Singapore's attractive corporate tax policies are a major draw for companies setting up here. In addition to the competitive standard rate, your business can often achieve significant additional tax savings through government-designed exemption schemes. These tax exemption schemes are available for both new and established companies.
This article will explore the many tax exemptions available to new companies in Singapore and how you can use these advantages to kickstart your business.
Key Tax Exemption Schemes for Singapore Companies
Start-Up Tax Exemption Scheme (SUTE)
The Start-Up Tax Exemption Scheme (SUTE) in Singapore is designed to support new businesses by providing significant tax relief during their initial years of operation. The SUTE operates on a self-assessment basis, meaning you need to apply the exemption when filing your company’s annual tax returns.
Companies under SUTE can enjoy the following:
- 75% tax exemption on the first SGD 100,000 of normal chargeable income (income to be taxed at the prevailing 17% flat-rate CIT).
- 50% exemption on the next SGD 100,000 for their first three consecutive Years of Assessment (YAs).
To be eligible for startup tax exemption scheme, you must meet the following criteria:
- Must be incorporated as a private limited company in Singapore.
- Must be a tax resident in Singapore for the relevant Year of Assessment (YA).
- Should have no more than 20 shareholders, with at least one shareholder holding at least 10% of the ordinary shares.
- Companies whose principal activities are investment holding or property development for sale or investment are excluded from this scheme.
This scheme applies only to the first three assessment years, after which companies can transition to the Partial Tax Exemption (PTE) scheme.
Partial Tax Exemption (PTE)
The Partial Tax Exemption Scheme (PTES) is a tax incentive available to all companies registered in Singapore, except those claiming the Start-Up Tax Exemption Scheme for new start-up companies.
To be eligible for a PTE, your company must be registered within Singapore and is not under SUTE.
Once qualified, you can enjoy the following tax exemptions:
- 75% exemption on the first SGD 10,000 of normal chargeable income
- 50% exemption on the next SGD 190,000 of normal chargeable income
PTE applies to all assessment years except for companies that enjoyed SUTE for the first 3 years. This means, there is no specific duration limit for this scheme and is available annually to eligible companies, providing ongoing tax relief.
Corporate Income Tax Rebate
The Corporate Income Tax (CIT) Rebate in Singapore is a scheme designed to provide relief to companies by reducing their tax liabilities. It consists of two main components: the CIT Rebate and the CIT Rebate Cash Grant. Here’s how they are different:
| Type of CIT Rebate | Details | Eligibility |
|---|---|---|
| CIT Rebate | Eligible companies receive a rebate of 50% of their corporate tax payable, capped at SGD 40,000. | Available to all taxpaying companies, including those that are not tax residents in Singapore. |
| CIT Rebate Cash Grant | Eligible companies receive a cash grant of SGD 2,000. This grant is not taxable and is intended to support smaller companies that may not benefit significantly from the CIT Rebate. | Must be an active company and meet the local employee condition. The local employee condition requires the company to have made CPF contributions for at least one local employee (Singapore citizen or permanent resident) in the calendar year preceding the grant. |
The CIT Rebate and CIT Rebate Cash Grant are typically announced as part of the annual budget measures and may vary from year to year. However, once announced, these rebates are generally available for the specified year of assessment. For instance, the CIT Rebate Cash Grant for 2025 will be disbursed based on conditions met in 2024.
How to Claim Tax Exemptions for Companies in Singapore
Tax exemptions operate on a self-assessment basis. This means that you don’t need to submit a separate application to IRAS for the exemptions and you must apply them directly when filing your annual tax returns. Here's a step-by-step guide on how to claim these exemptions:
- File Form C-S or Form C – you must file Form C or Form C-S depending on your eligibility for tax exemptions in Singapore. Form C-S is an abridged version suitable for smaller companies with annual revenues of SGD 5 million or less and no claims for specific tax reliefs. Meanwhile, Form C is more detailed and required for companies that do not meet the Form C-S criteria or need to claim additional reliefs.
- Submit Supporting Documents – While Form C-S does not require submission of financial statements unless requested by IRAS, Form C requires audited/unaudited financial statements, tax computations, and supporting schedules.
- Review and Respond to IRAS Notices – After filing, IRAS will issue a Notice of Assessment (NOA) detailing the tax payable. Review the NOA carefully to ensure accuracy. If there are discrepancies or disagreements, file an objection within the specified timeframe (2 months for companies).
- Pay Any Tax Due – Once the tax liability is confirmed, ensure timely payment of any tax due. Failure to pay on time can result in penalties and interest charges. Use the GIRO payment method for interest-free instalments if eligible.
Emerhub will help you claim tax exemptions by providing you with guidance on how you can be eligible for Singapore’s tax exemption schemes. We will prepare financial statements and tax computations, providing ongoing support to maintain compliance with tax laws and respond to IRAS notices or audits.
Looking to maximize tax savings for your new company in Singapore? Talk to our local experts by filling out the form below!
Frequently asked questions
Do companies need to submit a separate application for tax exemptions?
New companies in Singapore who qualify for tax exemptions do not need to submit a separate application to IRAS. The tax exemption schemes such as SUTE or PTE operate on a self-assessment basis. This means that companies apply the exemptions directly when filing their annual tax returns using forms like Form C-S or Form C. Necessary documents such as financial statements and shareholder particulars are submitted during annual corporate tax return filing and no additional application is required beyond the usual process.
When must companies file their tax returns in Singapore?
Companies in Singapore must file their tax returns by specific deadlines. The Estimated Chargeable Income (ECI) must be filed within three months after the company's financial year-end. The Corporate Income Tax Return (Form C-S/Form C-S (Lite)/Form C) must be filed by 30 November of each year for the preceding financial year. For example, if a company's financial year ends on December 31, 2023, the ECI must be filed by March 31, 2024, and the Corporate Income Tax Return must be filed by November 30, 2024.
Can companies claim both SUTE and partial tax exemption simultaneously?
Companies cannot claim both SUTE and PTE simultaneously for the same Year of Assessment. The SUTE scheme is specifically designed for newly incorporated companies and provides exemptions for the first three consecutive Years of Assessment. Once a company has claimed SUTE for the initial three YAs, it can then qualify for the PTE scheme in subsequent YAs if it meets the PTE eligibility criteria.
Can foreign companies qualify for SUTE if they are tax residents in Singapore?
Foreign companies can qualify for SUTE only if they are considered tax residents in Singapore. This means that control and management of the business must be exercised in the country. Company activities such as board meetings and key strategic decisions must be made in Singapore. If your private limited company is incorporated locally, even with foreign directors or shareholders, you can still qualify. Here are other specific criteria you must meet: