Singapore is consistently ranked among the most business-friendly countries in the world. With a competitive corporate tax rate of 17%, a transparent regulatory framework, and strong government support, it offers an ideal environment for entrepreneurs and growing enterprises.
Beyond the low tax rate, small businesses and startups benefit from a wide range of targeted tax incentives designed to reduce costs, support innovation, and encourage international expansion.
This article provides a comprehensive overview of the main tax schemes available to small businesses in Singapore, together with their eligibility requirements.
Start-Up Tax Exemption Scheme (SUTE)
Overview:
The SUTE provides new companies with substantial concessions from tax during their first three Years of Assessment (YA) by exempting a portion of the first $200,000 of chargeable income.
Benefits:
- 75% exemption on the first $100,000 of normal chargeable income.
- 50% exemption on the next $100,000.
Eligibility:
- Incorporated and tax resident in Singapore.
- Not an investment holding company or one engaged in property development for sale/investment.
- Applies only to the first three consecutive YAs.
Partial Tax Exemption Scheme (PTE)
Overview:
Once the SUTE period ends, companies can continue to benefit from ongoing relief under the PTE.
Benefits:
- 75% exemption on the first $10,000 of normal chargeable income.
- 50% exemption on the next $190,000.
Eligibility:
- Available to all companies generating active business income.
- No restrictions by industry or size.
R&D Tax Deductions
Overview:
Designed to encourage innovation, this scheme provides enhanced deductions for qualifying research and development (R&D) activities.
Benefits:
- 250% deduction for qualifying R&D expenditure conducted in Singapore.
- Additional allowances for automation projects and intellectual property registration.
Eligibility:
- Company must be tax resident in Singapore.
- R&D must be carried out in Singapore.
- Work must address scientific or technological uncertainty (routine improvements are not eligible).
Double Tax Deduction For Internationalisation (DTDi)
Overview:
Supports Singapore companies in exploring overseas opportunities.
Benefits:
- 200% tax deduction on qualifying internationalisation expenses, such as overseas trade fairs, marketing trips, and feasibility studies for overseas expansion.
Eligibility:
- Company must be incorporated and tax resident in Singapore.
- Activities must fall within pre-approved categories, or require prior approval from Enterprise Singapore or the Singapore Tourism Board.
GST Schemes And Startup SG Support
Overview:
Provides cashflow advantages for import/export businesses and funding support for startups.
Benefits:
- Major Exporter Scheme (MES) – Suspension of GST on imports for exporters.
- Import GST Deferment Scheme (IGDS) – Defer import GST until monthly GST return filing.
- Startup SG and Angel Investor Schemes – Co-funding, mentorship, and investor tax deductions to support high-growth companies.
Eligibility:
- GST schemes – Company must be GST-registered and have a strong compliance record.
- MES – Must be a major exporter with significant zero-rated supplies.
- IGDS – Must regularly import goods with consistent GST compliance.
- Startup SG – Companies under 5 years old, incorporated in Singapore, and engaged in scalable, growth-oriented activities.
Conclusion
Singapore’s tax framework gives small businesses a strong competitive edge. Whether it’s through generous start-up exemptions, ongoing relief, support for innovation, or schemes that ease cashflow and encourage expansion abroad, SMEs can take advantage of a wide variety of government-backed measures. The key is to understand the eligibility requirements and plan early so that these incentives align with your business growth strategy.
Five Key Takeaways For Small Businesses
- Start Strong – maximise savings in your first three years through the Start-Up Tax Exemption (SUTE).
- Maintain Relief – benefit from the Partial Tax Exemption (PTE) even after the start-up phase.
- Invest In Innovation – leverage enhanced R&D deductions and IP incentives to scale sustainably.
- Expand Overseas – tap into the Double Tax Deduction for Internationalisation (DTDi) when entering new markets.
- Optimise Cashflow And Funding – use GST deferment schemes and Startup SG programmes to ease liquidity and attract investors.