Singapore's Corporate Income Tax Rates, Rebates, and Exemptions That You Need To Know

Corporate Income Tax Rate, Rebates & Tax Exemption Schemes in Singapore

Corporate Income Tax Rate

Singapore's corporate income tax rate is a flat 17% on chargeable income, which is income after deducting allowable expenses and other approved deductions. The tax rate is among the lowest in the world, making Singapore an attractive destination for businesses.

Tax Exemption Schemes

Tax Exemption Scheme for New Start-Up Companies

The Tax Exemption Scheme for New Start-Up Companies was introduced under Section 43 of the Income Tax Act 1947 in the Year of Assessment (YA) 2005 to support entrepreneurship and grow local enterprises. The scheme was revised from YA 2020 as announced in Budget 2018.

For YA 2020 onwards:

• 75% exemption on the first $100,000 of normal chargeable income.

• A further 50% exemption on the next $100,000 of normal chargeable income.

For YA 2019 and before:

• Full exemption on the first $100,000 of normal chargeable income.

• A further 50% exemption on the next $200,000 of normal chargeable income.

This scheme applies to qualifying companies for their first three consecutive YAs. From the fourth YA onwards, companies can enjoy the partial tax exemption.

Partial Tax Exemption Scheme for Companies

All companies, including those limited by guarantee, are eligible for partial tax exemption unless they are claiming the tax exemption for new start-up companies.

For YA 2020 onwards:

• 75% exemption on the first $10,000 of normal chargeable income.

• A further 50% exemption on the next $190,000 of normal chargeable income.

• The maximum exemption for each YA is $102,500.

For YA 2019 and before:

• 75% exemption on the first $10,000 of normal chargeable income.

• A further 50% exemption on the next $290,000 of normal chargeable income.

• The maximum exemption for each YA is $152,500.

Corporate Income Tax (CIT) Rebate

The CIT rebate is an additional measure to help businesses lower their tax liabilities. As announced in Budget 2024, to help companies manage rising costs, a CIT Rebate of 50% of the corporate tax payable will be granted to all taxpaying companies, whether tax resident or not, for YA 2024. Companies that have employed at least one local employee in 2023 (referred to as “local employee condition”) will receive $2,000 in cash payout (referred to as “CIT Rebate Cash Grant”). Such companies will therefore receive a minimum benefit of $2,000. The maximum total benefits of CIT Rebate and CIT Rebate Cash Grant that a company may receive is $40,000, and it will be granted as follows:

If company meets local employee condition and receives CIT Rebate Cash Grant of $2,000

• If CIT Rebate ≤ $2,000, no CIT Rebate to be given.

• If CIT Rebate > $2,000, CIT Rebate (capped at $40,000) less $2,000 to be given.

If company does not meet local employee condition and does not receive CIT Rebate Cash Grant of $2,000

• If CIT Rebate > $0, CIT Rebate (capped at $40,000) to be given.

The CIT Rebate Cash Grant supports smaller companies that would receive little or no CIT Rebate. To be eligible, a company must have made CPF contributions to at least one local employee (excluding shareholders who are also directors) in 2023. Eligible companies, including registered business trusts and variable capital companies, will automatically receive the CIT Rebate Cash Grant by Q3 2024, which will not be taxable.

The CIT Rebate applies to income taxed at a concessionary tax rate but not to income subject to a final withholding tax. It is extended to registered business trusts and variable capital companies. Companies should not include the CIT Rebate in their declared chargeable income for tax returns. IRAS will automatically compute and allow the CIT Rebate in the YA 2024 tax assessment based on the submitted tax returns. Amended notices of assessment will be issued by 31 August 2024 for finalized assessments impacted by the tax changes.

Conclusion

Singapore's tax policies, including the corporate income tax rate, tax exemption schemes, and CIT rebates, provide significant incentives for businesses to operate and grow in the country. These measures are designed to support entrepreneurship and enhance the business environment, making Singapore an attractive hub for companies. For more information, please refer to https://www.iras.gov.sg/taxes/corporate-income-tax/basics-of-corporate-income-tax/corporate-income-tax-rate-rebates-and-tax-exemption-schemes.

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