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FAQ - Singapore Taxation
“He is wise who knows the sources of knowledge - who knows who has written and where it is to be found.” - A. A. Hodge
- Question : What is an Exempt/Deemed Exempt Private Limited Company?
Answer : Exempt/Deemed Exempt Private Limited Company is a private company, which has less than 20 shareholders with none of them a corporate shareholder. However, for tax purposes a newly incorporated company with up to 90% shareholding can still qualified for the 3-year tax exemption benefits (Please refer to the next point below). Should the company turnover exceed S$5million it will no longer be deemed exempt. The status is not specially conferred. It is simply a status by operation of law.
- Question : What is the 3-year full tax exemption for newly incorporated Exempt Private Limited company?
Answer : All newly incorporated Private Limited company with less than 90% corporate shareholding qualified for 3-year tax exempt profits on the following basis:
| Net Profit |
Exempt amount |
Tax Amount in SGD |
Effective Tax Rate |
| % |
SGD |
First S$100,000 |
100% |
$100,000 |
$0 |
0.00% |
Next S$200,000 |
50% |
$100,000 |
$17,000 |
8.50% |
Total tax payable for the first S$300,000 net profit is S$17,000,
5.67% ETR(Effective Tax Rate).
- Question : What is a Private Limited Company?
Answer : A Private Limited company is company limited by shares pursuant to and governed by the Singapore Companies Act. The shareholders cannot be held personally liable for the debts of Limited Companies, with their liability limited to the amount of shares that have been issued to them, which they have not fully paid for. The number of shareholders is limited to fifty or less.
- Question : What is Partial tax exemption for non-exempt company?
Answer : Partial tax exemption for non-exempt company and for companies which had already utilised the 3-year tax exemption benefit, the tax will be calculated on the following basis:
| Net Profit |
Exempt amount |
Tax Amount in SGD |
Effective Tax Rate |
| % |
SGD |
First S$10,000 |
75% |
$7,500 |
$425 |
4.25% |
Next S$290,000 |
50% |
$145,000 |
$24,650 |
8.50% |
Net profit from $300,000 above will be at 17% tax rate.
Total tax payable for the first S$300,000 net profit is S$25,075,
8.36% ETR (Effective Tax Rate).
By having individual shareholder holding at least 10% shares:
Additional Tax Saving for the 3 years of exemption period will be
[S$25,075 – S$17,000] * 3 = S$24,225 |
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