Corporate Tax Rate
With effect from Year of Assessment 2010, a company is taxed at a flat rate of 17% on its chargeable income regardless of whether it is a local or foreign company.
Common Tax Reliefs That Help Reduce The Tax Bills
Some common tax reliefs for companies to help reduce their tax are:
- Tax Exemption Scheme for New Start-Up Companies;
- Partial Tax Exemption for all companies; and
- Deduction of Expenses Incurred Before Commencement of Business.
Partial tax exemption for companies (From YA 2020)
| Chargeable income | % Exempted from tax | Amount exempted from tax |
|---|---|---|
|
|
@75% |
$7,500 |
|
Next $190,000 |
50% |
$95,000 |
All companies including companies limited by guarantee can enjoy Partial tax exemption unless they have already claimed the Tax Exemption Scheme for New Start-Up Companies. Qualifying companies can enjoy 75% tax exemption on the first $10,000 of the chargeable income; and A further 50% tax exemption on the next $190,000 of the chargeable income.
The maximum exemption to be enjoyed is $102,500.
Tax Exemption Schemes for new start-up companies (where any of the first 3 YAs falls in or after YA 2020
| Chargeable income | % exempted from tax | Amount exempted from tax |
|---|---|---|
|
First $100,000 |
@75% |
75,000 |
|
Next $100,000 |
@50% |
$50,000 |
Under the scheme, qualifying new companies are given 75% exemption on the first $100,000 chargeable income and a further 50% exemption on the next $100,000 of chargeable income for the first three consecutive YAs. The maximum exemption per YA is therefore $125,000.
The exemption is available only for the first three YAs. From the fourth YA onwards, the company can enjoy the partial tax exemption like all qualifying companies.
The tax exemption is open to all new companies except these two types of companies:
- A company whose principal activity is that of investment holding; and
- A company whose principal activity is that of developing properties for sale, investment, or both.
To qualify for tax exemption for start-ups, eligible companies must satisfy these three qualifying conditions:
- The company must be incorporated in Singapore;
- The company must be a tax resident in Singapore for that YA;
- The company’s total share capital is beneficially held directly by no more than 20 shareholders throughout the basis period for that YA where:
- all of the shareholders are individuals; or
- at least one shareholder is an individual holding at least 10% of the issued ordinary shares of the company.
Corporate Income Tax Rebate
| Year of Assessment (YA) | Corporate Tax Rebate | Capped at |
|---|---|---|
|
2019 |
20% |
$10,000 |
|
2018 |
40% |
$15,000 |
|
2017 |
50% |
$25,000 |
|
2016 |
50% |
$20,000 |
Deduction of Expenses Incurred Before Commencement of Business
Only revenue expenses incurred after your business commences are deductible for tax purposes.
As a concession, revenue expenses incurred one year before the first day of the financial year in which you earn your first dollar of business receipt will be tax-deductible.
Example
ABC Pte. Ltd. was incorporated on 1 June 2016 and has a December year-end. Assuming it earned its first dollar of business receipt on 1 March 2018 (relates to YA 2019), the revenue expenses incurred during the period 1 January 2017 to 31 December 2017 (i.e. one year before 1 Jan 2018, which is the first day of the financial year in which the company earned its first dollar) will also be tax-deductible in YA 2019.