Tax Exemption Scheme for New Start-Up Companies
Qualifying Conditions for Start-Up Companies
The tax exemption is open to all new companies except these two types of companies:
- A company whose principal activity is that of investment holding; and
- A company which undertakes property development for sale, for investment, or for both investment and sale.
To qualify for tax exemption for start-ups, eligible companies must satisfy these three qualifying conditions:
- The company must be incorporated in Singapore;
- The company must be a tax resident in Singapore for that YA;
- The company’s total share capital is beneficially held directly by no more than 20 shareholders throughout the basis period for that YA where:
- all of the shareholders are individuals; or
- at least one shareholder is an individual holding at least 10% of the issued ordinary shares of the company.
Determining the First YA of a Qualifying Company
The exemption is for the company’s first three consecutive YAs. The first YA is the YA relating to the basis period during which the company is incorporated.
The first YA of a company depends on the financial year end chosen and the closing date of the first set of accounts. Hence, the first YA of a company may be different from another company that is incorporated on the same day.