2026 Singapore Tax Incentive Guide for Businesses

Singapore leads by example in the region as it offers a highly business-friendly environment for investors and entrepreneurs. The Corporate Income Tax (CIT) rate is 17% but most companies end up paying much less after applying tax incentives.

The reason is that Singapore actively offers tax reductions and incentives to keep attracting global businesses. However, the tax environment is changing. New global minimum tax requirements and rising carbon taxes mean that business owners must be proactive in keeping themselves informed.

This guide breaks down the available tax incentives in Singapore that you can maximise for your business, and learn how to adapt to these tax updates.

The Start-Up Tax Exemption (SUTE)

If you are a newly incorporated company, the Start-Up Tax Exemption (SUTE) scheme offers tax relief during your first few years.

This scheme applies to the first three consecutive Years of Assessment (YAs) for eligible companies.

How It Works

The exemptions are calculated as follows (YA 2020 onwards):

• 75% exemption on the first S$100,000 of chargeable income
• 50% exemption on the next S$100,000 of chargeable income

Who is Eligible?

To qualify for SUTE, a start-up must meet the conditions below.

• The company has no more than 20 shareholders throughout the YA.
• All shareholders are individuals who directly hold the shares.
• At least one (1) shareholder directly holds at least 10% of the ordinary shares.

Companies mainly involved in investment holding or property development for sale or investment are generally not eligible for this scheme.

The Partial Tax Exemption (PTE)

If your company is past its first three years or if you don’t qualify for SUTE (such as investment holding companies), you automatically fall under the Partial Tax Exemption (PTE) scheme.

Under PTE (from YA 2020 onwards):

• The first S$10,000 of chargeable income receives a 75% exemption.
• The next S$190,000 receives a 50% exemption.

In short, only chargeable income above S$300,000 is taxed at the full corporate tax rate.

Deductions for Growth and Operations

Aside from tax exemptions, Singapore also offers deductions to help businesses manage the costs of starting up and improving their operations.

Pre-Commencement Expenses

Normally, expenses are deductible only after a company starts earning income. But in Singapore, new companies can claim tax-deductible revenue expenses incurred before they begin their operations.

The commencement date is simply the day the company earns its first dollar. This tax incentive was designed to allow businesses to recover some of their setup and preparation costs.

Renovation and Refurbishment (R&R)

Companies can also claim deductions on qualifying renovation and refurbishment expenses under Section 14N of the Income Tax Act.

R&R expenditure that qualifies for tax deduction is capped at S$300,000 per relevant three-year period.

Capital Allowances (CA)

Because depreciation is not deductible, Singapore permits businesses to claim Capital Allowances instead, for the wear and tear of qualifying fixed assets.

• 100% write-off for these assets: computers, prescribed automation equipment, and low-value assets.
• Accelerate write-off over two years: on the amount incurred in obtaining the asset during the basis period for YA 2024
• Write-off over three years: for most other fixed assets such as office equipment.
  • CA is given in the form of annual allowance (AA):
    • For assets that are bought with cash: annual AA = ⅓ of the asset’s cost
    • For assets bought under hire purchase: annual AA = ⅓ of the principal payment and deposit paid wherever applicable
• Write-off over the prescribed working life of the asset:
  • If the asset’s working life is ≤ 12 years, you can choose between 6 or 12 years to spread these deductions over.
  • If the asset’s working life is 16 years, you can choose from 6, 12, or 16 years. Remember that your choice is final and irrevocable.
  • This only applies to assets that are purchased in YA 2023 onwards or earlier assets if you have not started claiming allowances yet.
  • You must choose the number of years when filing taxes for the YA in which the asset was bought.

Tax Incentives For Various Industries

Singapore also offers various grants and tax incentives to encourage growth in sectors like advanced manufacturing, fintech, biotech, and green energy, through the Economic Development Board (EDB) and other government agencies.

Global Trader Programme

GTP is a tax incentive for global trading companies.

If your company trades commodities internationally and sets up operations in Singapore, you can pay only 5%, 10%, or 15% on your trading income for five (5) years.

Here are the types of income that the lower tax rate applies to:

1. Buying and selling physical goods
2. Brokering physical commodity deals
3. Trading derivatives
4. Doing financing related to commodity trades

Your company can qualify if it meets the requirements listed below.

1. Is already established and doing international trading
2. Has a broad global trading and distribution network
3. Has a good performance track record

And for you to get the incentive, your company must commit to the following:

• Running major trading activities from Singapore
• Hiring skilled professionals here
• Handling big strategic functions here like strategy, risk management, finance, and logistics
• Using Singapore’s services, such as banking, logistics, and arbitration

Finance and Treasury Centre (FTC) Incentive

The FTC is a tax perk that encourages companies to set up their finance and treasury headquarters in Singapore; basically, the place where they manage money for their global operations.

A company can apply if it is registered in Singapore and it has international business operations.

If your company is approved as an FTC, it gets:

1. Lower tax rates (8% or 10%) – this tax rate applies to money the FTC earns from:
   1. Providing finance/treasury services to its related companies overseas, and
   2. Doing treasury activities for itself, using funds from approved sources
2. No withholding tax on certain loans – the FTC does not need to pay withholding tax on interest paid for:
   1. Loans from banks or financial institutions outside Singapore, and
   2. Loans or deposits from its related companies overseas

Financial Sector Incentive (FSI)

The FSI is a special tax incentive that Singapore gives to licensed financial institutions like banks, fund managers, and capital market firms that set up and grow their operations in Singapore.

This incentive is for big financial institutions, especially banks that meet the following requirements:

1. Handle things like lending, treasury, capital markets, and fund management
2. Have headquarters or key functions based in Singapore
3. Serve regional clients across Asia or ASEAN

Are you wondering what a typical FSI company looks like? A typical bank under FSI:

1. Has around 100 employees
2. At least 70% are skilled professionals doing real financial work (front/middle office)
3. Has senior leaders overseeing Asia/ASEAN operations
4. Spends about S$250 million a year running the business
5. Uses Singapore as a hub for strategic activities like:
   1. Risk management
   2. Compliance
   3. Technology
   4. Training
   5. Corporate planning
   6. Hosting client events

Pioneer Incentive

The Pioneer Incentive gives certain companies up to 15 years of tax exemption on income earned from a special approved activity called the pioneer trade.

But some companies also run other businesses at the same time. These are called separate trades. Because only the pioneer trade is tax-exempt, special rules apply to make sure companies don’t shift profits around to avoid tax.

Development and Expansion Incentive (DEI) for Services

The DEI for Services is a tax incentive that rewards companies for doing high-value service activities in Singapore (not manufacturing and not headquarters work).

If your company grows its service operations in Singapore, you can get a lower tax rate (5%, 10%, or 15%) on the new income you earn from those activities.

To know if your company can apply, it must satisfy the following conditions:

1. It is registered in Singapore.
2. It is doing qualifying service activities (e.g., IT services, R&D, engineering services, consultancy, medical services, logistics, financial services, etc.)

The government looks at your past three years of income from these service activities. This becomes your base income.

Any income above that base gets the lower tax rate. Your base income and non-qualifying income are still taxed at the normal 17% rate.

Let’s say your company was eligible for this lowered tax rate. Your proactive efforts do not end here. You must commit to the following for five years.

1. Hire more skilled employees in Singapore
2. Spend more in Singapore (operating expenses)
3. Carry out at least one qualifying service activity

The higher the tax discount, the higher the hiring and spending commitments.

How Can Businesses Adapt?

These many tax incentives in Singapore are more than enough to encourage businesses to trade, innovate, and grow. But it can be quite tricky when you solely carry the burden of understanding who qualifies and how to apply, especially for schemes like the Pioneer Incentive and Capital Allowances.

To avoid mistakes and make sure you get the benefits you’re entitled to, it’s best to work with an accounting services provider. They can help you file taxes, handle bookkeeping, and apply for the right incentives so that your company can reduce tax costs and maximise savings.