LET'S TALK ABOUT YOUR COMPANY'S COMPLIANCE NEEDS. CALL US AT: 6272 0820

Margin Wheeler

MarginWheeler - Your Company, Our Priority.

T +65 6272 0820
Email: [email protected]

Margin Wheeler
21 Bukit Batok Crescent, #15-75, WCEGA Tower, Singapore 658065

Open in Google Maps
  • HOME
  • OUR TEAM
  • SERVICES
  • ACCOMPLISHMENTS
  • TESTIMONIALS
  • BLOG
  • CONTACT
  • CAREER
FREEQUOTE
  • Home
  • Taxation
  • Understanding Corporate Tax Exemptions in Singapore

BLOG & Gossip

Understanding Corporate Tax Exemptions in Singapore

by Sheann / Monday, 10 May 2021 / Published in Taxation
tax exemption

Incorporating a company in Singapore comes with many benefits, one of the biggest being the city-state’s low corporate tax rate. Even with these low tax rates, Singapore’s legal framework includes several tax exemptions schemes for all sorts of companies incorporated in Singapore.

Overview of Singapore’s corporate tax

All resident companies in Singapore are taxed on profits earned both locally and on foreign soil, which is then remitted into Singapore. The corporate tax rate of 17% is then calculated based on the company’s chargeable income, which is taxable revenues less allowable expenses and other allowances. This tax rate applies to both foreign and local entrepreneurs.

Though this tax rate is already fairly low, the actual tax payable can come out to even lower if you know how to utilise government incentives, subsidies and schemes to your benefit. For example, the Singapore government provides tax exemptions to start-ups for their first three years after incorporation.

 

Start-up Tax Exemption (SUTE)

Start-ups are eligible for the Start-Up Tax Exemption (SUTE) scheme for the first three years after incorporation. From the Year of Assessment (YA) 2020 onwards, companies that qualify will be given the following exemption for the first three consecutive YAs:

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 on first $200,000 of chargeable income (where any YA 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

For companies that were incorporated in YA 2019 and before, the following exemptions apply:

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 on first $200,000 of chargeable income (where any YA of the first 3 YAs falls in or after YA 2020)

Chargeable Income

% Exempted from Tax

Amount Exempted from Tax

First $100,000

100%

$100,000

Next $100,000

50%

$50,000

To qualify for SUTE, your company must also,

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

 

Partial Tax Exemption

After the first three years, your company will be eligible for Partial Tax Exemption (PTE). Other companies that do not qualify for SUTE will also be able to qualify for PTE. If your company qualifies, you will enjoy the following exemptions:

YA 2020 onwards

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

YA 2019 and before

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

 

Corporate Income Tax (CIT) rebate

As of 2020, all incorporated companies in Singapore will be granted a 25% Corporate Income Tax (CIT) rebate, subject to an annual cap of $15,000.

The CIT applies to all incorporated businesses in Singapore, including registered business trusts, non-tax residents companies in Singapore, and companies already receiving income taxed at a concessionary tax rate. 

 

Foreign Sourced Income Exemption Scheme (FSIE)

Most resident companies that do business overseas have their foreign-sourced income remitted into Singapore. Based on Singapore’s progressive tax framework that also takes into account territorial policies, this income is also taxed. However, the Foreign Sourced Income Exemption Scheme (FSIE) helps to reduce taxes for these companies.

Tax exemption under FSIE only applies when the headline corporate tax rate in the foreign country is at least 15%, and the income has already been subjected to tax in that particular country. These exemptions will also only qualify if it is deemed to be beneficial to the specified resident taxpayers.

FSIE is applicable to the following:

  • Foreign-sourced dividend – A dividend paid by a non-Singapore tax resident company, which may have been temporarily deposited into a foreign custodian account before its remittance into Singapore. However, the remittance must be made within one year from the 
  • Foreign branch profits – profits earned from business operations of a Singapore company registered as a branch in a foreign company. It does not include non-trade or non-business income of the foreign branch.
  • Foreign-sourced service income – income generated by a resident taxpayer for services provided through a fixed place of operation in a foreign country. 

 

Exemptions from Corporate Tax in Singapore

 Other types of exemptions include the Pioneer Certificate Incentive (PC) for companies approved as ‘pioneers’ in their field. The Development and Expansion Incentive (DEI) offers concessionary tax to companies conducting new activities that contribute to the overall economic benefit for Singapore.

No matter if you are a small start-up or a multinational business, you’ll stand to benefit from the variety of tax exemptions for companies found in this city-state. But if you’re just starting out, we understand that it can be hard to wrap your mind around corporate tax. Be sure to engage a professional, or reach out to us at Margin Wheeler where our taxation services will be able to help.

1
Tagged under: corporate tax, corporate tax exemption, singapore, tax, tax exemption

About Sheann

Penultimate undergraduate at NUS with experience in writing lifestyle articles and copywriting.

What you can read next

skills development
Paying Skills Development Levy in Singapore
tax
Taxable Income for my Business
tax investigation
All You Need to Know About Tax Investigations

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Recent Posts

  • e-commerce

    Designing Your E-commerce Website

    Creating an e-commerce website In today’s day a...
  • accountant

    Growing your startup with an accountant

    Hiring an accountant  When you first open a sta...
  • shipping

    8 Tips to Make Profits While Offering Free Shipping

    Offering free shipping You would have probably ...
  • traffic

    5 Tips To Get Traffic to your Online Store

    Getting traffic to your online store Though set...
  • CTA

    Full Guide to Commercial Tenancy Agreements (CTA)

    What are Commercial Tenancy Agreements? Though ...

Categories

  • Accounting
  • Business
  • Entrepreneurship
  • Incorporation
  • Taxation
  • Uncategorized

INCORPORATION

  • Incorporation with Local
  • Incorporation with Foreigner
  • Incorporation (BVI)
  • Nominee Director Services
  • Registered Address

CORPORATE SECRETARY

  • Company Secretary Service
  • Meeting Room Support
  • Company Strike Off
  • Scrutineer

WORK PASS

  • Work Permit
  • Skill Pass
  • Employment Pass
  • Entrepreneur Pass

TAXATION

  • Company Tax
  • Personal Tax
  • Goods And Services Tax (GST)
  • Tax Planning

ACCOUNTING SERVICES

  • Bookkeeping
  • Cloud Accounting
  • Financial Statement
  • XBRL Filing
  • Onsite Accounting

AUDIT SERVICES

  • Statutory Audit
  • Sales/Rental Audit (GTO)
  • Charity Audit
  • Lucky Draw Audit

HR, ADMIN &
DATA PROTECTION

  • Payroll Services
  • CPF Account Opening
  • Administrative Services
  • Data Protection Services

TRADEMARK

  • Trademark Registration
  • Trademark Classes

GET IN TOUCH

T (+65) 6272 0820
Email: [email protected]

Margin Wheeler Pte Ltd
21 Bukit Batok Crescent, #15-75, WCEGA Tower
Singapore 658065

Margin Wheeler

© 2023 All rights reserved. Margin Wheeler Pte Ltd (Professional Firm Licence No. FA20153653) Privacy Policy

TOP
×