How to Reduce Corporate Tax for Companies in Singapore (2025 Guide)

Singapore offers one of the most attractive corporate tax systems in the world — a flat 17% corporate tax rate, generous tax exemptions, and multiple incentive schemes to help businesses grow. If you run a company in Singapore, proper tax planning can significantly reduce your tax bill while ensuring IRAS compliance.

Below are the most effective strategies to reduce corporate tax in Singapore, with detailed explanations to help business owners understand how to maximise savings.

1. Tap Into the Start-Up Tax Exemption (SUTE) Scheme

The Start-Up Tax Exemption (SUTE) scheme is one of the biggest tax-saving tools for new companies.

Who qualifies?

• Company must be incorporated in Singapore

• At least one shareholder is an individual (not a corporate shareholder)

• Company must be tax resident in Singapore

Tax benefits:

• 75% exemption on the first S$100,000 of chargeable income

• 50% exemption on the next S$100,000

This can reduce a young company’s tax payable by thousands each year in its first 3 years.

2. Enjoy the Partial Tax Exemption (PTE) Scheme

If your business doesn’t qualify for SUTE, you still enjoy the Partial Tax Exemption (PTE).

Benefits under PTE:

• 75% exemption on the first S$10,000

• 50% exemption on the next S$190,000

This scheme applies to most SMEs in Singapore and provides substantial annual savings.

3. Claim All Allowable Business Expenses

One of the easiest ways to lower your company tax is to ensure that all deductible business expenses are claimed.

Common deductible expenses include:

• Employee salaries, CPF contributions, bonuses

• Outsourced services (accounting, tax agent, secretary fees)

• Marketing expenses (Google Ads, social media ads)

• Digital tools (Xero, Canva, Microsoft, Zoom)

• Office rental, utilities, and internet

• Staff training

• Travel expenses for business purposes

• Bad debts written off

• Tax agent fees (fully deductible)

A cloud accounting system like Xero ensures accuracy and prevents missed claims.

4. Use Capital Allowances for Fixed Assets

Instead of claiming fixed assets immediately, Singapore allows companies to write off asset costs through capital allowances.

This applies to:

• Computers and laptops

• Printers and office equipment

• Office furniture

• Machinery

• Delivery vehicles

Capital allowance types:

• Write-Off Over Useful Life (default)

• Section 19A — 3-Year Write-Off (accelerated)

• 100% Write-Off for Low-Value Assets (≤ S$5,000)

Proper planning allows companies to time purchases to reduce taxable profits.

5. Optimise Staff Bonuses and Director Fees Timing

Certain expenses are deductible only if incurred in the accounting year.

This includes:

• Bonuses

• Director fees

• Staff commissions

• Accrued expenses

Important: Director fees are only deductible after they are approved at AGM. Proper timing ensures the deduction falls in the year that reduces tax the most.

6. Carry Forward Unutilised Losses & Allowances

If your company makes a loss in earlier years, you can carry them forward to reduce future taxable profits, provided:

• Shareholding test is met

• Business continues

This helps new or fluctuating businesses reduce future tax burden.

Contact us at www.swiftbalance.biz to find out more!