In order to propel further economic growth and to attract foreign investments, the Singapore government takes measures to keep Singapore business-friendly. One important aspect is the very attractive corporate tax rate on businesses in Singapore.

 

Tax Residency And Taxable Income

Companies (resident and non-resident) that carry on a business are taxed on their corporate income derived from Singapore and also on foreign-sourced income when it is remitted or deemed remitted into Singapore.

As a Singapore tax resident, companies do get to enjoy the following benefits:

  • Tax benefits provided under avoidance of double taxation agreements
  • Tax exemption for new start-ups

 

Dividends Are Tax Exempted

Singapore practices a single-tier tax system: Tax is imposed on the companies profit but dividends in the hands of shareholders are tax exempted.

 

Corporate Tax Rate

Tax on corporate income is imposed at a flat rate of 17%. The effective tax rate can be further reduced significantly from the tax incentives and exemptions offered by the Singapore government.

 

Tax Incentives

Tax Exemptions For Qualifying New Start-Ups:

YA 2018 to YA 2019 YA 2020 Onwards
Chargeable Income (SGD) Exempt From Tax Exempt Income (SGD) Chargeable Income (SGD) Exempt From Tax Exempt Income (SGD)
First 100,000 100% 100,000 First 100,000 75% 75,000
Next 200,000 50% 100,000 Next 100,000 50% 50,000
Total 200,000 125,000

*not available to investing holding and property development companies.

 

Partial Tax Exemptions For Qualifying Companies

YA 2018 to YA 2019 YA 2020 Onwards
Chargeable Income (SGD) Exempt From Tax Exempt Income (SGD) Chargeable Income (SGD) Exempt From Tax Exempt Income (SGD)
First 10,000 75% 7,500 First 10,000 75% 7,500
Next 290,000 50% 145,000 Next 190,000 50% 95,000
Total 152,000 Total 102,500

 

Corporate Tax Rebate

There is also a rebate of 20% tax payable for YA 2019, capped at SGD10,000.

 

Other Tax Incentives

There are more tax incentives available for industry-specific qualifying companies.

 

With Avoidance Of Double Taxation treaties with more than 80 jurisdictions and a favorably low headline corporate tax, companies in Singapore can greatly reduce their tax expenses.