Revision to Tax Exemption Schemes for Singapore companies from YA2020

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Revision to Tax Exemption Schemes for Singapore companies from YA2020

On August 17, 2018, Posted by , In Corporate Secretarial,Corporate Services,Singapore,Singapore Companies,Singapore Corporates,Singapore Law,Singapore Tax,startups, By ,,, , With Comments Off on Revision to Tax Exemption Schemes for Singapore companies from YA2020

Overall company tax rate is a flat 17%. Listed below are general tax exemptions/incentives currently available to Singapore resident companies. Once these tax exemptions are applied to the taxable income, the effective income tax rate for small-to-midsize Singapore companies is reduced significantly. The Tax Exemption Schemes have been in place since YA2010, and over the years, and the rates are now subject to revision for new Singapore resident companies whose first 3 YAs fall from YA2020 onwards.

Full Tax Exemption (where any of the first 3 YAs fall in from YA2010 to YA 2019)

  • Full Tax Exemption for new Singapore resident companies which meet the Full Tax Exemption criteria on the first S$100,000 normal chargeable income for the first 3 years.
Amount of normal chargeable income Rate of Tax Exemption
First $100,000 100%
Next $200,000 50%

 

Tax Exemption Scheme for new Singapore resident companies (where any of the first 3 YAs fall in or after YA 2020)

Amount of normal chargeable income Rate of Tax Exemption
First $100,000 75%
Next $100,000 50%

Full Tax Exemption scheme does not apply to the following companies incorporated after 25 Feb 2013:

  1. A company whose principal activity is that of investment holding; and
  2. A company whose principal activity is that of developing properties for sale, for investment, or for both investment and sale.

 

Investment holding companies derive only passive incomes such as dividend and interest income, while the real estate industry typically incorporates a new company for each new property development. The start-up tax exemption for encouraging entrepreneurship is not intended for such companies. These companies will be given partial tax exemption.

 

 

Partial Tax Exemption (For YA2010 to YA2019)

All companies are eligible for partial tax exemption till YA2019 on normal chargeable income of up to S$300,000 as follows:

Amount of normal chargeable income Rate of Tax Exemption
First $10,000 75%
Next $290,000 50%


Partial Tax Exemption (From YA2020)
 

All companies are eligible for partial tax exemption from YA2020 on normal chargeable income of up to S$300,000 as follows:

Amount of normal chargeable income Rate of Tax Exemption
First $10,000 75%
Next $190,000 50%


 

 

Information Source: IRAS website (http://www.iras.gov.sg)

 

 

VALON can be your resource and business partner in Asia. Should you wish to receive more detailed information on VALON, please do not hesitate to contact us at enquiry@valoncorp.com.

 

 

Disclaimer: This publication does not provide financial, legal or tax or advice of any kind, and VALON cannot guarantee that the information is accurate, complete or up-to-date. While we intend to make every attempt to keep the information in this publication current, VALON make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained herein. Nothing on this publication should be used as a substitute for the advice of a third party. VALON assumes no responsibility to any person who relies on information contained herein and disclaim all liability in respect to such information. You should not act upon information in this publication without seeking professional advice.

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