Singapore’s business oriented and friendly tax environment is designed to help companies like yours to thrive and offering numerous legitimate opportunities to minimise your corporate tax liability while supporting your growth journey.
Whether you’re just starting out or running an established business, understanding these tax incentives can make a real difference to your bottom line and help you build a stronger and more profitable company.
Group Relief – Improve Tax Efficiency
Group Relief is a tax scheme that enables companies to deduct unutilised capital allowances, trade losses and donations of one company from the assessable income of another company in the same group.
Financial Benefits
Your loss-making company can transfer 100% of its unutilised allowances, trade losses and donations to your profitable group companies under the same group, if they can absorb these losses under the Group Relief scheme.
This means your group’s overall tax liability is reduced by allowing profitable entities to offset losses from struggling subsidiaries, significantly improving your group’s cash flow and tax efficiency.
To qualify for group relief, both transferor and claimant companies must meet all three conditions :
- Be a Singapore-incorporated company
- Belong to the same group with 75% shareholding threshold maintained
- Have the same financial year end
You must submit Form GR-A (transferor) and Form GR-B (claimant) when filing [Form C] a.k.a. Corporate Income Tax Returns. As the election for Group Relief is irrevocable, the corporate tax returns cannot be amended after submission. Therefore, a careful and accurate filing is critical for securing these tax benefits.
Double Tax Treaties: Eliminating International Tax Duplication
For companies with international operations, Singapore’s extensive network of Double Taxation Agreements (DTAs) prevents the same income from being taxed twice in multiple jurisdictions.
Financial Benefits
Singapore has concluded DTAs with numerous countries worldwide, making it an ideal regional hub for businesses with cross-border operations.
Check the current list of treaty partners on the IRAS website here
To benefit from double tax treaty provisions:
- Your company must be a Singapore tax resident
- Foreign income must have been taxed in a jurisdiction that has a DTA with Singapore
Step 1: Obtain Supporting Documents:
- Certificate of Residence (COR) from non-resident companies (which may cover multiple years if clearly stated) to support residency status – or –
- A Signed Form IR586 from non-resident professionals when tax treaty exemption applies.
Step 2: Submit and Retain
Submit the COR to IRAS by the filing due date and retain all supporting documents and records for 5 years. Extensions for COR submission can be requested if needed, ensuring compliance while securing valuable treaty benefits.
Mergers and Acquisitions Scheme: Incentivizing Corporate Growth
The M&A scheme, recently extended until 31 December 2030, encourages corporate consolidation and growth through strategic acquisitions.
Financial Benefits
The scheme offers substantial benefits for qualifying acquisitions:
- Allowance Rate: 25% of the acquisition value
- Enhanced Cap: Maximum acquisition value increased from S$20 million to S$40 million (for qualifying acquisitions made from April 1, 2016)
- Allowance Ceiling: Capped at S$10 million per YA
- Distribution Method: Granted equally over five years on straight line basis
The M&A allowance applies to acquisitions of ordinary shares in target companies made between April 1, 2010, and December 31, 2030 (both dates inclusive). This extended timeline provides businesses with clarity for long-term strategic planning.
You should coordinate acquisition strategies with your tax advisors first as the M&A allowance cannot be deferred, making timing crucial for tax planning purposes.
Research & Development (R&D) Tax Measures: Boosting Innovation
Singapore’s R&D tax scheme provides enhanced deductions to encourage companies to invest in research and development activities and varies based on where the R&D is sourced from.
Your company must be the beneficiary of R&D activities, bearing the financial burden and effectively owning the intellectual property or results.
Projects must meet all three requirements:
- Acquire new knowledge/create or improve products/processes
- Involve novelty or technical risk
- Involve systematic, investigative and experimental study in science or technology
Companies must make the R&D claim in its Corporate Income Tax Return for the relevant YA and complete the R&D Claim Form.
Form C filers must submit the R&D claim form with their tax returns, while Form C-S/Form C-S (Lite) filers only retain the claim form unless IRAS requests submission the form. Maintain proper R&D documentation from project start – no initial filing required but must be available upon IRAS request.
Capital Gains and Investment Allowances – Plan Ahead
In Singapore, Capital Gains are not subject to tax but not all profits qualify for exemption. The key distinction lies between genuine investment activity and trading business.
Frequent property flipping, active stock trading, or systematic buying and selling of assets may interpreted as taxable trading income by IRAS rather than exempt capital gains. Factors like transaction frequency, holding periods, intention to profit from short-term price movements, and the primary nature of your activities all influence this classification.
Properly structuring asset sales, investments, and business exits to legally qualify for capital gains exemption through strategic timing and clear separation of investment activities from trading operations can help you avoid unintended tax surprises while maximizing your wealth preservation.
Tax Exemption Schemes Your Company Might Already Be On:
Start-up Tax Exemption Scheme (SUTE)
New Singapore private limited companies get tax relief for their first 3 years: 75% exemption on first S$100,000 income + 50% exemption on next S$100,000.
Partial Tax Exemption Scheme (PTE)
All companies (except those on SUTE) get ongoing tax relief: 75% exemption on first S$10,000 income + 50% exemption on next S$190,000 for a maximum of S$102,500 annual exemption!
Check if your company qualifies for either of these schemes here
* These exemptions apply automatically only when tax returns and ECI are filed to IRAS correctly and accurately for the respective YA. Errors or omissions may result in losing these valuable benefits on top of penalties.
Important Legal Warning: Proper Use of Tax Schemes
While Singapore’s tax incentive schemes offer attractive benefits, overzealous attempts to maximize these advantages can inadvertently cross into prohibited territory. You may in the process unknowingly create structures that IRAS deems abusive, even when the original intent was legitimate tax planning.
Common mistakes
Problematic approaches include creating entities without genuine business operations to repeatedly claim start-up tax exemptions, or establishing corporate structures designed primarily to exploit tax benefits rather than conduct real business. Advisors who facilitate such arrangements may also face penalties.
Maximizing Your Tax Strategy
Proper structuring from the outset ensures your company can take full advantage of available tax incentives while maintaining compliance with all regulatory requirements.
You do not want to miss out on any tax deduction schemes due to poor filing or lack of information and knowledge, or even worse – get yourself in legal trouble.
Our team at Verti can assist in handling all aspects of Singapore tax compliance and optimization, ensuring accurate documentation and strategic tax planning to help you benefit from any qualifying tax deductions while maintaining full compliance with IRAS requirements.
Let us manage the complexities so you can focus on growing your business while securing optimal tax outcomes. Reach out to us at contactus@verti.sg or +65 6909 5691
All information accurate as of 20 August 2025