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A Foreigner's Guide to Singapore Tax Incentives

Overcoming the complexities of taxation in a foreign country can be daunting, especially for businesses seeking to establish a presence in Singapore. 

However, Singapore offers a range of tax incentives aimed at attracting foreign investment and boosting economic growth. Understanding these incentives is important for businesses looking to optimize their tax liabilities and maximize their potential in the vibrant Singaporean market.

Start-Up Tax Exemption Scheme

Singapore is renowned for its vibrant start-up ecosystem, and the government offers a range of tax incentives to support early-stage businesses. 


The Start-Up Tax Exemption Scheme (SUTE) provides tax exemptions for qualifying newly incorporated companies in their first three consecutive years of assessment. Eligible companies can enjoy full tax exemption on the first S$100,000 of chargeable income and a 50% exemption on the next S$200,000.


In this regard, start-ups can conserve valuable resources in their formative years by leveraging the SUTE, which allows them to reinvest profits into growing their businesses and pursuing innovation. 

This scheme has played an important role in nurturing entrepreneurship and fueling the growth of Singapore’s start-up ecosystem, attracting talent and investment from around the world. 

Financial Services Industry

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Singapore’s financial services industry enjoys several tax incentives designed to promote its growth and competitiveness on the global stage. 


One such incentive is the Progressive Wage Credit Scheme, which provides wage subsidies to eligible employers in the financial services sector. This scheme aims to support the industry’s efforts to raise wages sustainably and enhance productivity.


Furthermore, the financial services industry can benefit from industry-specific tax incentives tailored to its unique needs and challenges. These incentives may include tax exemptions or reduced tax rates for certain types of income, such as income derived from qualifying financial activities. 


By taking advantage of these incentives, financial services firms can minimize their tax burden and reinvest savings into expanding their operations or enhancing their services.

Research, Development, and Innovation

Innovation lies at the heart of Singapore’s economic strategy, and the government offers generous tax incentives to encourage research, development, and innovation (R&D&I) activities. 


Companies engaged in R&D&I can benefit from tax deductions or allowances on qualifying expenditure incurred in Singapore. Additionally, the Productivity and Innovation Credit (PIC) scheme provides tax benefits for investments in innovation and productivity-enhancing activities.


These incentives aim to promote a culture of innovation and technological advancement, positioning Singapore as a hub for cutting-edge research and development across various industries. 


By leveraging these incentives, businesses can invest in innovation with confidence, knowing that the government supports and rewards their efforts to stay ahead in an increasingly competitive global business environment.

Services and Manufacturing Industry

The services and manufacturing sectors are cornerstones of Singapore’s economy, and the government provides a range of tax incentives to support their growth and development. These incentives may include tax exemptions, deductions, or allowances for qualifying income, investment, or expenditure incurred in Singapore. 

Additionally, businesses in these sectors may benefit from various industry-specific tax incentives aimed at promoting innovation, productivity, and internationalization.


By taking advantage of these incentives, services and manufacturing companies can strengthen their competitive position, expand their operations, and tap into new markets with confidence. 


Whether providing professional services, manufacturing goods, or engaging in international trade, businesses in these sectors can benefit from Singapore’s pro-business environment and attractive tax incentives

Trading Industry

Singapore’s strategic location and robust infrastructure make it an ideal hub for international trade and commerce. To further enhance its position as a global trading hub, Singapore offers tax incentives tailored to businesses engaged in trading activities. 


These incentives may include tax exemptions or concessions on income derived from qualifying trading activities, as well as tax incentives for setting up trading companies in Singapore. 


Through capitalizing on these incentives, trading companies can optimize their tax structure and enhance their competitiveness in the global marketplace. 


Whether trading in goods, commodities, or financial instruments, businesses can leverage Singapore’s favorable tax regime to minimize their tax liabilities and maximize their profitability.

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The 100 Percent Investment Allowance Scheme

To encourage capital investment and productivity enhancement, Singapore offers the 100 Percent Investment Allowance Scheme (100% IA) to qualifying businesses. 


Under this scheme, companies can claim a 100% deduction on qualifying capital expenditure incurred for the acquisition of approved automation equipment or intellectual property rights. This includes expenditure on machinery, equipment, and software aimed at automating processes or enhancing productivity. 


In this regard, businesses can accelerate their investment in technology and innovation, driving operational efficiency and competitiveness by leveraging the 100% IA scheme. 


This scheme not only helps businesses offset the cost of investment but also positions Singapore as a forward-looking and technology-driven economy, poised for sustainable growth and success in the digital age.

Final Takeaways

Understanding Singapore’s tax incentives is essential for businesses looking to thrive in the dynamic and competitive Singaporean market. 


Regardless of whether operating in the financial services, trading, services, manufacturing, or start-up sector, businesses can leverage these incentives to optimize their tax liabilities, drive innovation, and enhance their competitiveness. 

By staying informed and working with reliable partners such as outsource accounting services in Singapore, businesses can meet Singapore’s tax requirements with confidence and enjoy new opportunities for growth and success.

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