7 Ways to Reduce Your Corporate Tax Bill in Singapore
For those steering a growing company in Singapore, their post-tax cash is the lifeblood of their next innovation or expansion. So, what options do entrepreneurs have? Additionally, what are some other clever strategies that small businesses and SMEs can implement to cut corporate tax legally?
Quick summary table
| Strategy | Effect |
|---|---|
| Start‑Up/PTE Exemption | Reduces startup taxable profits significantly |
| Innovation & IDI incentives | Lowers tax or offers cash conversion |
| DTDi (International expenses) | 200% deduction on overseas spend |
| CIT Rebate (2025 Budget) | Up to 50% rebate, capped S$40k + cash |
| Volunteering & donations (BIPS/IPC) | 250% deduction on eligible expenses |
1. Make the most of Startup & Partial Tax Exemptions
If your company is newly incorporated, you may qualify for the Start‑Up Tax Exemption Scheme. From Year of Assessment (YA) 2020 onwards, eligible firms pay no tax on 75% of the first S$100,000 of chargeable income, and 50% on the next S$100,000. That’s up to S$125,000 tax‑free income for the first three YAs.
After that initial period, you shift into the Partial Tax Exemption (PTE) scheme: 75% on the first S$10,000 and 50% on the next S$190,000 of chargeable income, reducing your effective tax burden significantly.
2. Tap into innovation incentives
Since February 2025, Singapore has been offering a tax deduction for collaborative innovation activities. You may claim a deduction for innovation carried out with polytechnics or institutes, or opt for a non‑taxable cash payout of 20% on qualifying spend (up to S$100,000, capped at S$20,000 annually).
Meanwhile, the Intellectual Property Development Incentive (IDI) allows approved companies to enjoy concessionary tax rates of 5–15% on some qualifying IP income.
3. International expansion ≠ more tax
Under the Double Tax Deduction for Internationalisation (DTDi) scheme, overseas expansion costs—market research, trade missions or overseas promotional campaigns—may qualify for a 200% tax deduction on eligible expenses (up to S$150k/year automatically).
That means you can deduct twice the spend, greatly reducing your taxable income and enabling reinvestment.
4. Use Corporate Income Tax rebates wisely
In the 2025 Budget, Singapore announced a 50% CIT rebate on corporate tax liability for YA 2025, capped at S$40,000, with a minimum cash payout of S$2,000 for firms that employed at least one local staff in 2024.
Start-ups or SMEs can plan ahead to ensure eligibility before the end of the year to access this rebate.
5. Leverage charitable and volunteer deductions
If your company supports Institutions of a Public Character (IPCs), you may claim a tax deduction of 250% on qualifying donation or volunteering expenses under the Corporate Volunteer Scheme or BIPS.
That’s not just feel‑good branding—it’s also tax savings if correctly accounted.
6. Accuracy ≠ paperwork pain
Also, remember: maintain proper records for at least five years, preferably using a reliable accounting software, which eases the tax filing process and reduces simple errors.
Keeping your documents tight prevents IRAS audits or penalties, and ensures you can claim all legitimate deductions.
7. Work with a trusted accounting services provider
While these tax strategies are powerful, applying them effectively requires understanding the fine print. Working with an experienced corporate services or accounting firm ensures that your company not only remains compliant but is also strategically aligned with IRAS incentives.
A knowledgeable partner can help you track changes in tax policy, optimise your claims, and structure your business for sustained tax efficiency. It’s not just about filing taxes—it’s about planning growth.
Conclusion
Each approach to cut corporate tax relies on meeting eligibility criteria, and you must follow IRAS rules carefully. Think of this as a journey in which tax strategies fuel growth, not just compliance. Plan ahead, align activities with incentives, and you’ll keep more earnings working in your business’s future.
