The new start up tax exemption Singapore is a major reason the country remains a top choice for entrepreneurs. Known for its business-friendly environment, Singapore supports founders through generous tax incentives for new companies, helping them grow without heavy tax pressure.
If you’ve just started your business, this tax exemption for new start up companies can help you save thousands in corporate tax during your first few years. Under the Startup Tax Exemption Scheme (SUTE) and Partial Tax Exemption (PTE), eligible companies can legally reduce the amount of tax they pay, keeping more cash for growth, hiring, and investment.
In this guide, we’ll break down:
- What the tax exemption for new start-up companies really means
- Who qualifies and how much you can save
- How to make sure you’re taking full advantage of Singapore’s tax exemption schemes
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What is the Startup Tax Exemption Scheme (SUTE) in Singapore
The Startup Tax Exemption Scheme (SUTE) is a government initiative that helps new companies in Singapore lower their tax bills during their first few years of business. It’s designed to help startups manage cash flow and reinvest profits as they grow.
Under this scheme, eligible companies enjoy significant tax savings for their first 3 consecutive Years of Assessment (YAs) after incorporation. This early support gives founders more room to build their business, hire talent, and scale operations before paying the full corporate tax rate.
Skip the confusion.
Who qualifies for the start up tax exemption Singapore
Not every company automatically qualifies for the Startup Tax Exemption Scheme (SUTE). To be eligible, your business must meet a few key conditions.
You qualify if your company:
- Is incorporated in Singapore
- Is tax resident in Singapore for the year
- Has no more than 20 shareholders
- Has at least one individual owning 10% or more of the company’s shares
- Is an active trading business, not just a holding or investment company
Companies that mainly hold investments or are involved in property development generally do not qualify for the scheme.
If you’ve set up a genuine business that’s actively trading in Singapore, chances are you meet the requirements.
How much tax can startups save in Singapore
The Startup Tax Exemption Scheme (SUTE) offers significant savings for new companies during their first three years. Here’s how it works:
- 75% tax exemption on the first S$100,000 of taxable income
- 50% tax exemption on the next S$100,000 of taxable income
This means your startup could pay tax on only half (or even less) of its profits in the early years.
Partial Tax Exemption Singapore after year 3
After your company’s first three years, the Startup Tax Exemption (SUTE) ends. But you can still enjoy lower taxes through the Partial Tax Exemption (PTE).
The PTE applies to all companies in Singapore and continues every year as long as your business remains active.
Here’s what you get under the PTE:
- 75% tax exemption on the first S$10,000 of taxable income
- 50% tax exemption on the next S$190,000
This means even after your initial three-year startup period, you’ll still benefit from ongoing tax savings that help reduce your overall tax bill.
Common start up tax exemption Singapore mistakes and IRAS compliance tips
While the Startup Tax Exemption Scheme (SUTE) is generous, it’s important to stay compliant so you don’t lose your benefits. Here are a few common mistakes startups should avoid:
- Setting up a company that isn’t really active – The Inland Revenue Authority of Singapore (IRAS) may reject exemptions if your business isn’t trading or generating income.
- Running an investment or property-holding company – These are not eligible for SUTE.
- Not maintaining tax residency in Singapore – Key business decisions should be made locally for your company to remain tax resident.
- Setting up shell companies purely to claim tax exemptions – IRAS actively audits such cases and imposes penalties for abuse of the Startup Tax Exemption Scheme.
- Poor record keeping – Missing invoices, receipts, or unclear accounts can lead to issues during filing or audits.
- Reporting the wrong business start date – Your exemption period is based on when your business actually starts operations, not just when it was incorporated.
Avoiding these mistakes ensures your company stays compliant and continues to enjoy Singapore’s tax benefits.
How to apply for these exemptions in Singapore
You don’t need to submit a separate application to enjoy the Startup Tax Exemption (SUTE) or Partial Tax Exemption (PTE). These exemptions are applied automatically when you file your company’s annual tax return with IRAS.
When it’s time to file, submit Form C-S or Form C-S (Lite) through the myTax Portal. Make sure your company’s financial statements and shareholding details are up to date. IRAS may ask to review them if needed.
If you’re unsure about how to file or calculate your tax exemption, it’s a good idea to get help from a trusted tax services provider or accountant.
How Sleek helps with startup tax exemptions in Singapore
Navigating Singapore’s new start up tax exemption can feel complicated when you’re focused on growing your business, and that’s where Sleek comes in.
Sleek helps founders and small business owners incorporate, manage, and stay compliant in Singapore with ease. Our team of experienced tax and accounting specialists ensures your company:
- Meets all SUTE and PTE eligibility requirements
- Files corporate taxes correctly and on time with IRAS
- Maximises every available tax relief and incentive for your business type
- Stays compliant with Singapore’s latest regulations, without the admin stress
Sleek gives you the freedom to focus on your goals while we ensure your company stays compliant and benefits from every available tax savings.
Ready to simplify all the tax-related stuff?
FAQs
Do I need to apply for the startup exemption in Singapore?
No, there’s no separate application process. The exemption is applied automatically when you file your company’s Form C-S or Form C-S (Lite) through the IRAS myTax Portal, as long as you meet the eligibility requirements.
What happens after the three-year period ends for tax exemption in Singapore?
After the first three Years of Assessment, your company moves into the Partial Tax Exemption (PTE) scheme. Under PTE, you still receive tax relief each year, 75% exemption on the first S$10,000 and 50% on the next S$190,000 of taxable income, helping your business continue to save as it grows.
Can foreign-owned companies qualify for the new start up tax exemption?
Yes, as long as the company is incorporated and tax resident in Singapore. To maintain tax residency, key management and decision-making must take place in Singapore, such as board meetings and strategic planning.
Does the Singapore startup tax exemption apply if my company makes a loss?
No. The exemption only applies when your company makes taxable profits. However, even if your company makes a loss or has no income in a Year of Assessment, that year still counts toward your three-year Startup Tax Exemption (SUTE) period.
You can carry forward any unutilised losses to offset against future taxable income once your business becomes profitable.
Can startups combine the SUTE with other tax incentives in Singapore?
Yes. Startups can also benefit from other tax incentives for new companies in Singapore, such as deductible or allowable business expenses, capital allowances on equipment, and corporate income tax rebates announced in the national Budget.
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