Singapore’s Corporate Tax Rates
Companies in Singapore, both local and foreign, have to pay tax on their income. The corporate tax rate in Singapore is 17%. This is lowest amongst the corporate taxes all around the globe and there are also several other benefits of Company Registration in Singapore. Furthermore, there are tax exemptions available for qualifying businesses in Singapore, including a partial tax exemption and a three-year startup tax exemption.
Tax Relief / Exemption for Singapore Company
1. Partial Tax Exemption for Singapore Company
Partial tax exemption is a tax benefit that reduces the amount of corporate income tax that small and medium-sized enterprises (SMEs) in Singapore have to pay.
All companies incorporated in Singapore are eligible for partial tax exemption, regardless of their industry.
| Chargeable income (SGD) | Exempt from tax | Exempt income (SGD) |
| First 10,000 | 75% | 7,500 |
| Next 190,000 | 50% | 95,000 |
| Total | 102,500 |
Example of Partial Tax Exemption in Singapore:
A company has a chargeable income of S$200,000.
However, The company will be able to claim partial tax exemption on the first S$190,000 of its chargeable income.
This means that the company will only have to pay corporate income tax on the remaining S$10,000 of its chargeable income.
2. Start-up tax exemption for Singapore Company
Start-up tax exemption is a tax benefit that provides newly incorporated companies with a tax exemption on their taxable profits in their first three years of operation.
Eligibility for Start-Up Tax Exemption for Singapore Company
- It must be incorporated in Singapore.
- It must not be a property development or investment holding company.
- Lastly, It must not be a subsidiary of another company.
| Chargeable income (SGD) | Exempt from tax | Exempt income (SGD) |
| First 100,000 | 75% | 75,000 |
| Next 100,000 | 50% | 50,000 |
| Total | 125,000 |
Example:
A company has a chargeable income of S$100,000 in its first year of operation.
However, the singapore company will be able to claim start-up tax exemption on the first S$100,000 of its chargeable income.
The exemption will be allowed on up to a huge number ie. 75% of income which is SGD 75000.
3. Singapore’s Tax-Free Dividends for Foreign Investors & Shareholders
Singapore offers partial tax and startup exemptions to strengthen small and medium-sized enterprises (SMEs).
Furthermore, with a one-tier taxation system, dividends from Singaporean companies are tax-free in shareholders’ hands.
This makes Singapore an attractive destination for foreign investors, as they can receive dividends from their Singapore investments without having to pay any tax on those dividends.
4. Other Significant Tax Incentives in Singapore
Pioneer tax incentive: Tax exemption for 5-15 years for new high-tech manufacturing or qualifying services.
Development and Expansion Incentive: Reduced tax rate for 5-10 years for new high-value-added projects, expansion or upgrading of operations, or incremental activities after the pioneer period.
Investment allowance: Tax exemption for capital expenditure on qualifying projects or activities within 5-8 years.
Double tax deduction scheme for internationalization: Double deduction for eligible expenses for market expansion and investment development activities.
Enterprise Innovation Scheme (EIS): 400% tax deduction for qualifying expenditure on R&D, IP registration, acquisition or licensing of IP rights, employee training, and innovation projects with Polytechnics, ITE, or other qualified partners.
Intellectual Property Development Incentive (IDI): Reduced tax rate of 5-10% on qualifying income derived from the commercialisation of certain IP.
Mergers and acquisitions allowance: Write-off of 25% of the value of qualifying mergers or acquisitions deals over 5 years.
Financial Sector Incentive (FSI) scheme: Reduced tax rate of 5-13.5% on income from certain high growth, high-value-added financial activities.
Finance and treasury centre (FTC): Reduced tax rate of 8% on income derived from approved FTC activities.
Debt securities incentives: A package of tax concessions for various players in the Singapore bond market.
Insurance Business Development (IBD) scheme: 10% concessionary tax rate for qualifying income of life, general, and composite insurers from carrying on insurance businesses from Singapore.
Real Estate Investment Trusts (REITs): Reduced tax rate of 10% on distributions made to foreign non-individual investors by a listed REIT out of rental income from Singapore real estate.
Islamic financing arrangements: Income tax, stamp duty, and GST treatment aligned with that of the conventional financing contracts to which they are economically equivalent.
Infrastructure project finance incentives: Tax exemption for interest income earned from qualifying investments in qualifying infrastructure projects/assets.
Sovereign wealth funds: Tax exemption for income derived by a sovereign fund entity and an approved foreign government-owned entity from funds managed in Singapore.
Singapore Variable Capital Companies (VCC): Tax exemptions for income from funds managed in Singapore and the existing GST remission for funds are extended to qualifying VCC.
Headquarters schemes: Various tax incentives for international headquarters, depending on their level of economic commitments to Singapore.
Conclusion
Singapore is a great place to start a business!
With its low 17% corporate tax rate and business-friendly environment, it’s no wonder that companies of all sizes and all around the globe are choosing to incorporate their business in Singapore.
If you’re an SME or startup, you’ll benefit from even lower taxes and other incentives.
Furthermore, foreign investors can enjoy tax-free dividends.
Singapore also offers a wide range of other tax benefits to foster economic growth and innovation.
So, don’t miss these benefits and incorporate your company in Singapore right now!
For more information or any assistance required related to Singapore company registration, reach out to our experts at: 8881-069-069 or info@e-startupindia.com
Also read: How to Register Singapore Company from India
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