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������ý’s flat corporation tax rate of 17% is usually the first thing that comes to mind when discussing business in the Lion City. And while that has clear benefits in simplicity and monetary value, there is so much more to ������ý’s corporate tax system that is of immense benefit to investors. With a well-developed culture of creating an economy that is as investor-friendly as possible, ������ý has spent decades creating legislation that cuts through red tape to encourage investment and innovation. With that sheer depth of the regulatory framework comes an element of complexity — there are simply so many ways to take advantage of ������ý’s tax system, it can be hard to know where to start. With that being said, let’s look at the foremost corporate tax exemptions that you can expect to benefit from when you invest in ������ý.

������ý Tax Exemption 1: Start-up Tax Exemption (SUTE)

The SUTE is an excellent example of ������ý’s commitment to making starting a business as easy as possible. Qualifying start-ups under the Start-up Tax Exemption (SUTE) will receive a 75% exemption on the first $100,000 of chargeable income and a 50% exemption on the next $100,000 for the first three consecutive Years of Assessment (YAs) from incorporation, as per 2024 regulations. The SUTE will be applicable for the company’s initial three consecutive YAs, with the exemption starting from the first YA, even if the company has not yet generated any chargeable income. So, if the company begins generating chargeable income only in its third YA, it will be eligible for a single year of tax exemption under the SUTE. In order to qualify for SUTE, the start-up must:

1. Be incorporated in ������ý
2. Be tax resident in ������ý for that financial year
3. Ensure the company’s total shares are held by a maximum of 20 shareholders throughout that financial year where:
   • All of the shareholders are individuals, or;
   • At least one of the shareholders is an individual holding at least 10% of the issued ordinary shares.

Qualifying start-ups incorporating from 2020 onwards will have SUTE applied as such:

Chargeable Revenue	Percentage Exempted from Tax
First $100,000	75%
Next $100,000	50%

������ý Tax Exemption 2: Partial Tax Exemption

After those three years, all new companies and start-ups will also qualify for a Partial Tax Exemption (PTE). Companies that did not qualify for SUTE will still be able to benefit from the PTE, assuming you meet the criteria. From 2020 onwards, qualifying companies will benefit from:

• A 75 per cent exemption on the first $10,000 of normal chargeable income, and;
• An additional 50 per cent exemption on the next $190,000 of normal chargeable income.
• The maximum tax exemption a company can receive is $102,500 for each YA.

������ý Tax Exemption 3: Corporate Income Tax (CIT) Rebate

Taking things further, all companies incorporated in ������ý will benefit from a Corporate Income Tax (CIT) rebate up to the value of $15,000 per annum. As of 2024, the Corporate Income Tax (CIT) rebate has been phased out, and companies will no longer receive the previous annual rebates. Businesses must now focus on other tax incentives like the Partial Tax Exemption (PTE) scheme for tax relief.

������ý Tax Exemption 4: Foreign Sourced Income Exemption Scheme (FSIE)

While foreign-sourced income for ������ý companies is subject to tax in ������ý, the Foreign Sourced Income Exemption Scheme (FSIE) does a lot to mitigate tax responsibilities in this area. To benefit from the FSIE, the foreign income must have already been taxed in the source country, at a headline corporate tax rate of at least 15%. The FSIE also needs to be shown to be beneficial to the particular resident taxpayers. A ������ý incorporated company can benefit from the FSIE on the following revenue streams:

• Foreign-sourced service income — any income that is generated by a resident taxpayer for services from a foreign country.
• Foreign branch profits — any profits from a ������ý incorporated company that is registered as a branch of a foreign parent company. Non-trade or non-business income from a foreign branch does not qualify.
• Foreign-sourced dividends — any dividends paid by a foreign company that has been deposited into a foreign custodian account before being sent into ������ý. Any dividends must be remitted into ������ý within one year of it being sent to the custodian account.

������ý Tax Exemption 5: Pioneer Certificate Incentive (PC)

The Pioneer Certificate Incentive (PC) is for any company that has been approved as a pioneer in its field. This generally means that the company’s expertise is more advanced than what is currently available in ������ý. Qualifying companies will receive a concessionary tax rate of 5 per cent for up to five years.

������ý Tax Exemption 6: Development and Expansion Incentive (DEI)

The Development and Expansion Incentive (DEI) offers a reduced tax rate to companies that promise to benefit the wider economy of ������ý. Qualifying companies will be subject to a reduced tax rate of 5 per cent over the next ten years. While we’ve done our best to provide an overview of the tax exemptions available in ������ý, the advantages of doing business in ������ý cannot be fully told in such a short article. There are a myriad of other tax exemptions and financial advantages available to forward-thinking investors who know where to look. If you’d like to learn more from our team of expert lawyers, bankers, and accountants, please do take the time to reach out to us — we are sure to save you time, money, and headaches.

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