Singapore Corporate Income Tax Rebate for Singapore Companies: What Do You Need to Know

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.

Differentiating Between Corporate Income Taxes and Corporate Tax Rates

Corporate income tax is a government-imposed levy on the profits earned by a company within the country of its operation. This tax serves as a crucial source of revenue for the government, enabling it to fund infrastructure and foster economic growth. On the other hand, the corporate income tax rate specifies the percentage of a company’s taxable profits that must be paid to the government. Singapore adopts a one-tier taxation system, where the standard corporate tax rate is 17%. However, the effective tax rate can be lower due to various incentives, rebates, and exemptions offered by the government to encourage business activities and investments.

Businesses Mandated to Pay Corporate Income Tax in Singapore

All Singapore-incorporated companies, foreign companies with a branch office or subsidiary, and those with a permanent establishment (such as a branch, office, or factory) in Singapore are liable to pay corporate income tax on income generated within the country. Additionally, foreign companies without a permanent establishment in Singapore but conducting business through services or rental income are also subject to corporate income tax, including income remitted or deemed to be remitted to Singapore.

Rebates Following Year Of Assessment (YA) 2024

In Budget 2024, a Corporate Income Tax (CIT) Rebate of 50% on tax payable will be granted for the Year of Assessment (YA) 2024. Companies employing at least one local employee in 2023 will receive a minimum benefit of $2,000 as a cash payout (CIT Rebate Cash Grant), with the combined maximum benefits of the CIT Rebate and Cash Grant capped at $40,000.

Singapore 2024 Budget: Other Notable Highlights

Tax Deduction for Renovation or Refurbishment (R&R)

The Budget proposes expanding the scope of qualifying expenditures include designer fees or professional fees for renovation or refurbishment tax deductions from YA 2025. This aims to encourage businesses to enhance their premises, improving operational capabilities and overall productivity.

Pillar Two of the Base Erosion and Profit Shifting (BEPS) 2.0 Initiative

Singapore will implement the Income Inclusion Rule (IIR) and Domestic Top-up Tax (DTT) from Pillar Two of the BEPS 2.0 framework starting in 2025, This initiative aims to limit tax competition by ensuring that multinational enterprises (MNEs) pay a minimum level of tax in each jurisdiction in which they operate. The IIR will apply to in-scope MNE groups parented in Singapore, in respect of the profits of their group entities operating outside Singapore. Conversely, the DTT will apply to in-scope MNE groups with respect to the profits of their group entities operating within Singapore.

Refundable Investment Credit (RIC) Scheme

The Budget introduces the Refundable Investment Credit (RIC) scheme to incentivize businesses making significant investments in high-value economic activities, such as new productive capacity, digital and professional services, supply chain management, headquarters or centers of excellence, commodity firm activities, R&D and innovation, and decarbonization solutions.

Offering up to 50% support on qualifying expenses like capital expenditure, manpower, training, professional fees, and intangible assets over ten years, the credits can offset CIT payable, with unused credits refundable in cash within four years.

Extension and Revision of Incentives

The tax incentives for funds managed by Singapore-based fund managers (qualifying funds) under Sections 13D, 13O, and 13U of the Singapore Income Tax Act (ITA) will be extended until December 31, 2029. From January 1, 2025, Section 13O will include Singapore Limited Partnerships. The economic criteria for Qualifying Funds under the sections 13D, 13O and 13U schemes will be revised. 

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 income	Percentage exempted from tax	Amount exempted from tax
First S$100,000	75%	S$75,000
Next S$100,000	50%	S$50,000

Partial Exemption

Chargeable income	Percentage exempted from tax	Amount exempted from tax
First S$10,000	75%	S$7,500
Next S$190,000	50%	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.