Corporate Taxation in Singapore – Corporate Tax Rate & Structure

Singapore offers small and medium sized businesses one of the best economic environments and is known to pose the most competitive tax rate in the world. The corporate tax rate in Singapore is pegged at 17%. It is essentially the amount based on the gross income obtained by a business generally during the first year. The Single-Tier Corporate Tax system is especially beneficial for startups.

Let’s have a look at the tax incentives and corporate tax rates in Singapore

Single-Tier Corporate Tax System

The city-state follows the Single-Tier Corporate Tax system where the profits are taxed at the corporate level, which is ascertained as the final tax. Additionally, the dividends are exempt from tax. What are the benefits of the single- tier system?

  • Cuts down the cost of compliances
  • Eliminates restrictions placed on distribution of dividends from capital gains
  • Enables all tiers of shareholders to benefit from the vast flow-through of exempt dividends

Start-Up Tax Exemption (SUTE)

Company formation in Singapore can benefit from the Start-Up Tax Exemption (SUTE). But they have to meet the following criteria. Please note: SUTE is not applicable for property or investment holding companies

  • One individual corporate shareholder needs to own minimum 10% of the issued shares
  • They cannot have more than 20 individual shareholders

Tax rates for companies eligible for full exemption

Tax rates for companies eligible for full exemption

Tax rates for companies eligible for partial exemption

Tax rates for companies eligible for partial exemption

What are the different tax incentives in Singapore?

Under the Singapore Income Tax Act, a Tax resident company in Singapore enjoys the privilege of being exempt from tax on foreign income; however, this is subject to conditions. Listed below are some of the incentives enjoyed by a Singaporean Company.

  1. Pioneer Incentive – A company is granted complete income tax exemption on its profits for 15 years.
  2. Local Enterprise Technical Assistance Scheme – This helps companies looking for external expertise providing up to 50% of the cost for the same.
  3. Local Enterprise Finance Scheme – This helps companies with loans when it comes to capitals, machines, factories, etc.
  4. Development and Expansion Incentive – It offers beneficial income tax rates on profits for a set time frame.
  5. Investment allowances – It is essentially a capital allowance given to companies to reduce the cost for equipment’s required in the field of IT.
  6. Certain industries enjoy the benefit of lowered corporate tax rates, these include:Industries with Lowered Corporate Tax Rates