Singapore is renowned for being one of the most business-friendly countries in the world, offering a favorable tax regime and supportive policies for startups. Entrepreneurs looking to incorporate a business in Singapore can benefit from multiple tax incentives designed to reduce financial burdens, encourage innovation, and stimulate growth. Here are the top five tax incentives every startup should know about.
1. Startup Tax Exemption (SUTE) Scheme
The Startup Tax Exemption (SUTE) scheme is one of the most significant incentives for new businesses. Qualifying startups can enjoy:
- 100% tax exemption on the first S$100,000 of chargeable income for the first three consecutive years.
- 50% exemption on the next S$200,000 of chargeable income.
Eligibility requires the company to be a Private Limited Company (Pte Ltd) incorporated in Singapore, with no more than 20 shareholders, and at least one shareholder being an individual. This exemption allows startups to retain more capital for reinvestment, helping them grow efficiently.
2. Partial Tax Exemption for Companies
In addition to the SUTE, Singapore offers partial tax exemptions for companies beyond the startup phase. For all companies:
- 75% exemption on the first S$10,000 of chargeable income.
- 50% exemption on the next S$190,000 of chargeable income.
This incentive reduces the effective corporate tax rate and benefits companies that are scaling beyond their initial startup years. It encourages reinvestment and business expansion while maintaining a competitive tax environment.
3. Productivity and Innovation Credit (PIC) Scheme
The Productivity and Innovation Credit (PIC) scheme is designed to reward companies that invest in innovation, automation, and productivity-enhancing activities. Startups can claim tax deductions or cash payouts on qualifying expenses, including:
- Research & development (R&D) activities
- Acquisition of IT or automation equipment
- Training of employees to enhance skills
By leveraging the PIC scheme, startups can significantly reduce taxable income while investing in technologies that improve business efficiency.
4. Angel Investor Tax Deduction (AITD) Scheme
The Angel Investor Tax Deduction (AITD) scheme encourages private investors to fund early-stage startups. Investors can receive tax deductions of up to 50% of their investment in qualifying startups, capped at S$500,000 per year.
For startups, this means better access to capital as investors are incentivized to fund innovative ventures. While this benefit targets investors directly, startups benefit indirectly by attracting more funding opportunities.
5. Double Tax Deduction for Internationalization (DTDi)
The Double Tax Deduction for Internationalization (DTDi) scheme encourages companies to expand overseas. Startups can claim 200% tax deductions on eligible expenses incurred for activities such as:
- Overseas market expansion
- Participation in trade fairs and business missions
- Market research abroad
This incentive allows startups to grow internationally while optimizing tax liabilities, supporting strategic expansion beyond Singapore.
Singapore’s tax regime provides significant advantages for startups, combining low corporate tax rates with targeted incentives that support innovation, growth, and international expansion. By leveraging these schemes — SUTE, partial tax exemptions, PIC, AITD, and DTDi — startups can retain more capital, attract funding, and focus on scaling efficiently.
Entrepreneurs looking to incorporate a business in Singapore should engage a professional corporate service provider to navigate eligibility requirements, claim appropriate tax incentives, and ensure full compliance with Singapore tax regulations.
With proper planning, these tax incentives can provide a strong foundation for long-term success in Singapore’s vibrant business ecosystem.