Business Registration in Singapore

What is the Corporate Tax System in Singapore?

Singapore’s corporate tax system is designed to be friendly to foreign businesses. It features a competitive flat tax rate of 17% on a company’s chargeable income. Additionally, the government offers tax exemption schemes for startups.

Unlike the US and many other countries that tax worldwide income, Singapore follows a territorial basis of taxation. The companies are primarily taxed on income sourced within Singapore. Foreign-sourced income, such as branch profits, dividends and service income, is generally not taxed until it is remitted or deemed remitted into Singapore. There’s an exception for foreign income already taxed in a country with a headline tax rate of at least 15%. 

Corporate tax rates for Pte Ltd companies

When it comes to corporate taxes, Singapore offers a transparent and competitive environment for Pte Ltd companies. As mentioned above, all companies in Singapore are subject to a flat corporate income tax rate of 17% on their chargeable income. This applies to both local and foreign companies. However, there are tax exemptions available that can significantly reduce the effective tax burden specifically for Pte Ltd companies.

For example, qualifying companies can enjoy a partial tax exemption on the first S$100,000 of their chargeable income. This translates to a more favorable tax rate of around 8.5% for that initial portion of their profits. This benefit is especially helpful for new businesses or those with lower profit margins. The government also offers a startup tax exemption scheme. Qualifying startups can be completely exempt from taxes on their chargeable income for the first three years of operation. 

Tax exemptions for startups

There are two main options available to help businesses establish themselves:

1. Startup Tax Exemption (SUTE): Available for startups incorporated less than three years ago. It offers a tiered tax exemption structure for the first three YAs:

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

To be eligible for SUTE, your newly incorporated company should:

• Be registered in Singapore
• Be a tax resident of Singapore for the YA
• Have a maximum of 20 individual shareholders
• At least 1 shareholder must own 10% or more of the issued ordinary shares

2. Partial Tax Exemptions (PTE): Companies that do not qualify for SUTE, including companies limited by guarantee, are eligible for partial tax exemption (PTE).

The tax exemptions for qualifying companies are as follows:

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

The due date for corporate tax filing in Singapore is 30 November. You must e-file your company’s Form C-S / Form C-S (Lite) / Form C for the current year of assessment which will cover the company’s financial statement submitted in the previous year.

We also recomend learning more about tax filing on the official IRAS website at https://www.iras.gov.sg/taxes/corporate-income-tax

Additional Deductions and Incentives by Government

Besides the above exemptions, the Singapore government has implemented a few additional incentives to help startups and SMEs in the country. In collaboration with the IRAS, Singapore has established tax reduction programs specifically targeted at businesses, with a particular emphasis on startups.

1. Startup SG Founder Grant

The Startup SG Founder Grant is specifically aimed at first-time entrepreneurs, offering them crucial guidance and initial funding to kickstart their ventures. This grant provides a dollar-for-dollar matching grant of up to S$30,000, essentially tripling the initial investment made by the entrepreneur. To qualify for this grant, applicants must be Singaporean citizens or Permanent Residents (PRs) with a minimum 30% ownership stake in their newly formed private limited company.

2. Startup SG Equity

The Startup SG Equity is suitable for startups demonstrating high-growth potential. Under this scheme, the government partners with qualified third-party investors to provide funding to eligible startups. The government’s contribution varies depending on the nature of the startup. For general tech startups, the government invests a significant portion, covering 70% of the first S$250,000, and then matches investments equally up to a maximum of S$2 million. For deep tech startups, the government contributes 70% to the first S$500,000 and matches subsequent investments up to S$4 million. To be eligible for Startup SG Equity, companies must be Singapore-based with core operations in the country. They should also be incorporated within the last five years and possess a strong intellectual property portfolio.

3. Startup SG Tech

The Startup SG Tech program applies specifically to tech startups, providing them with the resources necessary to commercialize their innovative technologies. This program offers two grant options: Proof-of-Concept (POC) and Proof-of-Viability (POV). The POC grant supports projects testing the technical and scientific possibility of new technology, offering funding of up to S$250,000. For startups with lab-proven technology seeking to validate its viability, the POV grant provides funding of up to S$500,000. The program prioritizes startups operating in key growth sectors such as advanced manufacturing, robotics and clean technology. To qualify, companies must be incorporated within the last five years and maintain a minimum of 30% local shareholding.

4. Enterprise Development Grant (EDG)

EDG supports business growth and transformation. This grant targets three areas: Core Capabilities (branding, strategy, HR), Innovation and Productivity (product development, automation) and Market Access (overseas expansion). It offers financial aid, covering up to 70% of qualifying project costs for SMEs and 50% for larger firms. These costs include equipment, software, internal manpower and consultancy fees. Companies should have at least 30% local ownership and the financial capacity to complete the project to qualify.

5. Double Tax Deduction for Internationalization (DTDi)

This scheme is offered to help businesses venturing overseas. It provides a significant incentive by allowing companies to claim a 200% tax deduction on qualifying expenses incurred during international market expansion and investment development activities.

While most DTDi deductions require approval from Enterprise Singapore (ESG) and the Singapore Tourism Board (STB), there’s a simplified process for companies starting their internationalization efforts. For the first S$150,000 of eligible expenses, companies can claim the DTDi deduction without prior approval.

6. Intellectual property (IP) acquisition expenses

For the years of assessment 2019 to 2025, the government offers an enhanced tax deduction of 200%. This applies to two categories of qualifying expenditures. The first S$100,000 spent on registering qualifying IP; and the first S$100,000 spent on licensing qualifying IP both qualify for this enhanced deduction.

The incentives become even more attractive for the years of assessment 2024 to 2028. For qualifying IP registration expenses, the tax deduction is boosted to 400% for the first S$400,000. Businesses with a revenue of less than S$500 million in the relevant year can claim a 400% deduction on the first S$400,000 of qualifying expenditure incurred to license or acquire IP.