What Are The Corporate Tax Exemptions in Singapore

Posted by John Rikvin on March 4th, 2022

Singapore is often cited as the leading example of countries that continues to reduce corporate income tax rates and introduce various tax incentives to attract and keep global investments. Singapore has a single-tier territorial based flat-rate corporate income tax system. Effective tax rates as one of the lowest in the world and the general “business friendliness” of Singapore are the two important factors contributing to the economic growth and foreign investment into the city-state.

Singapore Tax Exemption 1: Start-up Tax Exemption (SUTE)

The SUTE is an excellent example of Singapore’s commitment to making starting a business as easy as possible. Any start-up company that qualifies for the SUTE will have its chargeable income reduced by up to 75% in its first three years of operation.

In order to qualify for SUTE, the start-up must:

1. Be incorporated in Singapore
2. Be tax resident in Singapore for that financial year
3. Ensure the company’s total shares are held by a maximum of 20 shareholders throughout that financial year where:
   • All of the shareholders are individuals, or;
   • At least one of the shareholders is an individual holding at least 10% of the issued ordinary shares.

Singapore Tax Exemption 2: Partial Tax Exemption

After those three years, all new companies and start-ups will also qualify for a Partial Tax Exemption (PTE). Companies that did not qualify for SUTE will still be able to benefit from the PTE, assuming you meet the criteria. 

From 2020 onwards, qualifying companies will benefit from:

• A 75 per cent exemption on the first ,000 of normal chargeable income, and;
• An additional 50 per cent exemption on the next 0,000 of normal chargeable income.

Singapore Tax Exemption 3: Corporate Income Tax (CIT) Rebate

Taking things further, all companies incorporated in Singapore will benefit from a Corporate Income Tax (CIT) rebate up to the value of ,000 per annum. To qualify for the CIT, the entity simply needs to be incorporated in Singapore, which also includes non-tax resident companies, registered business trusts, and any companies already receiving income that is taxed at a reduced rate. 

Read more about Singapore Tax Exemptions at Rikvin.com.