Singapore’s corporate tax rates and tax benefits create an attractive environment for small businesses, providing incentives that support growth and profitability. Understanding these tax policies is essential for business owners looking to maximize their financial efficiency.

This article explores Singapore’s corporate tax structure, tax exemption schemes, and the incentives available to small businesses.

Singapore’s Basic Corporate Tax Structure

Singapore’s corporate tax rate is one of the most competitive in Southeast Asia, with a flat rate of 17% on chargeable income—the income after allowable expenses. This rate applies to:

Income generated within Singapore
Foreign income that is remitted to Singapore
Profits after expenses are deducted

This tax rate benefits businesses of all sizes, with additional advantages for small businesses and startups through targeted tax relief schemes.

Tax Exemption Schemes for Small Businesses

Singapore offers several tax exemption schemes to ease the tax burden on small businesses, especially during their early years.

Start-Up Tax Exemption (SUTE)

The Start-Up Tax Exemption (SUTE) scheme provides relief for new businesses in their first three Years of Assessment (YA). Eligible companies can receive:

75% exemption on the first S$100,000 of chargeable income
50% exemption on the next S$100,000

Eligibility for SUTE

To qualify for the SUTE scheme, a company must:

Be a Singapore tax resident
Have a maximum of 20 shareholders
Ensure at least one shareholder holds 10% of total shares
Not be an investment holding or property development company

This scheme allows startups to retain more capital in their early years, supporting growth and reinvestment in the business.

Partial Tax Exemption (PTE)

After the first three years, businesses can benefit from the Partial Tax Exemption (PTE) scheme, which offers:

75% exemption on the first S$10,000 of chargeable income
50% exemption on the next S$190,000

This scheme continues to provide significant tax savings, making it easier for businesses to maintain profitability as they scale.

2024 Tax Benefits for Singapore Businesses

In addition to standard tax exemptions, new benefits introduced in Singapore’s Budget 2024 aim to further support small businesses.

Corporate Income Tax Rebate: A 50% rebate capped at S$40,000 is available for eligible businesses, directly reducing their tax liabilities.
CIT Cash Grant: Companies with at least one local employee can receive a S$2,000 corporate income tax cash grant.
Additional Project-Based Tax Incentives: Qualifying projects may be eligible for additional tax incentives, promoting innovation and investment in high-growth sectors.

These initiatives enhance Singapore’s appeal as a base for business, making it a compelling choice for entrepreneurs.

Tax Implications Based on Business Structure

The tax structure applied depends on a business’s legal entity. Here’s how different structures are affected:

Private Limited Companies

Tax Rate: 17% corporate tax
Exemptions: Eligible for SUTE and PTE schemes
Additional Benefits: No tax on dividends distributed to shareholders, no capital gains tax

Sole Proprietorships and Partnerships

Tax Rate: Personal income tax rates, which can reach up to 24%
Exemptions: Not eligible for corporate tax schemes, but can benefit from personal reliefs available under Singapore’s individual tax system

These considerations make the private limited company structure popular among entrepreneurs seeking tax efficiency.

Additional Tax Benefits for Singapore Companies

Singapore’s tax framework offers several additional incentives for companies investing in research, development, intellectual property, and international expansion.

Research and Development (R&D) Incentives

Businesses involved in R&D projects benefit from:

400% tax deduction on the first S$400,000 of eligible R&D expenses
Valid from YA 2024 to YA 2028, covering staff costs and consumables for qualifying projects

This scheme encourages companies to innovate, making it particularly valuable for tech and manufacturing sectors.

Intellectual Property (IP) Benefits

Companies investing in IP can claim:

400% tax deduction on the first S$400,000 of qualifying IP registration costs
Valid for patents, designs, and trademarks registered from YA 2024 to YA 2028

This incentive reduces the financial burden of securing IP rights, promoting ownership of valuable assets.

Investment Allowance Scheme

For companies investing in capital equipment, the Investment Allowance Scheme offers:

Up to 100% tax exemption on qualifying fixed capital expenditure, capped at S$10 million
Available for automation and efficiency-enhancing projects

This tax allowance supports businesses looking to improve productivity through technology and capital investment.

International Expansion Support

To help businesses expand internationally, Singapore provides a Double Tax Deduction (DTD) on qualifying overseas expenses:

200% tax deduction for costs like market surveys, promotional campaigns, and setting up trade offices abroad

This scheme helps local companies offset the costs of exploring new markets and establishing a global footprint.

FAQs on Corporate Tax in Singapore

1. What is the standard corporate tax rate in Singapore?

The corporate tax rate in Singapore is a flat 17%, one of the lowest in the region.

2. Are small businesses eligible for tax exemptions?

Yes, small businesses and startups benefit from the SUTE and PTE schemes, providing partial or full tax exemptions on portions of their chargeable income.

3. How does the Start-Up Tax Exemption scheme work?

The SUTE scheme offers new businesses a 75% exemption on the first S$100,000 and a 50% exemption on the next S$100,000 of chargeable income for their first three years, reducing the initial tax burden.