If you’re planning to jump-start your Singapore e-commerce company, it’s important to be aware of the country’s tax regulations. In this article, we’ll provide an overview of the relevant tax rules and how they apply to your e-commerce businesses in the Lion City.
Factors impacting tax on Singapore e-commerce company
The tax regulations for e-commerce companies in Singapore are quite complex, based on several factors.
The company’s income
As an e-commerce company, your income is taxed in Singapore according to the corporate tax rates. The current corporate tax rate is 17%. This means that if your company earns a profit of S$100,000, you will be taxed S$17,000.
Income from certain digital services, such as online advertising and streaming services, can be also subject to income tax. However, the foreign-sourced income will be tax-free in the city-state until it is not remitted to Singapore.
Recommended reading: How to be exempted from Singapore foreign income tax
The type of products or services sold
The type of products or services you sell will also affect the taxes your e-commerce company pays. For example, if you sell digital products, such as e-books or software, you can be subject to Singapore Goods and Services Tax (GST) which might be different compared to others, depending on the number of sales you generate in the country, or globally.
Common taxes for Singapore e-commerce companies
Singapore’s e-commerce businesses are required to pay several different taxes, including:
- Corporate income tax: This is a tax on a company’s profits. The rate for corporate income tax in Singapore is 17%, and there are numerous available tax schemes as well.
- Goods and services tax: GST is a tax on the sale of goods and services currently set at 7% and will increase to 8% starting in 2023, applying to the value of goods and services sold in Singapore.
For example, an e-commerce company is required to charge GST on the sale of digital goods and services to consumers in Singapore. In addition, the company is responsible for paying GST on any imported goods that are sold online to consumers in Singapore.
If your global e-commerce sales (applicable for taxable turnovers) don’t exceed S$ 1,000,000, then you don’t have to pay GST. Otherwise, as per Singaporean regulations, you’ll need to complete your required duties such as VAT registration, tax payment, invoices, and tax filing.
- Excise duty: If you are an e-merchant who sells alcohol and tobacco, then excise duty is a tax that you should be aware of since it is a tax on the import or sale of certain types of goods
E-commerce tax regulations can frequently change, so businesses in Singapore must stay up-to-date on the latest changes. They can do this by browsing the Inland Revenue Authority of Singapore (IRAS) website or seeking professional advice regularly.
Challenges faced by Singapore e-commerce businesses
One of the key challenges that Singapore e-commerce businesses face is understanding the complex tax system and regulations of Singapore. Businesses need to be informed about the different taxes they are liable for, such as corporate tax, and goods and services tax (GST).
Filing the correct tax returns on time is also worth mentioning. Businesses that operate online need to be especially vigilant in ensuring that their transactions are captured correctly to avoid any penalties.
In addition, businesses need to be aware of the updated rules and regulations, as the tax landscape is constantly changing. For example, the Singapore government will be imposing a new GST on digital services from 1 Jan 2023 on all remote services in Singapore provided by GST-registered overseas firms. This is in line with the global trend of governments targeting digital services to improve the country’s tax system.
E-commerce business in Singapore made easy
Take your first step with this guide.
How can Singapore e-commerce companies save money on taxes?
There are some cost-saving tips you need to consider when setting up an e-commerce business in Singapore.
- Keep track of their income and expenses carefully, as these will be used to calculate the amount of tax that is owed.
- Take advantage of several tax deductions and allowances that are available to you. E-commerce businesses may be able to claim tax deductions for certain expenses, such as the cost of internet access and web hosting, or advertising costs.
- Benefit from the goods and services tax (GST) exemption on exported goods, if qualified.
There may be some uncertainties when it comes to taxation for e-commerce businesses in Singapore. Online businesses can stay compliant and avoid any potential issues with the authorities by understanding the relevant tax rules and adhering to them.
I hope this blog post provides you with some good insight before moving on. If you have any questions, feel free to contact us directly through the chatbox below or send us an email via firstname.lastname@example.org for further assistance.
Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.
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