Singapore Corporate Income Tax Rebate

Singapore is known for its low tax rates and incentives for companies to invest in the country. To help businesses grow, Singapore offers various incentives, including the Singapore Corporate Income Tax Rebate.

In this article, we’ll discuss the Singapore Corporate Income Tax Rebate and other tax exemptions and incentives available to Singaporean companies. Whether you’re starting a new business or looking to expand your existing operations, understanding these incentives can help you maximize your returns and achieve long-term success in Singapore.

What Is the Singapore corporate income tax rebate?

The Singapore Corporate Income Tax Rebate was a scheme that aids in cost-cutting and restructuring for companies. On February  14 2023, Singapore’s Deputy Prime Minister and Minister for Finance, Mr Lawrence Wong, delivered the Singapore Budget 2023 which indicated that there is no corporate income tax rebate proposed for the year of assessment (YA) 2023.The Singapore Budget 2023 also retains the corporate income tax rate at 17% for the same YA, with a partial tax exemption available on the first S$200,000 of a company’s normal chargeable income.

Singapore Tax Exemptions and Incentives for Singapore Companies

Start-up Tax Exemption (SUTE)

The Singapore Government’s Start-Up Tax Exemption Scheme (SUTE) provides special tax exemptions to eligible start-ups for the first three years of assessments. By reducing corporate tax rates, the scheme aims to assist new companies with their taxes.

Start-up companies that qualify for SUTE can have their chargeable income lowered by up to 75% in the first three years. To be eligible for SUTE, companies must meet the following criteria:

  1. The Singapore company must have been incorporated in Singapore.
  2. The company should have paid taxes in Singapore for the specific YA.
  3. The total share capital of the company must be owned by a maximum of 20 shareholders in the period taken as a basis for that year. The shareholders must all be individuals, or there should be at least one individual shareholder who owns a minimum of 10% of the company’s issued ordinary shares.

Partial Tax Exemption

If the business is not eligible for the Singapore Tax Exemption (SUTE) within the first 3 years, or if it is in its fourth year or beyond, it may still receive some tax relief with the Partial Tax Exemption (PTE) Scheme. Here’s how it works:

  • If the chargeable income is within the first S$10,000, you’ll be granted a 75% exemption, which implies that only 4.25% of that amount will be subjected to taxation.
  • If the chargeable income falls between the range of S$10,000 and S$200,000 (or the next S$190,000), you’ll be granted a 50% exemption for the next S$190,000, and only 8.5% of that amount will be subjected to taxation.

Singapore Corporate Income Tax Rebate (CIT Rebate)

Businesses incorporated in Singapore were previously eligible for a Corporate Income Tax Rebate of up to S$15,000 per year. Intended to lower the business costs of companies and support their restructuring, the Singapore corporate income tax rebate was available for the YAs from 2013 to 2020.

The Singapore corporate income tax rebate is no longer available for YA 2023. This is based on the Singapore Budget 2023, which was delivered by Singapore’s Deputy Prime Minister and Minister for Finance, Mr Lawrence Wong, on February 14 2023.

The corporate income tax rebate is designed to assist businesses that are liable to pay taxes. However, small and medium-sized enterprises (SMEs), who are the primary beneficiaries of the rebate, may not be able to take full advantage of it if they do not have taxable profits in the 2023 fiscal year. To address this issue and address the immediate cash flow requirements of these businesses, the Singapore government is exploring alternative measures that are tailored to support SMEs and help them remain competitive.

Despite the aforementioned points, the corporate income tax rate remains unchanged at 17% for both domestic and foreign companies. Additionally, companies are still eligible for a partial tax exemption on the first $200,000 of their normal chargeable income.

New Start-Up Companies

Chargeable incomePercentage exempted from taxAmount exempted from tax
First S$100,00075%S$75,000
Next S$100,00050%S$50,000

Partial Exemption

Chargeable incomePercentage exempted from taxAmount exempted from tax
First S$10,00075%S$7,500
Next S$190,00050%S$95,000

Foreign Sourced Income Exemption Scheme (FSIE)

Although foreign-sourced income for Singaporean companies is subject to taxation, the Foreign-Sourced Income Exemption Scheme (FSIE) can significantly reduce tax responsibilities in this area. The following particular forms of foreign-sourced income are eligible for exemptions under the FSIE program:

  1. Foreign branch profits – These refer to the profits that a Singaporean company generates through its business operations as a registered branch in an overseas country.
  2. Foreign-sourced service income – This is the income earned by a taxpayer who is a resident of Singapore, from services given through a fixed place of operation located in a foreign country.
  3. Foreign-sourced dividends – For the tax exemption, this is defined as a dividend that is paid by a company that is not a tax resident of Singapore.

Pioneer Certificate Incentive (PC)

Aside from the Singapore Corporate Income Tax Rebate, corporations in Singapore that manufacture high-tech products or provide qualifying services can apply for tax exemption for five to fifteen years per qualifying project or activity under the Pioneer Certificate Incentive (PC). 

This incentive promotes large-scale manufacturing activities that generate economic benefits. Eligible entities must be registered and operating in Singapore. During the tax relief period, the company’s income from the pioneer trade will be exempt from tax.

Development and Expansion Incentive (DEI)

Once the initial tax incentive period for pioneers ends, businesses can qualify for the Development and Expansion Incentive (DEI). This program rewards companies that invest in activities that add more value, such as projects that advance key industries like manufacturing, with a five to ten percent tax break.

Corporations that create new high-value-added projects, expand or upgrade their operations, or increase their activities after their pioneer period may apply for a lower tax rate of not less than five percent for up to ten years under the DEI. The tax relief period for each qualifying project or activity is limited to a maximum of 40 years.

How We Can Help

At Premia TNC, we understand that navigating the complex world of tax exemptions and incentives can be overwhelming for businesses. That’s why we offer a comprehensive suite of services to help you not only understand the available options but also to ensure that you receive the maximum benefit from them.

Our team of experienced tax experts is well-versed in Singapore taxes and the latest regulations to guide you through the application process with ease. We can also provide ongoing support to ensure that you remain compliant with all relevant tax laws and regulations.

Contact us today to learn more about how we can help your business thrive in Singapore.

Frequently Asked Questions

Q1. How do I know which tax exemptions and incentives my company is eligible for?

The eligibility criteria for each tax exemption and incentive vary. A tax professional can help you determine which ones your company may qualify for and guide you through the application process.

Q2. Are there any other tax incentives available in Singapore?

Yes. Aside from the Singapore Corporate Income Tax Rebate, there are several other tax incentives available, such as investment allowances and many more. The IRAS website contains information on different tax incentives that companies can access, and you can visit the website to learn more about them.

Q3. When should I apply for tax exemptions and incentives?

It's best to apply for tax exemptions and incentives as early as possible since the application process can take some time. It's also important to note that some incentives have specific deadlines and may only be available for a limited time.