It is the Government’s policy to keep our tax regime competitive to make Singapore an attractive business hub to encourage new investments and to spur entrepreneurship. In Singapore, there is only one rate of tax imposed on companies. This is currently set at 17%.

The Government seeks to provide start-ups with every opportunity to thrive and succeed.  In this regard, a start-up tax exemption scheme was introduced in 2004 to provide newly-incorporated companies generous exemption on their taxable profits. The Government also recognises that small and medium-sized businesses are an important component of a vibrant economy. To help such companies to grow and establish themselves, the Government has put in place a partial tax exemption scheme, which lowers the taxable profits of these companies. While the partial tax exemption scheme is available to all companies, the exemption thresholds are designed to target the benefits at small and medium-sized companies.

As companies become successful and grow, they tend to organise themselves into multiple holding companies, subsidiaries and associate companies to accommodate different business units and to limit liabilities. To facilitate risk taking and entrepreneurial activities for such companies, the Government introduced the loss transfer system of group relief. Under Singapore’s group relief system, current year unutilised losses, donations, and unabsorbed capital allowances of related companies may be transferred to related companies within the group. This reduces the overall tax burden for the whole group.

Singapore has a territorial system which taxes income received on a remittance basis.  Double taxation is eliminated through the provision of a foreign tax credit for taxes suffered by the taxpayer abroad on the remitted income. To mirror and simplify the foreign tax credit administration for businesses, the foreign-sourced income exemption regime was put in place since 1st June 2003.

The corporate income tax regime with its competitive corporate tax rate and broad-based features underline the Government’s commitment towards making Singapore a place where enterprises with substantive operations may thrive.