Singapore Business Registration and Company Incorporation Specialists
 
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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

  1. What is a Private Limited Company?
  2. What is an Exempt Private Limited Company (a subcategory of a Private Limited Company)?
  3. What is the 3-year full tax exemption for newly incorporated Exempt Private Limited company?
  4. What is partial tax exemption for a non-exempt company?

  1. 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, Cap 50. Shareholders are not held personally liable for the debts of Limited Companies, with their liability limited to the capital they have invested in return for registered shares. The number of shareholders is limited to fifty or less.

  2. Question : What is an Exempt/Deemed Exempt Private Limited Company?
    Answer : An Exempt/Deemed Exempt Private Limited Company is a private company which has less than 20 shareholders, with none of them being a corporate shareholder. *NB - For tax purposes, however, a newly incorporated private limited company with at least 10% of its share capital held by an individual/individual stakeholders (aggregate) can still qualify for IRAS’s 3-year tax exemption scheme for start-ups. (Excludes investment holding companies). For more information, please refer to the following FAQ.

    Should the Company’s turnover (or its group turnover) exceed S$10million, it will no longer be deemed ”exempt“. The status is not specially conferred. It is simply a status by operation of law.

  3. Question : What is the 3-year tax exemption scheme for newly incorporated “Exempt Private Limited” companies?
    Answer : Eligible newly incorporated Private Limited companies qualify for IRAS’s 3-year tax exemption scheme on the first S$300,000 of their net profit, as illustrated in the table below:

    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% $200,000 $17,000 8.50%
    Taxable Income $300,000 $17,000 5.67%
    *$300,001 17%

    Under this scheme, the total tax payable for the first S$300,000 net profit is S$17,000 – 5.67% ETR (Effective Tax Rate).

    *Tax on profits from $300,001 onwards will be taxed at the regular corporate tax rate of 17%.

  4. Question : What is the Partial tax exemption scheme for non-exempt companies?
    Answer : Non-exempt newly incorporated companies and companies more than 3 years old (that have already utilised their entitlement) are entitled to the following partial tax exemption on their net profit:

    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%
    Taxable income $152,500 $25,075 8.36%
    *$300,001 17%

    Total tax payable for the first S$300,000 net profit is S$25,075, 8.36% ETR.

    *Tax on profits from $300,001 onwards will be taxed at the regular corporate tax rate of 17%.

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