Tax Benefits for Newly Incorporated Companies in Singapore
Singapore is one of the most business-friendly countries in the world, offering attractive tax incentives and schemes to encourage entrepreneurship and economic growth. For newly incorporated companies, the tax benefits can significantly reduce operational costs, making it easier to establish and grow a business. In this guide, we’ll explore the various tax benefits available for newly incorporated companies in Singapore and how your business can take advantage of them.
1. Start-Up Tax Exemption (SUTE) Scheme
The Start-Up Tax Exemption (SUTE) Scheme is one of the most attractive tax benefits for newly incorporated companies in Singapore. It allows eligible companies to enjoy substantial tax exemptions on their chargeable income for the first three years.
Tax Exemption Breakdown:
- 75% exemption on the first $100,000 of chargeable income.
- 50% exemption on the next $100,000 of chargeable income.
Eligibility Criteria:
To qualify for the SUTE scheme, the company must:
- Be incorporated in Singapore.
- Be a tax resident in Singapore for that year.
- Have no more than 20 shareholders, with at least one shareholder being an individual holding at least 10% of the shares.
Note: Investment holding companies and companies engaged in property development for sale, investment, or both do not qualify for this scheme.
2. Partial Tax Exemption (PTE) Scheme
After the first three years of tax exemptions under SUTE, newly incorporated companies can continue enjoying tax benefits through the Partial Tax Exemption (PTE) Scheme.
Tax Exemption Breakdown:
- 75% exemption on the first $10,000 of chargeable income.
- 50% exemption on the next $190,000 of chargeable income.
This scheme ensures that small and medium enterprises (SMEs) continue to benefit from tax relief even after their initial three years in business.
3. Corporate Income Tax Rebate
To further ease the financial burden on businesses, the Singapore government periodically offers corporate income tax rebates. The rebates vary from year to year, depending on the economic conditions and government policies. Businesses should stay updated with IRAS announcements to take full advantage of these incentives.
4. Productivity and Innovation Credit (PIC) Scheme (Discontinued but Replaced by New Schemes)
While the PIC Scheme was phased out, Singapore has introduced several initiatives to encourage innovation and productivity improvements, such as:
- Enterprise Development Grant (EDG) – Supports businesses in innovation and market expansion.
- Productivity Solutions Grant (PSG) – Helps SMEs adopt technology and automation.
Newly incorporated companies should explore these grants to reduce their tax liability while investing in business growth.
5. Double Tax Deduction for Internationalisation (DTDi)
Expanding internationally? The DTDi scheme allows businesses to claim a 200% tax deduction on qualifying expenses incurred in overseas expansion activities. This includes:
- Market research and feasibility studies.
- Overseas business development trips.
- Advertising and promotional campaigns.
This scheme helps new businesses establish a global presence with significant tax savings.
6. Tax Deductions on Business Expenses
Singapore’s tax laws allow businesses to deduct expenses incurred in generating taxable income. Some commonly deductible business expenses include:
- Employee salaries and CPF contributions.
- Office rental and utilities.
- Advertising and marketing costs.
- Training expenses for employees.
7. Goods and Services Tax (GST) Registration Benefits
Newly incorporated companies with an expected annual turnover exceeding S$1 million must register for GST. While this may seem like an additional responsibility, GST registration allows businesses to claim input tax credits, reducing overall costs. Voluntary registration is also an option if your business deals with GST-registered suppliers or customers.
How SOAS Can Help Your Business Benefit from These Tax Incentives
Navigating Singapore’s tax benefits and compliance requirements can be complex. At SOAS, we specialize in corporate tax planning, compliance, and business advisory services to ensure that newly incorporated companies maximize tax incentives while staying compliant with IRAS regulations.
Why Choose SOAS?
- Expert Tax Advisory: Our specialists help you optimize your tax strategies.
- Compliance Support: We ensure your company meets all statutory requirements.
- Efficient Incorporation Services: Get your business up and running smoothly with our incorporation experts.
Ready to Maximize Your Tax Savings?
Visit SOAS.com.sg to learn how we can help your newly incorporated business leverage Singapore’s tax benefits and stay ahead in the competitive market.
FAQs About Tax Benefits for Newly Incorporated Companies in Singapore
Q. What are the tax benefits for newly incorporated companies in Singapore?
Newly incorporated companies in Singapore can enjoy tax benefits such as the Start-Up Tax Exemption (SUTE) Scheme, Partial Tax Exemption (PTE) Scheme, corporate tax rebates, and various government grants that help reduce their tax burden.
Q. How does the Start-Up Tax Exemption (SUTE) Scheme work?
The SUTE Scheme provides newly incorporated companies with a 75% tax exemption on the first $100,000 of chargeable income and a 50% exemption on the next $100,000 for the first three years.
Q. Do all newly incorporated companies qualify for tax exemptions?
No, to qualify for the Start-Up Tax Exemption (SUTE) Scheme, a company must be a Singapore tax resident, have no more than 20 shareholders, and have at least one individual shareholder holding at least 10% of shares. Investment holding and property development companies do not qualify.
Q. Can newly incorporated companies benefit from tax deductions on business expenses?
Yes, Singapore allows tax deductions on various business expenses, including employee salaries, CPF contributions, rental, utilities, and marketing costs, as long as they are incurred to generate taxable income.
Q. How can SOAS help newly incorporated companies with tax benefits?
SOAS provides expert tax advisory and corporate compliance services to help businesses maximize tax exemptions, deductions, and government grants while ensuring full compliance with IRAS regulations. Visit SOAS.com.sg to learn more.
Wrapping Up
Singapore’s pro-business tax policies provide significant financial relief for newly incorporated companies. From the Start-Up Tax Exemption (SUTE) Scheme to Partial Tax Exemptions and grants for innovation and expansion, businesses can strategically leverage these incentives to reduce tax liabilities and accelerate growth.
By partnering with SOAS, your company can navigate the complexities of corporate taxation and fully capitalize on Singapore’s tax incentives. Get in touch today and take the first step toward optimizing your business finances!