The practical takeaway
Check company tax residency and shareholder conditions before relying on an exemption.
01 / Understand the period
The scheme applies for the first three consecutive years of assessment of a qualifying new start-up company. The relevant taxable income, not gross revenue or incoming bank transfers, forms the basis of the calculation.
02 / Check the ownership rules
IRAS requires Singapore incorporation and tax residence for the year of assessment. The company must meet its beneficial shareholding conditions: no more than 20 shareholders, all individuals, or at least one individual holding at least 10% of issued ordinary shares.
03 / Know the excluded activities
IRAS excludes companies principally engaged in investment holding and companies undertaking property development for sale, investment or both. A newly registered company is not automatically eligible just because it is small.
04 / Calculate the exemption carefully
Under the current scheme described by IRAS, 75% of the first S$100,000 of normal chargeable income and 50% of the next S$100,000 may be exempt for the first three qualifying years of assessment. A tax exemption reduces chargeable income; it does not simply reduce gross receipts. Check the applicable year and the latest IRAS rules before filing.
05 / File even when relief applies
IRAS explains that the claim is made through the relevant estimated chargeable income and company income tax return sections. Maintain supporting calculations, directors’ records and records substantiating expenses. Relief is not a substitute for proper accounting.
Questions founders ask
Does every new company qualify?
No. Tax residence, beneficial ownership and excluded activity rules matter.
Is the exemption on revenue?
No. It is calculated using qualifying normal chargeable income.
Must a qualifying company still file tax returns?
Yes, subject to any applicable filing waiver; check the current IRAS obligations.
Primary sources
Regulatory rules change. Check the linked official guidance for your circumstances and the current filing period.
Editorial note: This independently prepared overview is educational and is not a substitute for regulated professional advice. No personal founder experience or service relationship is claimed.