CORPORATE TAX GUIDE · UPDATED AUGUST 2026
Start-up tax exemption vs partial tax exemption: what your company actually saves
Singapore taxes companies at a flat 17% — but almost nobody pays 17% on their first dollar, because one of two exemption schemes applies to every company. You do not choose between them; eligibility decides. The real questions are whether you qualify for the start-up scheme, what each is worth in dollars, and how not to waste one of your three start-up years.
THE TWO SCHEMES
Every company gets one of these.
Start-Up Tax Exemption (SUTE)
Qualifying new companies, for exactly their first 3 consecutive Years of Assessment.
- 75% exemption on the first S$100,000 of normal chargeable income
- 50% exemption on the next S$100,000
Maximum S$125,000 exempt per YA — worth up to S$21,250 in tax saved at 17%.
Partial Tax Exemption (PTE)
Every other company — including start-ups from their fourth YA onwards. No conditions to meet.
- 75% exemption on the first S$10,000 of normal chargeable income
- 50% exemption on the next S$190,000
Maximum S$102,500 exempt per YA — worth up to S$17,425 in tax saved at 17%.
WORKED NUMBERS
The same profit, under each scheme.
Tax payable before any rebate, at the 17% rate. Note where the start-up advantage settles: from S$100,000 of chargeable income upwards it is a constant S$3,825 per YA — real money, but not the windfall owners sometimes expect. The scheme’s deepest effect is at modest profits, where a new company’s effective rate at S$100,000 is 4.25%.
Chargeable income
Tax with SUTE
Tax with PTE
SUTE advantage
S$50,000
S$2,125
S$3,825
S$1,700
S$100,000
S$4,250
S$8,075
S$3,825
S$200,000
S$12,750
S$16,575
S$3,825
S$300,000
S$29,750
S$33,575
S$3,825
ELIGIBILITY
Who qualifies for the start-up scheme.
All four conditions must hold. Miss any of them in a given YA and that YA is assessed under the partial exemption instead — but it still counts as one of your three.
Incorporated in Singapore
The company must be incorporated here — a foreign company's Singapore branch does not qualify.
Singapore tax resident for that YA
Residency follows where control and management are exercised — broadly, where the board makes its decisions. A company run from overseas can fail this even though it is incorporated here.
20 shareholders or fewer, throughout the basis period
All share capital must be beneficially held directly by no more than 20 shareholders — and either all of them are individuals, or at least one individual holds at least 10% of the ordinary shares. The test runs for the whole basis period, not just at year end.
Not investment holding or property development
Companies whose principal activity is investment holding, or that undertake property development for sale, investment or both, are excluded outright — they go straight to the partial exemption.
THE THREE YAs
How the clock actually runs.
The clock is three YAs, not three calendar years
The exemption covers your first three consecutive Years of Assessment, and it starts counting from the first one — whether or not you claim anything in it. There is no deferring a YA to a better year.
A loss year still burns a YA
If the company makes a loss in YA one, there is no tax to exempt — and the YA is spent anyway. Many new companies burn one or two start-up YAs on losses and only enjoy the exemption once, in their last eligible year.
A long first financial period can cost you
A first accounting period longer than 12 months is split into two YAs for tax — which can consume two of your three start-up YAs in one filing. The financial year end you pick at incorporation decides this, which is why we treat FYE as a tax decision, not an admin one.
After YA three, PTE takes over automatically
Nothing to elect and nothing to apply for — from the fourth YA the company simply computes its tax with the partial exemption instead. The step-up in tax is predictable; budget for it.
YA 2026
This year’s rebate stacks on top.
50% CIT rebate for YA 2026
As announced at Budget 2026 and subsequently enhanced, taxpaying companies receive a rebate of 50% of corporate tax payable for YA 2026 — resident or not.
A S$2,000 cash grant for active employers
Active companies that employed at least one local employee in 2025 receive a CIT Rebate Cash Grant of S$2,000 — a floor of support that reaches companies with little or no tax payable. Where the grant applies, the rebate is reduced by the S$2,000 received.
Capped at S$40,000 combined
The maximum total benefit from the enhanced rebate and cash grant for YA 2026 is S$40,000 per company. The rebate is applied when IRAS assesses the return — there is no separate claim to file.
PITFALLS
The three ways companies waste the exemption.
Applying the exemption to the wrong number
The exemption applies to normal chargeable income — profit after all tax adjustments — not to revenue and not to accounting profit. The tax computation comes first; the exemption comes last.
Breaking the shareholding test mid-year
Taking corporate investment can end SUTE eligibility unless at least one individual still holds 10% of the ordinary shares — and the test runs through the whole basis period. Check before the round closes, not after.
Incorporating a new company to reset the clock
Routing income through fresh shell companies to farm the exemption is scheme abuse, and IRAS has said plainly that it audits for it and closes it down. The exemption is for genuinely new businesses, not new UENs.
Common questions.
Do I need to apply for the start-up tax exemption?
No. There is no application — you claim it in the company's corporate income tax return (Form C-S, Form C-S (Lite) or Form C), and the tax computation shows the exemption applied to normal chargeable income. IRAS assesses it from there.
How much tax does a new company actually pay?
At S$100,000 of normal chargeable income, a SUTE-qualifying company pays S$4,250 before any rebate — an effective rate of 4.25% against the 17% headline. At S$200,000 it pays S$12,750. For YA 2026, the enhanced 50% CIT rebate then roughly halves the bill, within the S$40,000 cap.
What happens after the first three Years of Assessment?
The company moves to the partial tax exemption automatically — 75% off the first S$10,000 and 50% off the next S$190,000 of normal chargeable income. At S$200,000 and above, the step-up costs S$3,825 more per YA than SUTE.
My company made a loss in its first year. Do I still use up a start-up YA?
Yes. The three YAs run consecutively from the first, claim or no claim. A loss year has nothing to exempt, but the YA is still spent — which is why the FYE decision at incorporation, and the timing of income in the early years, deserve actual thought.
Does my company qualify if it has a corporate shareholder?
It can — provided the company has no more than 20 shareholders throughout the basis period and at least one individual shareholder beneficially holds at least 10% of the ordinary shares. A company fully owned by another company does not qualify.
What counts as normal chargeable income?
Income taxed at the prevailing 17% corporate rate, after all tax adjustments — non-deductible expenses added back, capital allowances claimed, non-taxable income removed. It is the figure your tax computation produces, not your accounting profit.
Official sources
Exemption tiers and the YA 2026 rebate parameters are as published by IRAS, checked on 21 August 2026. Budget measures can change between YAs.
This guide provides general information, not tax advice. Worked figures assume all income is normal chargeable income taxed at 17% and exclude the YA 2026 rebate unless stated; eligibility for the start-up exemption and the rebate cash grant depends on the company’s circumstances, and Budget measures can change between Years of Assessment.
WRITTEN BY
Jacqueline May
Principal Accountant · Chartered Accountant (Singapore), ISCA member
Jacqueline is a Chartered Accountant (Singapore) and ISCA member, and the Principal Accountant at Synergy Accounting, a Singapore practice established in 2013. She works on corporate tax, GST and ACRA compliance for small and medium businesses — the filings, deadlines and judgement calls most owners would rather hand over. These guides are written from what she sees in practice.