Tax Exemptions on Start-Ups

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 falling within Year of Assessment 2005 to 2009.

 For who?

 New companies that meet these criteria:

  •   incorporated in Singapore

  •   a tax resident of Singapore in the Year of Assessment

  •   has no more than 20 shareholders throughout the basis period for the Year of Assessment

  •   all shareholders of the company are individuals throughout the basis period for the
      Year of Assessment

 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 years of tax assessment falling within
      Year of Assessment 2005 to 2009.

 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 Year of Assessment of a qualifying company is the Year of Assessment
      relating to the basis period during which the company is incorporated.

       E.g. Company A is incorporated in Singapore on 15 April 2003. The accounting
              year-end of the company is 30 June. The first Year of Assessment of Company A
              is YA2004 (basis period 15 April 2003 to 30 June 2003).

              If Company A meets the qualifying criteria for YA2005 (i.e. second Year of
              Assessment), Company A would enjoy full tax exemption of up to S$100,000 on
              its normal chargeable income (excluding Singapore franked dividends) for YA2005.

              Similarly, if Company A meets the qualifying criteria for YA2006 (i.e. third Year
              of Assessment), Company A would enjoy full tax exemption of up to S$100,000 on its
              normal chargeable income (excluding Singapore franked dividends) for YA2006.

For More Information

Tax Exemption for Start-ups
Inland Revenue Authority of Singapore (IRAS)