Start-ups that meet certain qualifying conditions do not need to pay tax on the first S$100,000 of chargeable income (excluding Singapore franked dividends) for any of the first 3 years of tax assessment from Year of Assessment 2005.
For who?
New companies that meet these criteria:
- From Year of Assessment (YA) 2005 to YA 2008:
- incorporated in Singapore (except companies limited by guarantee)
- a tax resident of Singapore in that YA
- has its total share capital beneficially held, directly or indirectly, by no more than 20 individuals throughout the basis period relating to that YA.
- With effect from YA 2009:
- incorporated in Singapore (except companies limited by guarantee)
- a tax resident of Singapore in that YA
- has no more than 20 shareholders throughout the basis period for that YA where:
- all of the shareholders are individuals beneficially holding the shares in their own names; OR
- at least one shareholder is an individual beneficially holding at least 10% of the issued ordinary shares of the company
For what?
- To help start-ups preserve their cash flow and profits.
How much?
- Tax exemption on the first S$100,000 of chargeable income (excluding Singapore franked dividends) for any of the first 3 consecutive years of tax assessment from YA2005.
- Starting from YA 2008, a further 50% exemption is given on the next S$200,000 of the normal chargeable income (excluding Singapore franked dividends) for each of the first 3 consecutive YAs.
Things to note
- Singapore franked dividends are dividends paid out of the profits of a company on which tax has already been paid in Singapore.
- The first YA of a qualifying company is the YA relating to the basis period during which the company is incorporated.