Tax Exemption for Companies in Singapore

Singapore is known as a best city for incorporation, not only for their robust economy but also for their government support and tax system. Once having completed company registration in Singapore, a company can enjoy attractive tax exemption from the government as a means of supporting investment and entrepreneurship.

With effect from Year of Assessment 2010, a company is taxed at a flat rate of 17% on its chargeable income regardless of whether it is a local or foreign company.

 

 

Tax Exemption Scheme for New Start-Up Companies

The tax exemption scheme for new start-up companies was introduced in Year of Assessment (YA) 2005 to support entrepreneurship and help local enterprises grow.

With the changes, qualifying companies will be tax-exempt as follows for the first three consecutive YAs where the YA falls in:

YA 2020 onwards 

  • 75% exemption on the first $100,000 of normal chargeable income*; and
  • A further 50% exemption on the next $100,000 of normal chargeable income*.

Tax exemption scheme for new start-up companies (where any of the first 3 YAs falls in or after YA 2020)

Chargeable income

% exempted from Tax

Amount exempted from Tax

First $100,000

@75% =$75,000

Next $100,000

@50%

=$50,000

Total $200,000

=$125,000

 

YA 2019 and before

  • Full exemption on the first $100,000 of normal chargeable income*; and
  • A further 50% exemption on the next $200,000 of normal chargeable income*.

Tax exemption scheme for new start-up companies (where any of the first 3 YAs falls in YA 2010 to YA 2019)

Chargeable income % exempted from Tax Amount exempted from Tax

First $100,000

@100%

=$100,000

Next $200,000

@50% =$100,000

Total $300,000

=$200,000

*Normal chargeable income refers to income to be taxed at the prevailing corporate tax rate.

 

Partial Tax Exemption for Companies (PTE)

All companies including companies limited by guarantee can enjoy PTE, unless they have already claimed the Tax Exemption Scheme for New Start-Up Companies.

Qualifying companies can enjoy the following tax exemption:

YA 2020 onwards 

  • 75% tax exemption on the first $10,000 of normal chargeable income; and
  • A further 50% tax exemption on the next $190,000 of normal chargeable income.

Partial tax exemption for companies (from YA 2020)

Chargeable income

% exempted from Tax Amount exempted from Tax
First $10,000 @75%

=$7,500

Next $190,000

@50%

=$95,000

Total $200,000

=$102,500

 

YA 2019 and before

  • 75% tax exemption on the first $10,000 of normal chargeable income; and
  • A further 50% tax exemption on the next $290,000 of normal chargeable income.

Partial tax exemption for companies (YA 2010 to YA 2019)

Chargeable income

% exempted from Tax Amount exempted from Tax

First $10,000

@75%

=$7,500

Next $290,000

@50%

=$145,000

Total $300,000

=$152,500

 

Besides tax exemption scheme and partial tax exemption, the Singapore Government offers different types of government grant and subsidy such as Productivity & Innovation Credit, Innovation & Capability Voucher, SME Enhanced Training Support, etc.

Ace Global Accountants assist companies in claiming grants, strategizing companies’ grant position, fulfilling grant criteria and the evaluation of grants claimable.

Should you have any queries regarding government grant, don’t hesitate to contact us and get a 1st free consultation!

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