Singapore has established itself as a global business hub, attracting entrepreneurs and multinational corporations with its pro-business environment, low corporate tax rates, and extensive tax incentives. The city-state ranks among the world’s most competitive economies, offering a transparent tax system, extensive trade agreements, and a business-friendly regulatory framework.
Singapore offers businesses zero tax on capital gains, one of the world’s lowest corporate tax rates, and access to over 100 tax treaties to prevent double taxation—making it a prime destination for global entrepreneurs and investors.
If you are considering establishing your company in Singapore, understanding the corporate tax structure is crucial. In this guide, we will break down Singapore’s corporate tax rates, tax exemptions, and incentives to help you maximize your profits while staying compliant.
Overview of Singapore’s Corporate Tax System
Singapore has a territorial tax system, meaning only income earned or received within the country is subject to taxes. Unlike many countries, there is no capital gains tax or dividend withholding tax, making it an attractive destination for startups and international businesses.
Key Features of Singapore’s Tax System
- Low Corporate Tax Rate – Singapore provides a flat corporate tax rate of 17%, significantly lower than global competitors.
- Tax Exemptions for Startups – New businesses enjoy generous exemptions.
- No Tax on Dividends & Capital Gains – Entrepreneurs can maximize their income.
- Extensive Tax Treaties – Over 100 Double Tax Agreements (DTAs) with other nations.
- Goods & Services Tax (GST) – The Goods and Service tax in Singapore is currently 9% for businesses exceeding S$1 million in revenue.
Singapore’s Corporate Tax Rate for Businesses
Singapore offers a progressive tax system for corporate entities, where companies benefit from tiered tax exemptions before reaching the standard 17% corporate tax rate.
Type of Business | Corporate Tax Rate |
All Companies (Profit above S$200,000) | 17% |
Foreign-Sourced Income (If not repatriated) | 0% |
Foreign-Sourced Income (Repatriated to Singapore) | Subject to 17% (tax credits apply) |
Key Takeaways:
- Small businesses and startups enjoy lower effective tax rates.
- Only profit above S$200,000 is taxed at the full rate of 17%.
- Foreign income may be tax-exempt if it is not repatriated to Singapore.
Tax Incentives and Exemptions in Singapore
To encourage investment and innovation, the Singapore government provides several tax reliefs to reduce the tax burden for new and existing businesses.
a) Start-up Tax Exemption (SUTE) Scheme
Newly incorporated companies may benefit from tax exemptions for the first three years:
- First S$100,000 of profit → 75% tax exemption (4.25% effective tax rate).
- Next S$100,000 of profit → 50% tax exemption (8.5% effective tax rate).
Eligibility Criteria:
- Must be a private limited company.
- Must be incorporated in Singapore.
- Cannot have more than 20 shareholders.
b) Partial Tax Exemption (PTE) for Established Companies
After the first three years, companies can continue to benefit from tax reductions:
- First S$10,000 of profit → 75% tax exemption.
- Next S$190,000 of profit → 50% tax exemption.
c) Industry-Specific Tax Incentives
Singapore also provides sector-specific tax incentives for industries such as technology, finance, and R&D:
Tax Incentive | Tax Rate | Targeted Sector |
Global Trader Program (GTP) | 5% – 10% | International Trading |
Pioneer Certificate Incentive | 5% – 10% | Tech, R&D, Innovation |
Finance & Treasury Centre (FTC) | 8% | Financial Services |
Research & Development (R&D) Tax Deduction | 250% Deduction | R&D Companies |
Comparison of Singapore’s Corporate Tax with Other Business Hubs
Singapore’s competitive tax system is one of the reasons it ranks among the best places to start a business.
Below is a comparison of corporate tax rates across major business hubs:
Country | Corporate Tax Rate | Dividend Tax | Capital Gains Tax |
Singapore | 17% | 0% | 0% |
Hong Kong | 16.50% | 0% | 0% |
United Kingdom | 25% | 8.75% – 39.35% | 20% |
United States | 21% | 15% – 20% | 20% |
Australia | 30% | 0% – 47% | 30% |
- Singapore and Hong Kong have the most tax-friendly policies for businesses.
- Countries like the US and UK impose high dividend and capital gains taxes.
Goods & Services Tax (GST) in Singapore
In addition to corporate tax, businesses have to consider Goods & Services Tax (GST), Singapore’s version of VAT.
- GST Rate: Singapore’s GST rate is 9%.
- Mandatory GST Registration: If annual revenue exceeds S$1 million you must register for GST.
- GST Exemptions: Certain financial services and real estate transactions
How to Legally Reduce Your Tax Liability in Singapore?
By using lawful tax techniques, entrepreneurs in Singapore can reduce their tax burden:
- Utilize Startup Tax Exemptions – Apply for SUTE or PTE schemes.
- Leverage Tax Treaties – Avoid double taxation in Singapore as the country has signed more then 100 double tax avoidance agreements.
- Deduct Business Expenses – Claim deductions for office rent, salaries, and R&D.
- Use Government Grants – Explore grants like EDG, PSG, and R&D tax incentives.
Why Foreign Entrepreneurs Should Register a Business in Singapore?
Singapore offers much more than just low corporate taxes. Entrepreneurs benefit from:
- #1 in Ease of Doing Business (World Bank Ranking)
- Stable Political & Economic Environment
- World-Class Banking & Financial System
- Access to Southeast Asia’s Growing Markets
- Extensive Network of Free Trade Agreements (FTAs)
With low tax rates, business-friendly policies, and global connectivity, Singapore is the ideal destination for startups and multinational companies looking to expand in Asia.
Conclusion
Understanding Singapore’s corporate tax rate and incentives is crucial for foreign entrepreneurs planning to start a business in Singapore. With a competitive tax structure, generous exemptions, and a robust financial ecosystem, Singapore remains one of the best places in the world to launch and grow a business.
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FAQ’s
Foreign earnings are not taxed in Singapore unless it is remitted (brought back) to Singapore. Even then, companies may qualify for tax exemptions or relief under Singapore’s Double Tax Agreements (DTAs).
No. Singapore does not impose any capital gains tax, making it an attractive destination for investors and business owners looking to maximize their earnings.
Yes, if your firm’s yearly revenue surpasses S$1 million, you must register for GST which is. Otherwise, GST registration is optional.
Yes, 100% foreign ownership is allowed in Singapore for most business structures, including private limited companies (Pte Ltd). There is no requirement for local shareholders.
