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Tax Exemption for Start-ups
…….. new 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 from Year of Assessment 2005.
For who?
New companies that meet these
criteria:
From Year of Assessment (YA)
2005 to YA 2008:
Ø incorporated
in Singapore (except companies limited by guarantee)
Ø a tax resident
of Singapore in that YA
Ø has its total
share capital beneficially held, directly or indirectly, by no more than 20
individuals throughout the basis period relating to that YA.
With effect from YA 2009:
Ø
incorporated in Singapore (except companies limited by guarantee)
Ø
a tax resident of Singapore in that YA
Ø has no more than 20 shareholders throughout the basis period for that
YA where:
ü all of the
shareholders are individuals beneficially holding the shares in their own
names; OR
ü at least one
shareholder is an individual beneficially holding at least 10% of the
issued ordinary shares of the company
With effect from YA 2010:
Ø
incorporated in Singapore (including companies limited by guarantee)
Ø
a tax resident of Singapore in that YA
Ø
has no more than 20 shareholders throughout the basis period for that
YA where:
ü all of the
shareholders are individuals beneficially holding the shares in their own
names; OR
ü at least one
shareholder is an individual beneficially holding at least 10% of the
issued ordinary shares of the company
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 consecutive years of tax assessment from YA2005.
Starting from YA 2008, a
further 50% exemption is given on the next S$200,000 of the normal
chargeable income (excluding Singapore franked dividends) for each of the
first 3 consecutive YAs.
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 YA of a qualifying
company is the YA relating to the basis period during which the company is
incorporated.
For more info
Tax Exemption for Start-ups
by Inland Revenue Authority of Singapore
(IRAS)
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