What is SUTE (Start-Up Tax Exemption)?
A tax exemption scheme for newly incorporated Singapore companies providing 75% exemption on the first S$100,000 and 50% on the next S$100,000 of chargeable income, for the first three consecutive Years of Assessment.
Current Rate (Year of Assessment (preceding-year basis))
75% on first S$100k + 50% on next S$100k (max exemption S$125,000 per YA)
Example
A startup with S$150,000 chargeable income in YA 2025 saves: 75% x S$100,000 = S$75,000 exempt, plus 50% x S$50,000 = S$25,000 exempt. Tax is charged on S$50,000 only, at 17%, giving a tax bill of S$8,500 instead of S$25,500.
How SUTE (Start-Up Tax Exemption) works in Singapore
**Start-Up Tax Exemption (SUTE) Overview**
The Start-Up Tax Exemption (SUTE) scheme was introduced to nurture entrepreneurship and make Singapore a business-friendly destination for new companies. It provides significant tax relief during the most critical early years of a company's life.
**Exemption Quantum**
For each of the first three consecutive YAs from the YA in which the company was incorporated: 75% of the first S$100,000 of chargeable income is exempt from tax. 50% of the next S$100,000 of chargeable income is exempt from tax. The remaining chargeable income above S$200,000 is taxed at the full 17% rate. The maximum tax exemption under SUTE is S$125,000 per YA.
**Eligibility Criteria**
To qualify for SUTE, a company must: (1) be incorporated in Singapore, (2) be a Singapore tax resident for the YA (management and control exercised in Singapore), (3) have no more than 20 shareholders throughout the basis period for the YA, (4) have at least one individual shareholder (not a corporate shareholder) who holds at least 10% of the issued ordinary shares throughout the basis period.
**Exclusions**
Two categories of companies are explicitly excluded from SUTE regardless of how recently they were incorporated: investment holding companies and property developers. These types of businesses must use the standard Partial Tax Exemption instead.
**Comparison with Partial Tax Exemption (PTE)**
For companies not qualifying for SUTE (or after SUTE expires), the Partial Tax Exemption provides: 75% exemption on the first S$10,000 of chargeable income, and 50% exemption on the next S$190,000. Maximum exemption of S$102,500 per YA. SUTE is markedly more generous, reflecting the intent to support companies in their growth phase.
**Practical Planning**
Companies should plan their financial year-end carefully. The first YA is the YA in which the company is incorporated. If a company incorporated in November 2024 adopts a 31 October year-end, the first YA may cover only a short period (November 2024 to October 2025 is YA 2025 if that is the basis period). Timing incorporation and the first FYE can optimise the SUTE period to cover the highest-income years.
**SUTE and the YA 2025 CIT Rebate**
Startups benefiting from SUTE may also benefit from the YA 2025 CIT Rebate (50%, capped at S$40,000), and qualify for the S$2,000 minimum cash grant if they employed at least one local employee in calendar year 2024.
Related terms
Singapore taxes resident companies at a flat rate of 17% on chargeable income. New companies benefit from the Start-Up Tax Exemption (SUTE), and all qualifying companies can access Partial Tax Exemption.
The most common business structure in Singapore. A private company limited by shares, requiring at least one director ordinarily resident in Singapore, at least one shareholder, and minimum S$1 share capital. Incorporated via ACRA's BizFile+ portal.
Singapore's annual corporate tax return. Form C is the full return; C-S for companies with revenue up to S$5 million; C-S Lite for revenue up to S$200,000. All due 30 November each Year of Assessment.
An estimate of a company's taxable income for a financial year, filed with IRAS within 3 months of the company's financial year-end. A waiver applies if revenue is S$5 million or less AND ECI is zero.
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