Singapore Corporate Tax Exemption For A New Start Up Company

Singapore Corporate Tax Exemption For A New Start Up Company

Singapore is a rapidly developing hub for business in Asia. Many local and foreign entrepreneurs prefer to setup a startup business in Singapore because of its government that supports businesses and its status for being a pro0business worldwide. Furthermore, Singapore is located at the heart of the growing Asia economy. Singapore corporate tax policy is another contributing factor that makes the country an ideal location for company incorporation by applying fair and competitive tax rates. Considering all these reasons, Singapore has confidently taken the lead as a recognized business nation worldwide.

Below are the favorable tax benefits to be considered a tax resident by the Inland Revenue Authority of Singapore (IRAS). As a tax resident, a Singapore company:

Is eligible for tax exemption scheme available for new start-up companies.

Can enjoy tax exemption on foreign-sourced dividends, foreign branch profits, and foreign-sourced service income.

Is entitled to benefits conferred under the Avoidance of Double Taxation Agreements (DTA) that Singapore has concluded with treaty countries.

Is only taxed on Singapore source income and foreign income, which is remitted to Singapore.

A Singapore resident company is a type of company where the control and management of the business is exercised in Singapore. Although the term "control and management" is not defined explicitly by authorities, a generally accepted consensus is that it refers to the policy level decision making at the level of Board of Directors and not the day-to-day decision making and operations.

For new startup companies, Singapore Government has declared a full tax exemption for newly incorporated companies. Full tax exemption is granted on the first S$100,000 of Chargeable Income for qualifying new companies for the first three years of assessment consecutively.

Below are the qualifying conditions for new startup companies tax exemptions:

It is incorporated in Singapore;

It is a tax resident of Singapore for that Year of Assessment;

It has no more than 20 shareholders throughout the basis period relating to that Year of Assessment;

All its shareholders are individuals throughout the basis period relating to that Year of Assessment; or

There is at least one individual shareholder with a minimum of 10% shareholding.

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