Singapore remains one of the most attractive business hubs globally, partly due to its competitive corporate income tax regime. For companies operating or planning to establish themselves in Singapore, understanding the nuances of corporate income tax in Singapore is essential to optimise tax liabilities and leverage government incentives effectively. This article provides a comprehensive overview of the current corporate income tax landscape in Singapore, including the latest updates for 2025 practical insights to help businesses thrive.
What Is Corporate Income Tax in Singapore?
Corporate income tax (CIT) in Singapore is levied at a flat rate of 17% on a company’s chargeable income after start-up/partial tax exemption, applicable to both local and foreign companies deriving income from Singapore. Singapore employs a single-tier tax system, meaning that dividends paid by companies are exempt from further taxation, avoiding double taxation on corporate profits.
Key Features:
- Flat tax rate: 17% on chargeable income.
- Start-up tax exemption: For qualifying new companies, up to 75% exemption on the first SGD 100,000 and 50% on the next SGD 100,000 for the first three years.
- Partial tax exemption: For qualifying companies, up to 75% exemption on the first SGD 10,000 and 50% on the next SGD 190,000 for every year.
Latest 2025 Corporate Income Tax Changes in Singapore
The Singapore government announced several significant tax measures in the 2025 Budget to support businesses amid evolving economic challenges. These changes are designed to enhance competitiveness, encourage innovation, and provide financial relief to companies.
1. Corporate Income Tax Rebate and Cash Grant
For the Year of Assessment 2025, companies can benefit from a 50% corporate income tax rebate capped at SGD 40,000, plus a SGD 2,000 cash grant. This rebate aims to alleviate cost pressures and boost business liquidity.
| Tax Computation Example (YA 2025) | Amount (SGD) |
| Chargeable Income after tax exemption | 297,500 |
| Gross Tax Payable @ 17% | 50,575 |
| Less: Tax Set-Off | (175) |
| Tax Payable before CIT Rebate | 50,400 |
| Less: CIT Rebate (50% capped at 40,000) & Cash Grant | (23,200 + 2,000) |
| Net Tax Payable | 25,200 ** |
This rebate and grant provide immediate tax relief, improving cash flow for companies.
** The effective tax rate is 8.5% compared to the chargeable income after tax exemption.
2. Support for Innovation Activities – Enterprise Innovation Scheme (EIS)
To encourage the Company on research and development (R&D), innovation and capability development activities, IRAS allowed up to 400% tax deductions/allowances on up to $400,000 of qualifying expenditure per year for each of the 4 qualifying activities:
Qualifying R&D undertaken in Singapore;
Registration of Intellectual Property (IP);
Acquisition and Licensing of Intellectual Property Rights (IPRs);
Training courses that are eligible for SkillsFuture Singapore (SSG) funding and aligned with the Skills Framework
The Company has the option to convert the above expenditure up to $100,000 of the total qualifying expenditure across all the qualifying activities for each YA into a non-taxable cash payout at a conversion rate of 20%, instead of tax deductions and/ or allowances.
To further encourage innovation through collaborative efforts. Effective from 19 February 2025, a tax deduction will be granted for payments under an approved cost-sharing agreement (CSA) for innovation activities. IRAS offers a 100% tax deduction on payments made under approved cost-sharing agreements for innovation activities. This incentive promotes partnerships and investment in technology and innovation.
3. Employee Equity-Based Remuneration (EEBR) Schemes
Companies can now claim tax deductions for payments to holding companies or special purpose vehicles issuing new shares under EEBR schemes. This change offers greater flexibility in structuring employee remuneration packages, incentivising talent retention and alignment with company performance.
4. Enhancements to Section 13W of the Income Tax Act
Effective from 1 January 2026, gains from the disposal of shares will be non-taxable under enhanced Section 13W provisions. This strengthens Singapore’s position as a preferred investment holding location by providing certainty on the tax treatment of capital gains.
5. Global Minimum Tax (Pillar Two) Compliance
From 2025, Singapore will implement a 15% minimum effective tax rate for large multinational enterprises (MNEs) with annual consolidated revenue exceeding EUR 750 million, aligning with OECD/G20 global tax reforms (Pillar Two). This affects relevant MNE groups operating in Singapore, ensuring they pay a minimum level of tax globally.
Corporate Income Tax Rates and Exemptions in Singapore
| Tax Aspect | Details |
| Standard Corporate Tax Rate | 17% |
| Partial Tax Exemption | 75% on first SGD 10,000; 50% on next SGD 190,000 |
| Start-up Tax Exemption | 75% on first SGD 100,000; 50% on next SGD 100,000 for first 3 YAs |
| Corporate Income Tax Rebate (2025) | 50% rebate capped at SGD 40,000 (inclusive of SGD 2,000 cash grant if condition is met) |
Practical Tips for Businesses on Corporate Income Tax in Singapore
- Leverage tax rebates and grants: Ensure eligibility for the 2025 CIT rebate and cash grant by maintaining active operations and at least one local employee in 2024.
- Optimise R&D activities: Structure innovation projects under approved cost-sharing agreements to benefit from 100% tax deductions.
- Review employee remuneration schemes: Consider implementing or restructuring EEBR schemes to maximise tax deductions.
- Plan for Pillar Two compliance: Large MNEs should assess their global tax positions to meet the 15% minimum effective tax rate requirements.
- Stay updated on filing deadlines: Timely submission of corporate tax returns and compliance with IRAS guidelines avoid penalties.
Why Singapore Is a Preferred Jurisdiction for Corporate Tax Planning
Singapore’s transparent tax system, competitive rates, and extensive network of double tax treaties make it an ideal base for regional headquarters and investment holding companies. The recent enhancements in tax incentives and clarity on capital gains taxation further reinforce its attractiveness.
Conclusion: Maximise Your Corporate Income Tax Benefits with Professional Guidance
Navigating the complexities of corporate income tax in Singapore requires up-to-date knowledge and strategic planning. The 2025 tax reforms present valuable opportunities for businesses to reduce tax liabilities, support innovation, and enhance competitiveness.
For companies seeking expert advice and tailored tax solutions, DTL Accounting Group offers comprehensive services to help you maximise your tax benefits and ensure full compliance with Singapore’s tax laws. Our experienced team provides insights on corporate tax planning, incentive applications, and regulatory updates, empowering your business to thrive in Singapore’s dynamic environment.Visit DTL Accounting Group today to unlock your company’s full tax potential and gain a competitive edge in the market. Don’t miss out on the latest tax rebates and incentives- partner with us for expert support and seamless corporate tax management.