For entrepreneurs and business owners, understanding the tax structure in Singapore and available exemptions can translate into significant savings during the early years of your operation.
Let’s find out the essential tax information that companies need to know: the standard tax rate set by IRAS, startup exemptions, and the additional relief measures announced in Budget 2025.
Corporate Tax Rate in Singapore
Singapore applies a flat corporate tax rate of 17% on a company’s chargeable income. This rate applies to both local and foreign companies operating in Singapore.
Chargeable income refers to your net profit after deducting allowable business expenses, not your gross revenue.
For example, if your company earns $300,000 in revenue and incurs $280,000 in expenses, you are taxed on the $20,000 profit. At 17%, the tax payable would be $3,400.
Start-Up Tax Exemption (SUTE)
New startup companies can benefit from substantial tax exemptions for their first three consecutive Years of Assessment (YA) under the Start-Up Tax Exemption (SUTE) scheme.
This scheme provides relief during the early stages of business when capital preservation is essential.
Exemption Structure:
- 75% exemption on the first $100,000 of chargeable income
- 50% exemption on the next $100,000 of chargeable income
Example Calculation:
If your company earns $200,000 in chargeable income during its first year:
- First $100,000: 75% exempt ($75,000) → Taxable amount: $25,000
- Next $100,000: 50% exempt ($50,000) → Taxable amount: $50,000
- Total taxable income: $75,000
- Tax payable: $12,750 (17% of $75,000)
Without the exemption, the tax payable would be $34,000, resulting in a saving of $21,250.
Eligibility Criteria
To qualify for the startup tax exemption scheme, your company must meet the following conditions:
- Incorporated in Singapore
- Tax resident of Singapore for that Year of Assessment
- Annual revenue not exceeding $5 million
- Maximum of 20 shareholders throughout the basis period
- At least one individual shareholder holding a minimum of 10% of the issued shares
Property development companies and investment holding companies are excluded from this scheme.
Year of Assessment 2025: Corporate Income Tax Rebate
As announced in Budget 2025, the Singapore government is providing additional tax support to companies through a Corporate Income Tax (CIT) rebate and cash grant.
50% CIT Rebate
All companies, whether tax resident or not, will receive a 50% rebate on their corporate tax payable for YA 2025, capped at $40,000.
$2,000 CIT Rebate Cash Grant
Active companies that employed at least one local employee (Singapore Citizen or Permanent Resident, excluding shareholder-directors) in 2024 will automatically receive a minimum cash grant of $2,000.
How the Rebate and Cash Grant Work Together:
- If your company qualifies for the cash grant and your calculated rebate is less than $2,000, you receive the $2,000 cash grant with no additional rebate.
- If your calculated rebate exceeds $2,000, you receive the rebate amount minus the $2,000 cash grant.
- The combined maximum benefit is capped at $40,000.
IRAS will process these benefits automatically when you file your corporate tax return. No separate application is required.
Filing Your Corporate Tax Return
All Singapore companies must file their Corporate Income Tax Return with IRAS by 30 November each year. The type of form you need to file depends on your company’s annual revenue:
Form C-S (Lite)
- For companies with annual revenue of $200,000 or less
- Simplified form with minimal details required
Form C-S
- For companies with annual revenue above $200,000 but not exceeding $5 million
- Suitable for companies with straightforward tax affairs
Form C
- For companies with annual revenue exceeding $5 million
- Also required for companies claiming specific tax incentives or with more complex tax positions
All forms must be filed electronically through IRAS’s online portal. Ensure your financial statements are prepared and your accounts are in order before the filing deadline to avoid late filing penalties.
How Singbac Can Help
Singapore’s competitive tax structure, combined with targeted exemptions and rebates, creates a supportive environment for business growth.
New companies should take advantage of SUTE during their first three years of operation, while all companies can benefit from the YA 2025 tax relief measures.
Staying compliant with IRAS filing requirements and understanding your eligibility for various tax benefits will help optimize your company’s tax position.
If you need assistance with corporate tax matters or company incorporation in Singapore, contact us for professional guidance.
Frequently Asked Questions
- When do the first three years of SUTE start counting?
Your first Year of Assessment (YA) begins based on your company’s incorporation date and financial year-end.
For example, if you incorporated in June 2024 with a December year-end, your first YA would be 2025. The three consecutive years of SUTE would apply to YA 2025, 2026, and 2027, regardless of whether you have taxable income in all those years.
- What happens after my company’s first three years of SUTE?
After the three-year SUTE period, your company automatically transitions to the Partial Tax Exemption (PTE) scheme.
Under PTE, you receive 75% exemption on the first $10,000 of chargeable income and 50% exemption on the next $190,000. While less generous than SUTE, PTE still provides tax relief for established companies.
- Can I claim both SUTE and the YA 2025 CIT rebate?
Yes. SUTE and the CIT rebate work together. SUTE reduces your chargeable income first, then the 17% tax rate is applied to calculate your tax payable.
The 50% CIT rebate is then applied to that tax payable amount. This means new companies can benefit from both schemes simultaneously.
