A company limited by guarantee pay corporation tax in Singapore depends on various conditions. While a company limited by guarantee (CLG) in Singapore is subject to the prevailing corporate tax rate of 17%, it may qualify for tax exemptions under certain conditions.
The taxation level depends on the nature of the income generated. To be eligible for corporate tax exemptions, the CLG must refrain from engaging in trade or professional associations and should not derive more than half of its income from membership fees from Singapore members that are tax-deductible according to the Income Tax Act. If less than 50% of the receipts are tax-deductible, only income derived from non-members is taxable.
CLGs in Singapore, typically established for non-profit purposes such as charity or education, often do not incur corporate tax on their income. However, if a CLG generates income unrelated to its charitable or non-profit objectives, it may be liable for taxation. For instance, profits from business operations conducted by the CLG could be subject to taxation under Singapore’s corporate tax laws.
It is crucial for CLGs in Singapore to prudently manage their operations and finances to ensure compliance with relevant tax legislation. Seeking advice from tax professionals or accountants well-versed in Singapore’s tax regulations can offer tailored guidance to meet the organization’s needs.