Singapore consistently ranks as one of the most business-friendly economies in the world. Beyond its world-class infrastructure and strategic location, one of its biggest attractions is its corporate tax system. With a low flat rate, startup-friendly exemptions, no capital gains tax, and a wide network of Double Taxation Agreements (DTAs), Singapore offers clarity and certainty for companies planning regional or global expansion.
This guide explains how Singapore’s corporate tax works — and why entrepreneurs and multinational firms continue to choose the city-state as their base of operations.
A Competitive 17% Corporate Tax Rate
Singapore’s corporate income tax rate is set at a flat 17%, one of the lowest in Asia. Unlike tiered systems in other countries, the flat rate applies equally to both local and foreign companies, making tax planning straightforward and transparent.
This competitive rate allows businesses to retain more of their profits and reinvest in growth — a major advantage for global entrepreneurs.
Startup Tax Exemption (SUTE) Scheme
To encourage entrepreneurship, Singapore offers generous tax relief for newly incorporated companies under the Startup Tax Exemption (SUTE) Scheme:
- 75% exemption on the first SGD 100,000 of chargeable income
- 50% exemption on the next SGD 100,000
This scheme applies for the first three consecutive years of assessment.
Eligibility criteria include:
- The company must be incorporated in Singapore.
- It must be a tax resident in Singapore.
- It must have no more than 20 shareholders, with at least one individual holding 10% or more of the shares.
- It cannot be an investment holding or property development company.
After the first three years, companies may benefit from the Partial Tax Exemption (PTE) scheme, which continues to reduce effective tax liability.
No Tax on Dividends or Capital Gains
Singapore operates a single-tier corporate tax system, which means:
- Profits are taxed only once at the corporate level.
- Dividends distributed to shareholders are exempt from further taxation.
- No capital gains tax is levied on the sale of shares, property, or other assets.
For holding companies, family offices, and investors, this framework is highly attractive as it minimizes “leakage” of profits through additional taxation.
Tax Treatment of Foreign-Sourced Income
Foreign-sourced income — such as dividends, branch profits, or service income — may be taxable when remitted into Singapore. However, exemptions are available if conditions are met, including:
- The income was subject to tax in the foreign jurisdiction at a rate of at least 15%.
- The income was already taxed and is not further exempted.
- The Comptroller of Income Tax in Singapore is satisfied that the exemption is fair and reasonable.
This ensures Singapore remains attractive for regional headquarters managing cross-border operations.
Double Taxation Agreements (DTAs)
Singapore has signed over 90 Double Taxation Agreements worldwide. These treaties:
- Prevent the same income from being taxed in both Singapore and another country.
- Clarify taxing rights between jurisdictions.
- Offer reduced withholding tax rates for cross-border payments like dividends, interest, and royalties.
For businesses with global operations, this network provides certainty and reduces overall tax costs.
Targeted Tax Incentives
Beyond its low tax rate, Singapore also provides tax incentives to encourage investment in strategic industries, such as:
- Financial services and FinTech
- Maritime and logistics
- Research & development and innovation
- Green energy and sustainability
These incentives align with Singapore’s national growth strategies and create opportunities for forward-looking businesses.
Key Takeaways
Singapore’s corporate tax regime is designed to support growth, attract investment, and provide certainty. Businesses benefit from:
- A low flat 17% corporate tax rate
- Startup and SME tax exemptions
- No dividend tax or capital gains tax
- Over 90 DTAs to avoid double taxation
- Industry-specific incentives for innovation and sustainability
For global entrepreneurs, this makes Singapore more than just a business destination — it’s a launchpad for international success.
Next Steps
Planning to set up your company in Singapore? Getting your tax strategy right from the beginning is essential.
Contact InvestinAsia today and take your first step toward building a strong foundation for your business in Southeast Asia.
