Corporate Tax: COVID-19 Support Updates To Be Aware Of
In response to the COVID-19 pandemic, the Inland Revenue Authority of Singapore (IRAS) has been making adjustments to corporate taxes to give relief to businesses during these trying times. But the situation is changing so rapidly, and IRAS regularly reviews these measures to remain relevant.
If you are a business owner, it is crucial to be aware of the latest updates to ensure that your business continues to keep up with the right processes. Even if you are not the one filing the taxes, you might find it useful so that you can make adjustments to your business operations or cash flow as well.
Not too sure how tax filing works? Your business can get help from one of Singapore’s audit firms. They will help you understand the relief measures and ensure that your company is in compliance.
Here’s a look at some of the developments as of the third quarter of 2020.
Tax filing deadlines have been extended
It is probably the most crucial update that you ought not to have missed. Deadlines for tax filing, for both individuals and businesses, have been adjusted. But different entities have different dates. Here are some worth highlighting:
- Companies, trusts, clubs and associations with financial year ending January and February 2020 received an extension on their income tax returns to 30 June 2020.
- Goods and Services Tax (GST) returns for the period that ended on March and April 2020 were extended to 11 May and 11 June 2020.
- The dates for individual income tax return were adjusted to 31 May 2020.
- The deadline for non-citizen employees’ filing of tax clearance (originally due in April and May 2020) was revised to 30 June 2020.
- For objections against a Notice of Assessment by IRAS, a one-month extension may be granted on a case by case basis.
IRAS introduced a new discount in corporate income tax
To support the huge number of businesses that have been impacted by the pandemic, the support measures include significant discounts in corporate income tax. Companies can look forward to a rebate of 25% on corporate income tax (CIT) capped at S$15,000 for FY 2020. This is a boost from the 20% rebate that was granted in 2019 capped at S$10,000.
Zero-interest instalments for payments of Estimated Chargeable Income (ECI)
Currently, only companies that pay through General Interbank Recurring Order (GIRO) can pay the ECI in instalments. Such companies received a further boost when the authorities announced an additional two months of interest-free ECI instalment payments. This allowance is granted to companies that file their ECI from 19 February 2020 to 31 December 2020.
Companies that filed their ECI before 19 February 2020, and had ongoing instalment payments for March 2020, would also receive the automatic two-month extension of interest-free payments.
If your company is not under the GIRO arrangement, reach out to Singapore’s audit firms for guidance on how to get on board. Keep in mind that ECI has to be filed within three months of your company’s financial year-end.
Pushing back the next GST hike
In 2018, authorities in Singapore announced the intention to increase GST from 7% to 9% between 2021 and 2025. But due to the current economic climate, the government has put these plans on hold, and declared that the hike will not take place in 2021.
An experienced tax agent would be well aware of these developments, but business owners might also benefit from understanding these changes. If your company is in need of a tax filing agent, accounting or audit services, you can enlist the help of outsourced professionals to keep everything in perfect order.
For more information on tax updates related to Covid-19, also refer to the official IRAS website.