Common Tax Reliefs that will help to reduce the tax bill for New Start-Up Companies

The Singapore government has always been supportive of start-up companies and has many schemes to support entrepreneurship. One of the ways which they have been assisting new start-up companies is by providing tax reliefs.
Let us focus on Year of Assessment 2019 and 2020.
Year of Assessment 2019 (YA 2019)
This is for financial years which closed in 2018.
(Please watch our YouTube video at the bottom of this article to better understand how to decipher which accounts belong to which financial year.)

• Full exemption on the first $100,000 of normal chargeable income; and
• A further 50% exemption on the next $200,000 of normal chargeable income.

Year of Assessment 2020 (YA 2020)
This is for financial years which closed in 2019.

• 75% exemption on the first $100,000 of normal chargeable income; and
• A further 50% exemption on the next $100,000 of normal chargeable income.

(Normal chargeable income refers to income to be taxed at the prevailing corporate tax rate.)

The tax exemption is open to all new companies except these two types of companies:

• A company whose principal activity is that of investment holding; and
• A company which undertakes property development for sale, for investment, or for both investment and sale.

To qualify for tax exemption for start-ups, eligible companies must satisfy these three qualifying conditions:

1. The company must be incorporated in Singapore;
2. The company must be a tax resident in Singapore for that YA;
3. The company’s total share capital is beneficially held directly by no more than 20 shareholders throughout the basis period for that YA where:
4. 1. all of the shareholders are individuals; or
   2. at least one shareholder is an individual holding at least 10% of the issued ordinary shares of the company.

New start-up companies will also be eligible for Corporate Income Tax Rebates
All companies will receive a corporate income tax rebate of the following:

• 20% corporate income tax rebate, capped at $10,000 for YA 2019
• 40% corporate income tax rebate, capped at $15,000 for YA 2018

Do remember that all companies need to submit two corporate income tax returns to IRAS every year.

1. Estimated Chargeable Income (ECI): To be submitted within three months from the company’s financial year end except for companies which are exempted.
2. Corporate Income Tax Returns (Form C-S of Form C): To be submitted by 30th November (hard copy) or 15th December (e-filing)

For accounting advice, you may contact our accounting partner Singapore Accounting Services at [email protected].