What are the Tax Incentives for Start-ups in Singapore?

Singapore offers a range of tax incentives to encourage entrepreneurship and innovation. This is particularly for start-ups in their early stages of development. Here are some of the tax incentives that start-ups in Singapore may be eligible for:

1. Start-up Tax Exemption Scheme (SUTE): This scheme is available to companies that are incorporated in Singapore. Such companies should have no more than 20 individual shareholders. Under this scheme, eligible companies can claim a tax exemption on the first S$100,000 of normal chargeable income. This can be claimed for each of their first three consecutive years of assessment.

2. Partial Tax Exemption (PTE): Companies that do not qualify for the SUTE can still claim a partial tax exemption on their taxable income. Under this scheme, eligible companies can claim a tax exemption on 75% of the first S$100,000 of normal chargeable income, and 50% of the next S$100,000 of normal chargeable income.

3. Tax Incentive for Angel Investors (AIS): This scheme encourages investments in early-stage start-ups by providing tax incentives to angel investors. Under this scheme, investors who invest at least S$100,000 in qualifying start-ups can claim a tax deduction of 50% of their investment amount for the first two years.

4. Early Stage Venture Fund (ESVF) Scheme: This scheme encourages investments in early-stage technology start-ups by providing tax incentives to venture capital firms. Under this scheme, qualifying venture capital firms can enjoy tax exemptions on income derived from their investments in qualifying start-ups.

These are just a few of the tax incentives available to start-ups in Singapore. It’s worth noting that eligibility criteria, application procedures, and other details may vary depending on the specific scheme.

A closer look at the criteria required to be eligible for the Start-up Tax Exemption scheme:

1. The company must be incorporated as a private limited company in Singapore.

2. The company must be a tax resident in Singapore for the year of assessment in which the tax exemption is claimed. A company is a tax resident if the control and management of its business are exercised in Singapore.

3. The company must have less than 20 individual shareholders throughout the basis period for the year of assessment in which the tax exemption is claimed. This limit does not include shareholders which are corporations.

4. All individual shareholders of the company must be individuals who are not carrying on a trade or business or individuals who are holding shares as investments.

5. The company must be a Singapore tax resident company. Its annual revenue for the financial year must not exceed S$5 million.

Under the SUTE scheme, eligible companies can claim a tax exemption on the first S$100,000 of normal chargeable income for each of their first three consecutive years of assessment. For further details, do reach out to us today to take advantage of these incentives.