Navigating Tax Incentives and Exemptions for New Companies in Singapore

If you’re an entrepreneur looking to launch a business in Asia, Singapore continues to stand out as one of the most tax-friendly and strategically positioned locations. Its well-structured tax system, coupled with strong legal protections and world-class infrastructure, makes it an attractive destination for startups and multinational companies alike.

But beyond just the basics, Singapore offers a range of tax incentives and exemptions specifically tailored to support new businesses. Understanding these opportunities is key to building a financially sound operation from day one.

In this post, we’ll guide you through the essential tax incentives available to startups and explain how they can benefit your Singapore company formation journey. Whether you’re at the early stages of planning or already preparing for company registration in Singapore, this guide is here to help you make the most of what’s on offer.

Why Singapore for Business?

Before diving into the specifics of tax incentives, it’s worth noting why so many entrepreneurs choose Singapore for their ventures. The country consistently ranks as one of the easiest places in the world to do business, thanks to its efficient bureaucracy, low corporate tax rates, and extensive double tax treaties with other nations.

When planning your Singapore company setup, these foundational strengths are already in your favor. But on top of that, the government actively encourages entrepreneurship through a mix of grants, tax breaks, and innovation support schemes.

1. Start-Up Tax Exemption (SUTE) Scheme

One of the most notable benefits for new businesses in Singapore is the Start-Up Tax Exemption scheme. This incentive is designed to support local entrepreneurship by easing the tax burden in the critical first few years of operation.

Under this scheme:

• The first SGD 100,000 of chargeable income is 75% exempt from corporate tax.

• The next SGD 100,000 is 50% exempt from tax.

This applies for the first three consecutive years of assessment, provided your company qualifies. To be eligible, your company must:

• Be incorporated in Singapore

• Be a tax resident in Singapore

• Have no more than 20 shareholders, with at least one holding 10% or more of the shares

The Start-Up Tax Exemption can lead to significant savings in your early years and should be factored into your financial planning during the company registration in Singapore process.

2. Partial Tax Exemption for All Companies

Once your business outgrows the SUTE or if it doesn’t qualify, you can still benefit from the Partial Tax Exemption scheme. This exemption is available to all qualifying companies and is structured as follows:

• First SGD 10,000 of chargeable income: 75% exempt

• Next SGD 190,000 of chargeable income: 50% exempt

That’s up to SGD 102,500 in tax-exempt income each year, even after your startup period ends. It’s another reason why a Singapore company setup offers long-term value.

3. Corporate Tax Rate and Rebates

Singapore’s corporate tax rate is a flat 17%, one of the lowest in the region. On top of this, the government occasionally introduces corporate income tax rebates to ease the cost of doing business, particularly during challenging economic periods.

For example, during the COVID-19 pandemic, eligible companies received rebates of up to 25% of their tax payable, capped at SGD 15,000. While rebates vary from year to year, staying informed allows you to plan for potential windfalls or reliefs that could boost your company’s cash flow.

4. Tax Incentives for Specific Industries

If your startup falls within strategic growth sectors, additional tax incentives may be available under Singapore’s economic development framework. These include:

• Pioneer Certificate Incentive (PC) – for companies that engage in high-value manufacturing or services. Approved companies enjoy a reduced tax rate of up to 5%.

• Development and Expansion Incentive (DEI) – designed for businesses looking to expand existing operations or invest in new capabilities.

• Financial Sector Incentive (FSI) – available to financial institutions involved in asset management, treasury services, or capital market activities.

These programs require a more in-depth application process, but the tax reductions can be substantial. If your company operates in tech, fintech, biotech, or clean energy, it’s worth exploring these options during your Singapore company formation planning phase.

Also Read: Different Licensing Options for Finance Companies in Singapore

5. Double Tax Agreements (DTAs)

Singapore has signed over 90 Double Tax Agreements with countries worldwide. These agreements help businesses avoid being taxed twice on the same income—once in Singapore and again in the foreign jurisdiction.

This is particularly advantageous for startups with international clients, suppliers, or partners. Leveraging these agreements can significantly reduce your global tax exposure and improve profitability.

6. Goods and Services Tax (GST) Considerations

If your annual taxable turnover exceeds SGD 1 million, you’ll be required to register for GST, which is Singapore’s version of VAT. The current GST rate is 9% as of 2024. However, for many startups, especially in B2B industries, GST registration can be beneficial as it allows you to claim input tax on business expenses.

During your early Singapore company setup, it’s important to assess whether voluntary GST registration makes sense for your operations and future growth.

Final Tips for Maximizing Tax Benefits

Here are a few practical tips as you navigate tax planning:

• Incorporate early: Timing your company registration in Singapore allows you to align with the tax assessment year and benefit from incentives sooner.

• Keep accurate records: Incentives often come with compliance requirements. Clean, accurate financial statements are your best tool for claiming what you’re entitled to.

• Consult tax professionals: Singapore’s tax incentives can be complex. A qualified corporate services firm or accountant can ensure you don’t leave money on the table.

Final Thoughts

Starting a business in Singapore is more than just a strategic move—it’s a smart financial decision when done right. From the very beginning of your Singapore company formation journey, there are real tax advantages that can make a tangible difference to your bottom line.

Whether you’re just researching or actively planning your Singapore company setup, understanding the landscape of tax incentives and exemptions allows you to launch with confidence. These schemes are not just cost-saving tools; they’re investments in your growth, sustainability, and global competitiveness.

If you're looking to build a strong and tax-efficient foundation for your business, there’s no better time than now to explore your options in Singapore.

Also Read: Different Types of Strategic Alliances in Singapore

FAQs

1. Do I need to be a Singapore resident to benefit from the Start-Up Tax Exemption?
No, but the company itself must be a tax resident in Singapore. This usually means that strategic decisions are made in Singapore and the company has local directors.

2. Can foreign-owned companies qualify for tax incentives in Singapore?
Yes. As long as the company meets the eligibility criteria—such as being incorporated and tax resident in Singapore—it can access many of the same tax exemptions and benefits as local businesses.

3. How long do tax incentives last for new startups?
The Start-Up Tax Exemption scheme offers benefits for the first three years. After that, companies typically transition to the Partial Tax Exemption scheme, which continues to offer significant relief.