Singapore
  • Hong Kong
  • UK
  1. Osome Blog Singapore
  2. How Tax Exemptions Work in Singapore?

How Tax Exemptions Work in Singapore?

How Tax Exemptions Work in Singapore?

Singapore tax system is one of the best in the world for entrepreneurs. Learn how to benefit from opening your company and paying its taxes in Singapore.

By the way, you can just hit us up for our accounting services and we'll figure it out for you. Just saying.

What makes Singapore tax system so attractive?

All tax rates in Singapore are simple, transparent and fairly low. For example, the corporate tax rate is 17% flat for both foreign and local entrepreneurs. On top of that, the Singapore government supports startups by giving exemptions for the first three years after incorporation.

What exemptions are there for start-ups?

The Start-Up Tax Exemption (SUTE) provides tax cuts for the first 3 years of operation. Starting from the financial year 2019 the rules translate into the following effective rates:

  • 4.25% on the first S$100,000 of normal chargeable income
  • 8.5% on the next S$100,000
    Here are the detailed rates you’ll pay on your exact income:
Chargeable income, S$ Extimated tax, S$ Effective tax rate
100,000 4,250 4.25%
200,000 12,750 6.38%
300,000 29,750 9.92%
400,000 46,750 11.69%
500,000 63,750 12.75%
1,000,000 148,750 14.88%
2,000,000 318,750 15.94%
3,000,000 488,750 16.29%
5,000,000 828,750 16.58%
10,000,000 1,678,750 16.79%

After the first 3 assessment years have expired, you can receive a Partial Tax Exemption (PTE). Here are the effective tax rates:

  • 4.25% for the first S$10,000 of normal chargeable income
  • 8.5% on the next S$190,000
    Here's a detailed calculation to estimate your exact tax rate:
Chargeable income, S$ Extimated tax, S$ Effective tax rate
10,000 425 4.25%
200,000 16,575 8.29%
300,000 33,575 11.19%
400,000 50,575 12.64%
500,000 67,575 13.52%
1,000,000 152,575 15.26%
2,000,000 322,575 16.13%
3,000,000 492,575 16.42%
5,000,000 849,575 16.99%

How can I qualify for the start-up tax exemption?

It is available within the first 3 years after you’ve opened a company in Singapore.

  • At least one shareholder has to be a person, not a company and hold more than 10%.
  • No more than 20 shareholders altogether.
  • Investment holding and property development companies cannot apply.
  • You have to be a tax resident in Singapore.

What are other taxes on business?

Singapore adopts a one-tier tax system under which income from a Singapore company is only taxed once hence, dividends are tax exempt in the hands of its shareholders. There’s a Goods and Services Tax (GST) on supplies made in Singapore but your company only has to register for it if your turnover grows over S$1,000,000. As a GST-registered company, you have to charge GST on your supply. The upside is you can claim GST suffered on your purchases. If you mainly export your goods abroad, you may apply for an exemption from GST registration.

What other tax-incentives can my company get?

There are several efforts that the government supports.

  • Foreign Tax Credit (FTC). If you have already paid elsewhere the tax on the income that is also subject to tax in Singapore, you can claim a credit for it in here. The credit amount is capped at the lower of actual foreign tax and Singapore tax payable.
  • Double tax deduction for internationalization (DTDI). You can claim up to S$150,000 per year on eligible expenses for supported market expansion and investment development activities like business trips, market surveys, or participating in fairs abroad.
  • Pioneer Certificate Incentive (PC). A tax-relief for up to 15 years is granted to companies approved as ‘pioneers’ in their field. That works if your business is related to R&D, IT, or an underdeveloped industry.
  • Development and Expansion Incentive (DEI) offers a concessionary tax rate of 5% or 10% on qualifying income to companies conducting new or expanded activities that contribute to the overall economic benefit for Singapore.

What other tax deductions are there?

  • Capital Allowances, such as office equipment or furniture can be claimed.
  • You can claim up to S$300,000 of qualifying Renovation & Refurbishment expenses over 3 years.
  • There is 250% tax deduction on donations made to approved Institutions of a Public Character.

How to Save on Taxes

Harmonize your tax routine and get the tax exemptions you’re entitled to with our online accounting service. Contact us to learn how it works.

Share this post:

Tips to run your business smarter.
Delivered to you monthly.

You'll receive a verification email you'll have to open and confirm the subscription.

You might like it

5 Tips for a Streamlined Payroll Process for SMEs
Payroll

5 Tips for a Streamlined Payroll Process for SMEs

For a business to run smoothly, the payroll process must be streamlined and error-free. It is easy to streamline and optimize your payroll and other back-office processes within your SMB. Did you know that this can improve your cash flow?

Phase 2 Heightened Alert Support Package for SMEs (July to August 2021)
Government Grant

Phase 2 Heightened Alert Support Package for SMEs (July to August 2021)

From 22 July 2021, Singapore has reverted to Phase 2 (Heightened Alert). Fortunately, the Singapore Government will be cushioning the impacts of the harsher COVID-19 restrictions with a $1.1 billion support package.

How To Offer Free Shipping Profitably
E-commerce

How To Offer Free Shipping Profitably

Should a customer or seller bear the shipping cost? Let’s explore how a profit margin can still be maintained while offering free shipping.

What Is a Register of Controllers and Why Singapore Companies Now Have To Submit This Document
Secretary

What Is a Register of Controllers and Why Singapore Companies Now Have To Submit This Document

In April 2020, Singapore businesses will have to submit the Register for Registrable Controllers to ACRA. Before, your company was only obliged to maintain it internally. Now you will have to file the Register with ACRA electronically and maintain it updated at all times.

SG Govt Will Extend Loans for SMEs by 6 Months as Part of Heightened Alert Support Measures
Government Grant

SG Govt Will Extend Loans for SMEs by 6 Months as Part of Heightened Alert Support Measures

Singapore's Phase 2 and 3 periods of heightened alert have undoubtedly affected many businesses, especially Small- and Medium-sized Enterprises (SMEs). As such, Finance Minister Lawrence Wong has announced additional support measures for these Singapore-registered companies on 5 Jul 2021.

Clickshare Media Ventures Scales Up E-commerce Operations With Osome as Accounting Partner
Seller Spotlight

Clickshare Media Ventures Scales Up E-commerce Operations With Osome as Accounting Partner

Clickshare Media Ventures (CSMV) is one of the fastest-growing e-commerce companies in Southeast Asia. In just 3 years, CSMV has built itself to be an 8-figure business with more than 10 direct-to-consumer e-commerce brands in the baby, beauty, and personal care industries.

The 10 Best E-Commerce Payment Gateway for Online Sellers
E-commerce

The 10 Best E-Commerce Payment Gateway for Online Sellers

Other than branding and marketing, these technologically savvy consumers are well acquainted with the Internet and convenient payment gateways and demand nothing less than a seamless e-commerce transaction.

SMEs Can Apply for Relief Measures and Delay Full Loan Repayments till 30 Sep
Government Grant

SMEs Can Apply for Relief Measures and Delay Full Loan Repayments till 30 Sep

As the pandemic gradually transitions to an endemic, the Monetary Authority of Singapore (MAS) has announced the 'final extension' of relief measures for small and medium-sized enterprises (SMEs) affected by the COVID-19 situation to resume full loan repayments.

8 Tips to Improve Your E-commerce Photos
E-commerce

8 Tips to Improve Your E-commerce Photos

Want to kickstart your start-up or bolster an existing online business? These 8 e-commerce photography tips could have a direct impact on small businesses owners in Singapore, take a look.

Finding And Selling Niche Products Online
E-commerce

Finding And Selling Niche Products Online

Launching an online business is not an easy achievement, with increasingly more entrepreneurs entering the online market space. Competition is fierce, product ideas are saturated, and consumers are getting more well-versed in sieving out the best prices for online products.

A Quick Guide to Wage and Rental Support for SMEs in P3HA
Government Grant

A Quick Guide to Wage and Rental Support for SMEs in P3HA

The Singapore Government has introduced measures to help businesses cushion the impact of the pandemic, including more salary support for affected firms to retain employees, one-off payments for rental relief and individuals for Phase 3 (Heightened Alert).

How To Change My Singapore Company’s Name?
Secretary

How To Change My Singapore Company’s Name?

There might come a point when the name you chose for your company during incorporation no longer fits where you want it to go. Often an application to ACRA to change your company name might be more efficient and cheaper, too.

Tips to run your business smarter. Delivered to you monthly.

You'll receive a verification email you'll have to open and confirm the subscription.

We’re using cookies! What does it mean?