Start-Up Tax Exemption Singapore (SUTE): Eligibility, Amounts and Worked Examples

The start-up tax exemption (SUTE) in Singapore exempts 75% of a qualifying new company's first $100,000 of chargeable income and 50% of the next $100,000, so up to $125,000 is exempt in each Year of Assessment (YA). It applies only to the company's first three consecutive YAs. On $100,000 of chargeable income, the tax is $4,250, an effective rate of 4.25%, before any rebate.

SUTE has to be claimed, and the company must pass residency and shareholder tests for each YA. This guide shows founders and bookkeepers who qualifies, which YAs count and exactly how the tax is worked out. All amounts are in Singapore dollars, based on IRAS guidance as at November 2026.

Key takeaways

• Amount: 75% of the first $100,000 and 50% of the next $100,000 of normal chargeable income, so up to $125,000 is exempt per YA.
• Duration: the first three consecutive YAs, starting with the YA whose basis period includes the date of incorporation. Loss-making and dormant YAs still count, and unused exemption is lost.
• Eligibility: incorporated and tax resident in Singapore, with no more than 20 shareholders throughout the basis period, all individuals or including one individual with at least 10%. Investment holding and property development companies incorporated after 25 February 2013 are excluded.
• YA 2026: the 50% CIT Rebate applies to the tax left after SUTE, capped at $40,000 in total benefits. None has been announced for YA 2027.
• Claim: indicate SUTE in your ECI and answer 'Yes' to the start-up exemption question in Form C-S, C-S (Lite) or C by 30 November.

Table of Contents

1. How Much Is the Start-Up Tax Exemption in Singapore?
2. Who Qualifies for SUTE?
3. Which Years Count as Your First Three YAs?
4. How Much Tax Does a New Company Pay in Singapore?
5. SUTE Worked Examples Step by Step
6. How to Claim SUTE in Your Tax Filings
7. Pitfalls That Can Cost You the Exemption
8. When Should You Get Professional Help?
9. Frequently Asked Questions
10. Official Sources

How Much Is the Start-Up Tax Exemption in Singapore?

IRAS calls SUTE the Tax Exemption Scheme for New Start-Up Companies. Like the partial tax exemption (PTE), it sits in section 43 of the Income Tax Act 1947 and applies only to normal chargeable income, meaning income taxed at 17%. Every company not on SUTE gets PTE, including SUTE companies from their fourth YA.

The schemes differ only between $10,000 and $100,000, where SUTE exempts 75% instead of 50%. So SUTE is worth at most $3,825 a year more than PTE before rebates ($22,500 × 17%), or $11,475 over three YAs: worth claiming correctly, but rarely worth restructuring a business around.

Pages that quote "full exemption on the first $100,000" describe the scheme up to YA 2019, which no longer applies.

Who Qualifies for SUTE?

To claim SUTE for a YA, the company must meet all four conditions for that YA, so it can qualify in one year and fail the next:

1. Incorporated in Singapore, including companies limited by guarantee. Foreign companies and their Singapore branches cannot claim SUTE, though they still get PTE.
2. Tax resident in Singapore for that YA. Residence follows control and management, which IRAS defines as the making of decisions on strategic matters, usually judged by where the board meets to make them. Incorporation alone is not enough.
3. No more than 20 shareholders, beneficially holding the shares directly, throughout the basis period. Either all of them are individuals, or at least one individual holds at least 10% of the issued ordinary shares. For a company limited by guarantee the test applies to members: all individuals, or one individual whose contribution on a winding up, under the Memorandum of Association, is at least 10% of the total.
4. Not an excluded company. A company incorporated after 25 February 2013 is excluded if its principal activity is investment holding, or if it develops property for sale, for investment or both. IRAS's reasoning is that investment holding companies earn passive income such as dividends and interest, and property developers usually set up a new company for each development. They still get PTE.

How the Shareholder Test Works

A company converted from a sole proprietorship or partnership can also qualify. If you are weighing that switch, see our comparison of sole proprietorship vs Pte Ltd tax.

Which Years Count as Your First Three YAs?

Companies are taxed on a preceding-year basis: a YA's basis period is the financial year ending in the previous year. The first YA is the one relating to the basis period in which the company was incorporated, and SUTE covers that YA and the next two, profitable or not. A YA with a loss or no income, such as before trading starts, still uses up one of the three.

Your year end also decides how many months of profit fall inside those YAs. IRAS's examples for a company incorporated on 1 July 2023 show the effect:

The last column is our arithmetic on IRAS's dates. A first financial year of exactly 12 months gives the full 36 months. A shorter first year, or first accounts longer than 12 months (which are split, leaving a short first YA), can cut the window to little more than 24 months: a company incorporated on 15 December with a 31 December year end has a first YA of just 17 days. This matters most if you expect early profits.

First Accounts Longer Than 12 Months

A basis period cannot exceed 12 months, so longer first accounts are split across two YAs, by time apportionment if income and expenses cannot be traced to each period. In IRAS's example, a company incorporated on 15 April 2024 with first accounts to 30 June 2025 has YA 2025 (15 April to 30 June 2024), YA 2026 (1 July 2024 to 30 June 2025) and YA 2027 (1 July 2025 to 30 June 2026) as its SUTE years. If that 442-day period made $88,400 of adjusted profit that could not be traced, $15,400 (77 days) would fall in YA 2025 and $73,000 (365 days) in YA 2026, each with its own exemption.

SUTE is only one factor in choosing a year end; our guide on how to choose a financial year end covers the others.

How Much Tax Does a New Company Pay in Singapore?

Chargeable income is accounting profit after tax adjustments, capital allowances, losses brought forward and donations. Here is the tax before any rebate, with SUTE in the first three YAs and PTE afterwards:

Effective rates are exact or rounded to two decimals. Up to $100,000, a SUTE company pays a flat effective 4.25%. Under PTE the same $100,000 costs $8,075, so at steady profits the bill nearly doubles in the fourth YA.

YA 2026 Rebate Applied After SUTE

For YA 2026 (financial years ending in 2025), IRAS gives a Corporate Income Tax (CIT) Rebate of 50% of the tax payable after exemptions, with total benefits capped at $40,000. Active companies that made CPF contributions in 2025 for at least one local (Singapore Citizen or PR) employee, other than shareholder-directors, received $2,000 of it early as a tax-free CIT Rebate Cash Grant. Their Notice of Assessment (NOA) shows the computed rebate minus $2,000, or no rebate if the computed rebate is $2,000 or less. IRAS computes all of this, so do not deduct it yourself.

Grant recipients pay $2,000 more on the NOA but already hold the $2,000, so the total benefit is the same, unless half the tax is under $2,000, when the grant is worth more. As at November 2026, no CIT Rebate has been announced for YA 2027. Our corporate tax calculator runs these steps on your own numbers.

SUTE Worked Examples Step by Step

These companies are hypothetical. Each follows IRAS's order: chargeable income, less the exempt amount, tax at 17%, then any rebate.

Example A: Second YA With No Local Staff

Company A was incorporated on 1 March 2024 and closed its first accounts on 31 December 2024, so YA 2026 (the year to 31 December 2025) is its second SUTE YA. Its two founders are its directors, own all the shares and are its only staff.

There is no cash grant, because shareholder-directors do not count as local employees for it. The effective rate is 2.69%.

Example B: Third YA With the Cash Grant

Company B is in its third SUTE YA with chargeable income of $280,000 for YA 2026. It paid CPF in 2025 for one local employee who is not a shareholder, so it received the $2,000 cash grant in 2026.

Company B's total benefit is $13,175 (the $2,000 grant plus the $11,175 rebate), so its net tax is $13,175, an effective 4.71%.

Example C: Losses Must Be Used First

Company C was incorporated on 1 July 2023 with a 30 June year end, so its SUTE YAs are 2025, 2026 and 2027. Its shareholders have not changed, so its tax losses carry forward.

IRAS does not let a company hold back brought-forward losses to make fuller use of SUTE, so YA 2026 is spent with nothing exempt. With no YA 2027 rebate announced, $9,775 is the bill, and from YA 2028 Company C moves to PTE.

How to Claim SUTE in Your Tax Filings

1. Check the conditions for the whole basis period: the shareholder history in ACRA's Electronic Register of Members (updated whenever a share change is filed on Bizfile), board minutes showing where strategic decisions were made, and the principal activity.
2. Work out chargeable income. Start from net profit before tax, take out non-taxable income, add back non-deductible expenses such as depreciation, then deduct capital allowances, brought-forward losses and approved donations. Interest and other separate-source income remain taxable. Do not deduct the exemption or the rebate.
3. File ECI within 3 months of your year end, unless revenue is $5 million or below and ECI is nil. Declare ECI before the exemption and indicate SUTE in the File ECI digital service on myTax Portal.
4. File Form C-S, C-S (Lite) or C by 30 November, answering 'Yes' to the start-up exemption question (Item 36 in IRAS's YA 2026 Form C-S notes). The person who submits it needs the Corppass 'Approver' role for Corporate Tax (Filing and Applications). SUTE does not count as exempt income when deciding which form you file.
5. Check the Notice of Assessment. IRAS computes the exempt amount and, for YA 2026, the rebate. If it is wrong, object within 2 months of the NOA date through the 'Revise/ Object to Assessment' digital service.

IRAS sends the first Form C-S/C filing notification by May of the second year after the year of incorporation. But if your first accounts close in the year of incorporation and the company starts business or earns income that year, you must file for the next YA anyway, requesting the return with IRAS's 'Request for Income Tax Return for Newly Incorporated Companies' form. Our new company compliance checklist lists the other first-year deadlines.

Pitfalls That Can Cost You the Exemption

• Incorporating long before you trade. A dormant first YA still counts as one of the three.
• Holding the shares through a company. Only direct holdings count, so a trading company wholly owned by the founder's holding company fails the test; holding at least 10% personally fixes it. The same trap applies when a corporate investor comes in: if no individual is left with 10%, SUTE is lost for that whole YA.
• Decisions made overseas. A locally resident director meets the Companies Act 1967 requirement but does not, by itself, make the company tax resident. For virtual board meetings, IRAS generally treats decisions as made in Singapore if at least 50% of the directors with authority to make them, or the chairman, are physically in Singapore. Minute where each meeting takes place.
• Spending allowances in your cheapest years. Losses must be used first, but most capital allowance claims can be deferred (the section 19 initial allowance cannot), and IRAS notes that companies generally defer them when they qualify for SUTE. Up to $100,000 of chargeable income, SUTE taxes each dollar at an effective 4.25%; the same allowance used later against income taxed at an effective 8.5% under PTE, or 17% above $200,000, saves two to four times as much, provided those profits arrive.
• Splitting one business across new companies. IRAS treats it as abuse of the scheme to allocate a profitable business's income to shell companies so that each stays within the exemption bands, or to have shell companies charge it fees or expenses without bona fide commercial reasons.
• Ticking the wrong box. Correct a wrong claim through 'Revise/ Object to Assessment'. A qualifying voluntary disclosure made within one year of the 30 November filing deadline attracts no penalty.

When Should You Get Professional Help?

Many companies need no help with SUTE itself. With a few individual shareholders, directors based in Singapore, first accounts of 12 months or less and Form C-S (Lite) eligibility, the claim is a single 'Yes' in the return.

Get your position checked if your first accounts run past 12 months, a company or investor is on the register, directors live overseas, you have losses or allowances to plan around, or the company holds investments or property. Losing SUTE for a YA costs up to $3,825 in extra tax before rebates.

We prepare the tax computation and file Form C-S or C-S (Lite); see our tax services. If you have not incorporated yet, we can set up the shareholding and year end with SUTE in mind as part of company incorporation.

Frequently Asked Questions

Does an investment holding company qualify for SUTE?

No, if it was incorporated after 25 February 2013 and its principal activity is investment holding. Companies that develop property for sale, for investment or for both are excluded on the same basis. IRAS's reasoning is that investment holding companies earn passive income such as dividends and interest, while developers usually set up a new company for each project. They can still claim the partial tax exemption on their normal chargeable income.

Do I need to apply for the start-up tax exemption?

There is no separate application, but the exemption must be claimed. Indicate that the company qualifies when you file its ECI, and answer 'Yes' to the start-up exemption question in Form C-S, Form C-S (Lite) or Form C, due by 30 November. IRAS then computes the exempt amount. Always declare chargeable income before deducting the exemption.

What is the effective tax rate for a new company in Singapore?

With SUTE, a new company pays an effective 4.25% on chargeable income up to $100,000, 6.375% at $200,000 and 12.75% at $500,000, before rebates. For YA 2026 the 50% CIT Rebate roughly halves these rates until its $40,000 cap applies. Under the partial tax exemption, the rate at $100,000 is 8.075%. The headline corporate tax rate is 17%.

Does the CIT rebate apply on top of SUTE?

Yes. For YA 2026, the 50% CIT Rebate is calculated on the tax payable after the start-up exemption, with total benefits capped at $40,000 per company. A company that received the $2,000 CIT Rebate Cash Grant gets the computed rebate less $2,000 on its assessment, or no rebate if the computed rebate is $2,000 or less. As at November 2026, no CIT Rebate has been announced for YA 2027.

What happens after the start-up tax exemption ends?

From its fourth YA, the company automatically gets the partial tax exemption: 75% of the first $10,000 and 50% of the next $190,000 of normal chargeable income, up to $102,500 a year. At $100,000 of chargeable income, tax rises from $4,250 to $8,075 before any rebate. Companies that never qualified for SUTE get the partial exemption from the start.

Can a company with a corporate shareholder claim SUTE?

Yes, if at least one individual directly holds at least 10% of the issued ordinary shares throughout the basis period and the company has no more than 20 shareholders. A company owned 90% by a holding company and 10% by its founder can qualify. A company wholly owned by another company cannot, even if the founder owns that company, because only direct holdings count.

Can a foreign-owned company claim the start-up tax exemption?

Yes, if it is incorporated in Singapore, controlled and managed from Singapore, and passes the shareholder test. Foreign individual shareholders are fine. A company wholly owned by a foreign parent company fails the shareholder test, and a company whose strategic decisions are made overseas is not tax resident. Foreign companies and their Singapore branches cannot claim SUTE at all.

Can a sole proprietorship that converts to a company claim SUTE?

Yes. IRAS confirms that a company converted from a sole proprietorship or partnership can claim the start-up exemption if it meets all the qualifying conditions in its first three consecutive YAs. Those YAs are counted from the new company's incorporation, not from when the original business started, so choose the new company's year end with that in mind.

Official Sources

• IRAS: Corporate Income Tax Rate, Rebates and Tax Exemption Schemes (SUTE and PTE amounts, IRAS FAQs and the YA 2026 CIT Rebate)
• IRAS: Basic Guide to Corporate Income Tax for Companies (how to determine a company's first YA)
• IRAS: Explanatory Notes to Form C-S for YA 2026 (PDF) (SUTE qualifying conditions and first accounts longer than 12 months)
• IRAS: Examples on computing the tax exemption for companies (PDF)
• IRAS: Tax residency of a company (control and management, virtual board meetings)
• IRAS: Estimated Chargeable Income (ECI) filing (declaring ECI before exemptions)
• IRAS: Capital allowances (deferring capital allowance claims)

About Tax Filing SG — We are a Singapore accounting practice run by ex-Big 4 Singapore Chartered Accountants (ISCA). We handle accounting, corporate tax, GST and company secretarial work for Singapore SMEs, including overdue and late filings.

Last updated: 9 November 2026. This article is general information based on IRAS and ACRA guidance as at November 2026, not advice for your specific situation. Rules, rates and deadlines change, so check the official sources above or speak to us before acting.