, IRAS may issue an estimated Notice of Assessment (NOA) based on your company’s past years’ income or any information that IRAS may have. Your company must pay the estimated tax within 1 month from the date of the NOA even if you intend to object to the assessment or are awaiting the outcome of the objection. A penalty of 5% of the unpaid tax will be imposed on you if the full payment is not submitted to IRAS by the due date addressed in the NOA.
  • Late payment penalty: If tax payment is overdue by 60 days after the 5% penalty, a 1% monthly penalty may apply for each completed month that the tax remains unpaid, up to a maximum of 12% of the unpaid tax.
  • Inaccurate filing penalty: A penalty ranging from 200% up to 400% of the additional tax may be imposed due to the inaccuracy, depending on whether there is evidence indicating intention to evade taxes. In severe cases where the taxpayers are found to have the intention to evade taxes, they may be prosecuted with a maximum fine of SG$50,000 and/or imprisonment of up to 5 years.
How Can BoardRoom Help You with Corporate Tax Filing in Singapore

How Can BoardRoom Help You with Corporate Tax Filing in Singapore

Navigating Singapore’s corporate tax system can be intricate. BoardRoom takes the complexity out of tax filing, allowing you to focus on running your business. Our team of tax professionals possesses in-depth knowledge of Singapore’s tax regulations and can handle all aspects of your corporate tax filing, from ECI filing and tax computation to preparing and submitting your final tax return to IRAS.

Talk to BoardRoom today to ensure accurate filing and compliance in your corporate tax filing.

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