Tax Exemption Scheme for New Startup Companies

For any of a company's first 3 consecutive Years of Assessment ("YA"), a portion of its normal chargeable income (excluding Singapore franked dividends) will be exempt from tax. This is provided all qualify conditions are met.

YA (2005 to 2007) - Exempt Income: First S$100,000 @ 100% (i.e. First 100k of net profit is exempted !!!)

YA(2008 onwards) - Exempt Income: First S$100,000 @ 100% & Next S$200,000 @ 50% (i.e. First 100k of net profit is exempted PLUS the next 200k of net profit is taxed at 50% of corporate income tax of 18%)

To qualify for the tax exemption for a particular YA, a company must:
(a) be incorporated in Singapore (other than a company limited by guarantee);
(b) be a tax resident of Singapore for that YA;
(c) not have more than 20 shareholders throughout the basis period relating to that YA; and
(d) have shareholders who are individuals throughout the basis period relating to that YA.