Start-Up Tax Exemption Scheme (SUTE)
The Start-up Tax Exemption scheme is a tax incentive scheme designed to encourage the growth and development of businesses in Singapore. Under this scheme, eligible companies are granted tax exemptions for the first 3 years after incorporation. After this period, companies transition to the partial Tax Exemption (PTE) scheme. This scheme serves to significantly reduce their tax burden and encourage more aspiring entrepreneurs to establish their start-ups in Singapore.
What exemption does the SUTE provide?
- 75% exemption on the first $100 000 of chargeable income
- 50% exemption on the next $1000 000 of chargeable income
Am I eligible?
- Was your company incorporated in Singapore?
- Is your company a tax resident in Singapore?
- Does your company have 20 or fewer shareholders?
- Does at least 1 shareholder of your company have an individual holding of at least 10% of the issued shares?
- Is your company engaged in an active trade?
- Your company must not be
- An Investment Holding company
- A Property Development company
If you answered Yes to all these questions, your business is eligible!
Business Entities that are Eligible
- Private Limited Company
- Exempt Private Company
- Subsidiary Company
Partial Tax Exemption Scheme (PTE)
The Partial Tax Exemption (PTE) Scheme is a tax scheme aimed to reduce the corporate tax burden for certain eligible companies. This scheme is available for every year, regardless of the company’s age.
What exemption does the PTE provide?
For every Year of Assessment, there is a:
- 75% exemption on first $10 000 of chargeable income
- 50% exemption on next $190 000 of chargeable income
Am I eligible?
- Is your company a tax resident in Singapore?
- Was your company incorporated in Singapore?
- Is your company actively engaged in trade?
- Your company must not be
-
- An Investment Holding company
- A Property Development company
If you answered yes to all the questions, you are eligible! Do note that under the PTE scheme, your company is required to file accurate income tax returns (Form C-S or Form C) and comply with all the tax reporting deadlines.
Business Entities that are Eligible
- Private Limited Company
- Exempt Private Company
- Subsidiary Company
- Public Limited Company
- Holding Company
- Variable Capital Company
Single Tier Dividend Tax System
The Single-Tier Dividend Tax System is a tax scheme where corporate profits are taxed at the company level, and dividends distributed to shareholders are exempt from any further taxation. This ensures that a company’s profit is only taxed once, preventing double taxation.
Key Features
2. Corporate tax on profits Companies are taxed on their profits at the corporate tax rate (17%)
3. No need for imputation credits In other countries, the imputation system is required to pass tax credits to shareholders for corporate tax that has already been paid. However, with the Single-tier Dividend Tax system, the tax process for companies and shareholders is simplified.
Am I eligible?
- Passive income
- Special investment entities (eg property)
- Dividends from foreign companies
Business Entities that are Eligible
- Private Limited Company
- Exempt Private Company
- Subsidiary Company
- Public Limited Company
- Holding Company
- Family Office
- Variable Capital Company
Capital Gains Tax
Capital Gain occurs when an asset is sold for more than its purchase price. Capital Gains Tax is a tax levied on the profit made from the sale of a capital asset such as real estate, stocks and bonds. For example, if you bought a property for $600 000 and sold it for $800 000, your capital gain is $200 000. In Singapore, there is no such capital gain tax, meaning any profit made from the sale of assets is not taxed, as long as the transaction was not part of any business activity. Instead, Singapore has a territorial tax system. This means that only income earned in Singapore is subject to tax, which does not include capital gains. This makes Singapore a more business-friendly and investment-friendly environment for investors and businesses, who won’t have to deal with complicated tax rules.