Guide for New Company Tax in Singapore
What Is Tax Exemption Scheme for New Start-up Companies?
Newly-incorporated companies in Singapore will be able to enjoy a full tax exemption on the first $100,000 of its normal chargeable income (excluding Singapore franked dividends), for each of its first three consecutive years of assessment. Further, they may also have a 50% exemption on the next $200,000 of chargeable income.
If a newly-incorporated company wants to enjoy this tax exemption scheme, it must satisfy the following conditions:
– It must be a company incorporated in Singapore.
– It must be tax resident in Singapore for that year of assessment.
– The total share capital of the company must be beneficially held, directly or indirectly, by less than 20 individual persons or there is at least one individual shareholder holding at least 10% of the total number of issued ordinary shares throughout the basis period for that year of assessment.
What Is Your First Year of Assessment?
The first Year of Assessment (YA) refers to the period since the company incorporated in Singapore.
Newly-incorporated companies in Singapore may enjoy the Tax Exemption Scheme for the first 3 years since the incorporation of the company. From the fourth Year of Assessment onward, the company may enjoy a partial tax exemption instead of the exempt amount for new start-up companies.
What if the company incurs losses or has no income in any of the first 3 Year of Assessment?
If your company incurs losses or it has no income (e.g. business has not commenced) during the first 3 Year of Assessments, your chargeable income and tax payable will be nil. In this case, your company cannot enjoy the benefit given under the tax exemption scheme for new start-up companies for the particular Year of Assessment. However, from the fourth year on if your company has income, it can be given partial tax exemption.