Corporate Tax in Singapore – A Quick Guide

Navigating a new country’s tax system can be overwhelming, especially for savvy business people like yourself. But fear not! We’ve put together a concise guide to Singapore’s tax system, focusing on key features that will help aspiring business owners understand how corporate tax works in Singapore, so you can be prepared when tax season arrives.

Singapore’s tax regime is a major draw for investors due to its attractive features, such as low corporate and personal tax rates, generous tax relief measures, absence of capital gains tax, a one-tier tax system, and extensive double tax treaties with many countries.

Let’s dive into the details.

What we’ll cover:

Tax Residency

Qualification for a Singapore tax residency

To qualify as a tax resident in Singapore, certain criteria must be met:

  • Your company must be registered as a company, society, fellowship, corporation, or fraternity in Singapore, and its management and control must be exercised in Singapore.
  • You, as an individual, must reside in Singapore, and any absence from Singapore must be temporary and reasonable.

Once your company is considered a tax resident of Singapore, it will be subject to corporate income tax rates based on its taxable income. Taxable income includes all profits earned from sources within or outside of Singapore.

However, certain tax deductions may apply, such as deductible business expenses like salaries paid to employees or rent for office space.

There are also various tax exemptions available for qualifying companies, such as those with annual chargeable income below SGD 300,000 or those approved by the Inland Revenue Authority of Singapore (IRAS).

Singapore Corporate Tax Rate

Singapore is an incredibly attractive destination for businesses looking to start or expand operations, primarily due to its low, flat corporate tax rate of 17%. This rate is one of the lowest in the world.

Businesses can also benefit from a partial tax exemption on their first SGD 200,000 of chargeable income, making it easier to achieve their profit goals.

Start-up companies may be eligible for even more generous incentives and benefits. They are entitled to a three-year start-up tax exemption, allowing them to avoid paying taxes on the first SGD 100,000 of their chargeable income for each of their first three years of operation. This can provide significant support to fledgling operations, giving them the breathing space needed to establish themselves and gain traction in the marketplace. For more information on tax exemptions, visit our startup tax exemption resource.

Overall, Singapore provides numerous opportunities for businesses to reduce their tax burden and increase profits. With its low corporate tax rate and generous incentive programs, businesses can take advantage of these benefits while enjoying the advantages of being based in a bustling metropolis surrounded by economic opportunities in Southeast Asia. With careful planning and strategic decision-making, businesses can leverage Singapore’s business environment and tap into the region’s lucrative markets.

Understanding Corporate Taxation Framework in Singapore:

Singapore follows a territorial basis for corporate taxation, where tax is imposed on income accrued or derived within Singapore, as well as foreign-sourced income remitted to Singapore.


Dividends are not taxed in Singapore but may be subject to Singapore’s withholding tax rules. Dividends paid by a Singaporean company are generally subject to withholding tax at 15%, unless there is an applicable double-taxation agreement between Singapore and the recipient’s country of residence.

Carrying Forward Unutilised Losses and Allowances

Unutilised losses and allowances can be carried forward to offset income in subsequent years until all trade losses are fully utilised.

Group Relief

Group relief enables companies within the same group to deduct unutilised capital allowances, trade losses, and donations from one company’s assessable income against another company’s income.

To qualify for group relief, the following criteria must be met:

  • The transferor and claimant companies must be incorporated in Singapore.
  • They must belong to the same group.
  • They must have the same financial year end.

Capital Gains Tax

In Singapore, capital gains arising from property or investment sales are generally not subject to taxation. This is because such gains are considered capital gains and are typically not taxable. However, if an individual engages in frequent property or investment trading activities, these activities may be deemed as trading rather than investing, potentially resulting in taxation. In such cases, gains derived from frequent buying and selling must be reported for tax purposes.

Tax Incentives and Exemptions

Start-up exemptions

In 2005, the Inland Revenue Authority of Singapore (IRAS) introduced tax exemptions to support entrepreneurship. These exemptions provide a compelling incentive for businesses considering establishing themselves in Singapore. Known as the Start-Up Tax Exemption (SUTE) scheme, it offers qualified start-ups a special tax exemption for the initial three years of assessments.

Under this scheme, eligible start-ups can enjoy a 75% tax exemption on the first $100,000 of their normal chargeable income. Furthermore, they receive an additional 50% exemption on the subsequent $200,000. In addition to these benefits, companies are permitted to deduct research and development expenses from their taxable income.

To be eligible for these exemptions, a company must meet the following criteria:

  1. The company must be a tax resident of Singapore.
  2. The company must not have more than 20 individual shareholders, or it should have at least one shareholder holding a minimum of 10% of the issued shares.
  3. The company must not operate as a property or investment holding company.

For the years of assessment (YA) between 2010 and 2019, the maximum exemption for each YA was set at $200,000. The following percentages represent the chargeable income exempted from tax, along with the corresponding amounts exempted:

Chargeable Income: First $100,000

Exempted from Tax: 100%

Amount Exempted: $100,000

Chargeable Income: Next $200,000

Exempted from Tax: 50%

Amount Exempted: $100,000

Starting from YA 2020 and onwards, the maximum exemption for each YA has been reduced to $125,000. The revised percentages of chargeable income exempted from tax, along with the corresponding amounts exempted, are as follows:

Chargeable Income: First $100,000

Exempted from Tax: 75%

Amount Exempted: $75,000

Chargeable Income: Next $100,000

Exempted from Tax: 50%

Amount Exempted: $50,000

Partial Tax Exemption

Embarking on a new business venture in Singapore can feel overwhelming, especially when considering the intricacies of taxation. Thankfully, the Singapore government extends tax relief and exemptions to alleviate the burden on start-ups. Among these measures is the Partial Tax Exemption (PTE) scheme, designed to assist start-ups in reducing their tax liabilities.

The PTE scheme enables qualifying companies to enjoy a 75% tax exemption on their initial $10,000 of chargeable income. Additionally, they can benefit from a further 50% tax exemption on the subsequent $290,000 of chargeable income. This translates to potential tax exemptions of up to $300,000 annually for start-ups.

To be eligible for either the Start-Up Tax Exemption (SUTE) or the Partial Tax Exemption (PTE) schemes, businesses must meet specific criteria outlined by the Inland Revenue Authority of Singapore (IRAS). These requirements include having no more than 20 shareholders and not being affiliated with other companies or business entities. Additionally, companies should have operated in Singapore for less than three years and have an annual turnover not exceeding S$5 million.

For the years of assessment (YA) spanning from 2010 to 2019, the maximum exemption for each YA was set at $152,500. The following percentages represent the chargeable income exempted from tax, along with the corresponding amounts exempted:

Chargeable Income: First $10,000

Exempted from Tax: 75%

Amount Exempted: $7,500

Chargeable Income: Next $290,000

Exempted from Tax: 50%

Amount Exempted: $145,000

Starting from YA 2020 and onwards, the maximum exemption for each YA was revised to $102,500. The percentages of chargeable income exempted from tax, along with the corresponding amounts exempted, are as follows:

Chargeable Income: First $10,000

Exempted from Tax: 75%

Amount Exempted: $7,500

Chargeable Income: Next $190,000

Exempted from Tax: 50%

Amount Exempted: $95,000

CIT Rebate and BIPS Scheme

In Singapore, companies have the opportunity to decrease their taxable income and achieve tax savings through Corporate Income Tax (CIT) rebates. The standard CIT rate in Singapore is 17%. However, companies can benefit from a partial tax exemption of up to SGD 200,000 for their chargeable income. Additionally, businesses may be eligible for the Business and IPC Partnership Scheme (BIPS), which offers a 250% Singapore corporate tax deduction on qualifying expenses incurred when their employees engage in voluntary work.

Furthermore, companies can take advantage of a corporate income tax rebate to further optimise their financial performance. For YA 2019, the rebate is capped at $10,000, while for YA 2020, it increases to $20,000. The rebate rate is set at 20% for YA 2019 and 40% for YA 2020. This valuable incentive allows companies to significantly reduce their corporate taxes and enhance their overall financial position.

The BIPS scheme not only benefits businesses but also provides an excellent opportunity for individuals who wish to make meaningful contributions to society through volunteering. The government’s commitment to recognising the social impact of individuals is evident in this initiative, which rewards them with substantial tax savings.

Please note that the YACIT rebate does not apply to non-resident companies subject to withholding tax.

Regional (RHQ) and International Headquarters (IHQ) award

Singapore offers the Regional Headquarters (RHQ) and International Headquarters (IHQ) award as a tax incentive scheme to attract foreign companies to establish their regional or international headquarters in the country. This initiative is part of the Singapore government’s strategy to encourage foreign investments and foster a business-friendly environment for multinational corporations.

To be eligible for the RHQ or IHQ award, companies must meet specific requirements and comply with the set criteria.

The Regional Headquarters Award (RHA) grants qualified businesses the opportunity to benefit from a reduced corporate income tax rate of 15% for a period of five years (3+2). This special rate applies to incremental qualifying income from overseas, providing a more favourable option compared to the standard Singapore corporation tax rate of 17%.

Furthermore, companies that qualify for the Regional Headquarters Award and demonstrate a commitment to exceeding the minimum standards can obtain an even lower concessionary corporate income tax rate. This rate can range from 5% to 15% and applies to incremental income derived from qualifying activities undertaken by the International Headquarters.

By offering these awards, Singapore aims to attract and support foreign companies in establishing their regional or international headquarters within the country. The tax incentives provided create a conducive environment for businesses to thrive and contribute to Singapore’s economy.

Pioneer Certificate Incentive (PC)

The Pioneer Certificate Incentive (PC) is an advantageous tax incentive scheme facilitated by the Economic Development Board (EDB) in Singapore. Its primary objective is to stimulate businesses and companies to establish pioneering activities that are not currently conducted within the country. Additionally, the scheme encourages the development of capabilities and the undertaking of research and development activities in Singapore.

Eligible companies under the PC scheme can benefit from tax deductions equivalent to up to 150% of their qualifying expenditure on approved activities for a continuous period of five years. This encompasses various expenses like the establishment of research laboratories, procurement of equipment, recruitment of personnel, and the execution of research and development initiatives. Moreover, the PC scheme offers additional advantages, including exemption from corporate income tax for manufacturing companies for up to 10 years, or for service companies for up to 5 years.

By introducing the PC scheme, Singapore aims to attract businesses and companies to engage in pioneering activities, foster technological advancements, and cultivate research and development capabilities within the country. These incentives contribute to the growth and competitiveness of Singapore’s economy while promoting innovation and knowledge transfer.

Development and Expansion Incentive (DEI)

The Development and Expansion Incentive (DEI) is a valuable tax incentive introduced by the Singapore government to stimulate and support economic development. Through the DEI, eligible companies can enjoy a special concessionary tax rate of 5%, significantly lower than the standard corporate tax rate.

To be eligible for the DEI, businesses must first complete a Pioneer Certificate Incentive (PC) period, during which they benefit from reduced corporate taxes. Upon fulfilling the PC period requirements, they become eligible to apply for the DEI. This scheme presents an excellent opportunity for companies seeking to expand their operations in Singapore, as it provides substantial tax savings. These savings can be reinvested into their businesses, driving further growth and development.

The DEI is open to businesses of all sizes and across all industry sectors operating within Singapore’s economy. It benefits both existing and new investors, encouraging them to initiate or expand their investments within the country rather than overseas. By utilising the DEI, companies contribute to the growth of Singapore’s economy while enjoying significant tax advantages and creating a positive impact on the nation’s business landscape.

Avoiding Double Taxation Agreements

When conducting cross-border business, it is important to ensure that income already taxed in a foreign country is not taxed again in Singapore. To address this issue, Singapore has established comprehensive Avoidance of Double Taxation Agreements (DTAs) with over 80 countries. You can find the current list of countries that have a DTA with Singapore on the IRAS website.

These agreements serve to prevent double taxation by either exempting foreign-sourced income from Singaporean taxes or allowing for a tax credit based on the taxes paid in the foreign jurisdiction. Companies can also take advantage of the Foreign Tax Credit system, which enables them to offset their Singaporean tax liability with the foreign taxes they have paid on their overseas income.

Withholding Tax

In certain cases, specific payments are subject to withholding tax. This applies to payments made to non-resident companies, individuals for services provided in Singapore, and income generated within Singapore. In such instances, the company is required to withhold a portion of the payment and remit it to IRAS. The following are common types of payments that may be subject to withholding tax:

  1. Interest, commission, or fees related to loans or debts.
  2. Royalties, rents, or other payments for the use or licensing of movable property.
  3. Management fees.
  4. Payments for the use or licensing of scientific, technical, industrial, or commercial knowledge or information, or for assistance or services related to the application or utilisation of such knowledge or information.

By familiarising yourself with these provisions, you can ensure compliance with Singaporean tax regulations while conducting international business activities.

Let Us Help You

If you’re seeking assistance with your tax setup, we’re here to help. Our dedicated team provides professional and cost-effective accounting services for companies aiming to establish themselves in Singapore. Get in touch with us today to discuss your requirements and benefit from our expertise.

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