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Tax Exemption Scheme for New Startup Companies in Singapore

Last modified: June 6, 2019
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incorporation2Singapore government with its welfare outlook has come out with a Tax exemption scheme for new startup companies. It is a universally known fact that businesses that are newly started have to go through the initial teething problems and may not registered a profit in the very first year of their establishment. Will it not be good if the startup companies are encouraged to continue with their businesses if they haven’t made any profit? Precisely with this philanthropic thought the Singapore government has prepared the tax exemption scheme which is very beneficial for the small and medium scale enterprises. Of course there is a criteria attached to it. They need to fit into the eligibility criteria to avail the laid down benefits.

The eligibility criteria are:

  • The company must be incorporated in Singapore.
  • The company must be tax resident in Singapore (if the business is exercised in Singapore)
  • The company can’t have more than 20 shareholders.
  • The company should not be an investment holding company or a property developing company.(These companies can however enjoy the partial tax exemption available to other companies.)

Given below is the table of Tax exemption and Partial Tax exemption for the first three years in S$.

Financial years Taxable Income Exemption in % Tax Rate
First year 0 – 100,000 100% 0%
Second year 100,000 – 300,000 50% 50%
Third year 300,000 – 2,000,000 17%

If the startup company doesn’t meet the qualifying conditions then under the Partial exemption scheme the startup company will get the partial tax exemption status – 50% exemption is given from the chargeable income. If the company reports losses or has no income in any of the first three years then the chargeable income and the tax payable will be nil and the company can’t enjoy the benefit of exemption scheme for new Startup Company. The three years are considered since the establishment of the Startup. Moreover if the company has not commenced any business for the first two years then only one year is left for the company to avail tax exemption. There is Income Tax Audit exemption for those companies where the number of corporate shareholders is lower than 20 and the annual income less than S$5,000,000. The Audit exemption is also there for the dormant companies (without any accounting evidence).

With these financial and administrative exemptions the atmosphere is right for company incorporation in Singapore. The sustainability of the Startup companies is also ensured coupled with the reasonable Tax structure giving them the benefit of two important aspects of business. With these corporate friendly policies Singapore has been able to attract the attention of companies from all over the world.

 About SBS Conaulting Pte Ltd

SBS, an established Company Secretarial, Accounting, taxation, payroll outsourcing Services firm, offers solution to start-up of business incorporation or Company Registration in Singapore.

SBS Consulting Pte Ltd
High Street Centre,
#18-03, 1 North Bridge Road,
Singapore – 179094
Phone: +65 6536 0036
Email: info@sbsgroup.com.sg

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