Singapore is one of the most attractive destinations for businesses looking to expand globally. A key reason behind this success is the government’s incentives policy, which provides companies with generous tax exemptions, rebates, and grants to support growth, innovation, and internationalisation.

Statutory Incentives

Statutory incentives are automatic benefits provided under Singapore’s tax framework. They do not require prior approval from government authorities and apply across multiple industries. These schemes are designed to reduce tax burdens and encourage business growth.

Start-up Tax Exemption Scheme (SUTE)

To support entrepreneurship, Singapore offers newly incorporated companies tax exemptions during their first three years of assessment:

Taxable Income（SGD） Tax Exempt（%） Tax Exempt（SGD）
Fist $100,000 75% $75,000
Next $100,000 50% $50,000
Total $200,000 $125,000

Exclusions:

  • Companies engaged in investment holding.
  • Companies involved in property development for sale or investment.

Eligibility requirements:

  • Must be incorporated in Singapore.
  • Must be a tax resident of Singapore for the relevant Year of Assessment (YA).
  • Total ordinary shares must be held by ≤20 shareholders, and at least one must be an individual holding ≥10% shares.

Partial Tax Exemption for Companies

Companies that do not qualify for the Start-up Tax Exemption Scheme can still benefit from the Partial Tax Exemption scheme.

Taxable Income（SGD） Tax Exempt（%） Tax Exempt（SGD）
Fist $100,000 75% $75,000
Next $190,000 50% $95,000
Total $200,000 $1,025,000

Corporate Income Tax Rebate

The corporate income tax rebate is a tax relief measure provided by the Singapore government for eligible companies. Such rebates are typically announced during the national budget statement.

For example, in Singapore’s 2024 Budget, to help companies manage rising costs, all taxable companies (whether tax residents or not) will receive a 50% rebate on corporate income tax payable for the Year of Assessment 2024, capped at SGD 40,000.

Year of Assessment (YA) Corporate Income Tax Rebate Cap (SGD)
2024 50% A cash payout of $40,000 minus a $2,000 rebate (if applicable)
2020 25% $15,000
2019 20% $10,000
2018 40% $15,000
2017 50% $25,000
2016 50% $20,000
2013-2015 30% $30,000
Corporate income tax applies to income taxed at concessionary rates, but not to income subject to final withholding tax.

Foreign-Sourced Income Exemption (FSIE) Scheme

With increasing globalization, many Singapore tax-resident companies earn income from overseas. Foreign-sourced income may be subject to double taxation: once in the foreign country and again when the income is remitted to Singapore. Singapore tax residents can use the FSIE scheme to mitigate this issue.

Under Sections 13(7A) to 13(11) of the Singapore Income Tax Act (ITA), companies may benefit from the FSIE scheme, provided that:

  • The corporate tax rate in the foreign country is at least 15%;
  • The income has been taxed in the foreign country; and
  • The company’s auditor is satisfied that the exemption will be beneficial to the Singapore tax resident.

Foreign-Sourced Income includes:

  • Dividends from overseas: Dividends paid by a non-Singapore tax resident company, originating from abroad.
  • Profits of foreign branches: Any profits generated by a Singapore company’s branch registered overseas, excluding non-trade or non-business income of the foreign branch.
  • Income from overseas services: Any income earned by a tax resident from providing services abroad

Singapore Foreign Tax Credit (FTC)

Singapore has signed 27 Free Trade Agreements (FTAs) and over 80 Double Taxation Agreements (DTAs). These agreements aim to facilitate cross-border trade and reduce the costs of overseas expansion for Singapore companies. Companies can claim deductions in Singapore for expenses incurred abroad, such as certain market development and investment costs, including manpower expenses during overseas expansion.

Under the Inland Revenue Authority of Singapore (IRAS) Foreign Tax Credit (FTC) scheme, companies can claim a credit on the same income, allowing taxes paid overseas to be offset against Singapore tax payable.

To apply for the Foreign Tax Credit (FTC) scheme, a company must meet the following conditions:

  • Be a tax resident of Singapore for the relevant basis year;
  • Have paid or be liable to pay tax on the same income in a foreign jurisdiction;
  • The income must be subject to tax in Singapore;
  • The company must not be in a loss-making position;
  • The company has a permanent establishment overseas.

When a company has a permanent establishment (PE) overseas and earns income through it, that income is generally taxed abroad. The Foreign Tax Credit (FTC) is granted only if the income is also subject to tax in Singapore.

Companies earning passive income:

Passive income received from outside Singapore (such as interest or dividends) is generally taxed in the foreign jurisdiction in the year it is received. The Foreign Tax Credit (FTC) is also granted when such income is subject to tax in Singapore in the year it is remitted.

Double Tax Deduction for Internationalisation (DTDi)

When companies expand their business overseas, qualifying expenses incurred for market expansion and investment development activities are eligible for tax relief. Under Section 14B of the Income Tax Act, the maximum claimable amount per year is SGD 150,000. This scheme will be extended until 31 December 2025.

According to Sections 14B, 14H, and 14I of the Income Tax Act, Singapore companies can claim automatic double tax deductions on qualifying expenses incurred during the relevant period for certain eligible activities, up to the specified expenditure limit.

Companies may apply to Enterprise Singapore (ESG) or the Singapore Tourism Board (STB) for the following double tax deductions:

  1. Qualifying expenses exceeding the prescribed expenditure cap incurred in eligible market expansion and investment development activities;
  2. Expenses for other eligible activities (subject to specific conditions).

For qualifying expenses incurred in the following nine eligible activities, companies can claim double tax deductions up to the prescribed expenditure cap without prior approval from ESG or STB:

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  • Overseas business development trips/study missions;
  • Overseas investment study missions;
  • Overseas trade fairs;
  • Local trade fairs approved by ESG or STB;
  • Virtual trade fairs approved by ESG;
  • Product/service certifications approved by ESG;
  • Overseas advertising and promotional activities;
  • Packaging design targeting overseas markets;
  • Advertising in approved local industry publications.

Why Singapore’s Government Incentives Policy Matters?

Singapore’s government incentives policy helps companies in three main ways:

  • Reduces tax costs for both start-ups and established firms.
  • Encourages overseas expansion through DTAs, FTAs, and DTDi schemes.
  • Supports innovation and competitiveness with rebates and exemptions tailored to global business needs.

These policies are part of Singapore’s broader strategy to remain a leading hub for international trade and investment.

How SIG Can Help?

Understanding and maximising government incentives policies in Singapore can be complex. SIG’s tax and accounting experts help businesses:

  • Assess eligibility for statutory incentives.
  • Apply for schemes such as FTC and DTDi.
  • Ensure compliance with IRAS requirements.
  • Structure tax planning to reduce double taxation risks.

Singapore’s government incentives policy provides businesses with valuable opportunities to lower tax costs, expand internationally, and maintain competitiveness. Whether you are a start-up or a multinational, leveraging these policies effectively can make a significant difference.

Get in touch with SIG today to maximise your benefits under Singapore’s government incentives policy and achieve sustainable business growth.