Singapore Fact-File Part 5:
Small Business Incentive Programs

5.4 Singapore Individual Business Tax Holidays

Tax holidays are available for individuals in business if they choose to incorporate;

Since 2005, an incentive scheme has been in place whereby if a business is incorporated in Singapore, is tax resident for the years of assessment in question, and has no more than 20 shareholders (where all of the shareholders are individuals beneficially and directly holding the shares in their own names, or at least one shareholder is an individual shareholder, with a direct holding of at least 10% of the issued ordinary shares of the company), it receives a 100% tax exemption on the first SGD100,000 of its chargeable income for the first three consecutive years of assessment (and since 2008, a further 50% exemption on the next SGD200,000 for those years).

The calculation of chargeable income should exclude Singapore franked dividends, or dividends paid out of company profits that have already been taxed in Singapore.

Where an incorporated start-up does not qualify for the full exemption, it can usually receive a partial exemption. The Inland Revenue Service of Singapore provides further details on the partial exemption scheme (and the changing thresholds over the years) here.

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