Start-Up Tax Exemption (SUTE): what new Singapore companies actually get
The practical conclusion first: if you’ve just incorporated a Singapore company, you may pay far less corporate tax in your first three years than you expect. Under the Tax Exemption Scheme for New Start-Up Companies (often called SUTE), a qualifying company generally gets 75% exemption on its first $100,000 of normal chargeable income, plus a further 50% on the next $100,000 — a maximum exemption of $125,000 each Year of Assessment (YA) — for its first three consecutive YAs. The catch is that not every company qualifies, and the exemption is not automatic to keep if your facts change.
Here’s what SME founders need to know, subject to your company’s specific facts and IRAS rules.
How much is the exemption?
For YA 2020 onwards, a qualifying start-up’s exemption works like this (IRAS):
- First $100,000 of normal chargeable income — 75% exempt ($75,000)
- Next $100,000 — 50% exempt ($50,000)
- Maximum exemption: $125,000 per YA
“Normal chargeable income” is income taxed at the prevailing corporate tax rate of 17%. The scheme applies only for your first three consecutive YAs. From the fourth YA onwards, your company moves to the Partial Tax Exemption (PTE) instead (more on that below).
Who qualifies?
To claim SUTE, your new start-up company must generally (IRAS):
- Be incorporated in Singapore;
- Be a tax resident of Singapore for that YA; and
- Have its total share capital beneficially held directly by no more than 20 shareholders throughout the basis period for that YA, where either all shareholders are individuals, or at least one shareholder is an individual holding at least 10% of the issued ordinary shares.
Setting this up correctly from day one matters — our company incorporation team can structure your shareholding with SUTE in mind.
Which companies are excluded?
Most genuine trading and services SMEs qualify — but two types of company are excluded from SUTE (IRAS):
- Companies whose principal activity is investment holding; and
- Companies that undertake property development for sale, investment, or both.
If your company falls into either group, it doesn’t get SUTE — but it may still be eligible for the Partial Tax Exemption.
What happens after year three? (Partial Tax Exemption)
From the fourth YA onwards, companies move to the Partial Tax Exemption (PTE), which is available to companies generally (unless they’re still claiming SUTE) (IRAS):
- First $10,000 — 75% exempt ($7,500)
- Next $190,000 — 50% exempt ($95,000)
- Maximum exemption: $102,500 per YA
Don’t forget the Corporate Income Tax Rebate
Separately from the exemption schemes, IRAS granted a Corporate Income Tax Rebate of 50% of tax payable for YA 2025, capped at $40,000 (less any $2,000 CIT Rebate Cash Grant where applicable) — the same as YA 2024 (IRAS). Rebates like this are announced year by year, so check the current YA’s position before relying on it.
Common mistakes we see
- Assuming you qualify without checking the shareholder test. A single corporate shareholder holding everything can break the “at least one individual holding 10%” condition.
- Investment holding structures. Founders sometimes set up a holding company and are surprised it’s excluded from SUTE.
- Miscounting the “first three YAs.” The three-year window is tied to your YAs, not calendar years — getting this wrong affects when PTE kicks in.
The bottom line
SUTE can meaningfully reduce a genuine start-up’s tax bill in its first three years, but eligibility turns on your incorporation, residency, shareholding and activity. The figures above are current IRAS positions for YA 2020 onwards and should be applied to your specific facts.
Speak with BTA to review your position and make sure your ECI and Form C-S/C corporate tax filing claim the exemptions your company is actually entitled to. Call +65 6250 4321 or visit businesstaxaccountancy.com.sg.
General information only, based on IRAS guidance current at the time of writing and subject to your company’s specific facts. This is not tax advice.
