An LLC is a business entity registered under the Companies Act, Chapter 50. It has a legal personality and therefore has rights to own properties, enjoys perpetual succession and can sue or be sued in its own name. If the number of shareholders in an LLC exceeds 50, it is deemed to be a public company. If the company has more than 20 but fewer than 50 shareholders, it is deemed to be a private company.
For the first three financial years of operation, qualifying new start-up companies (excluding investment holding and property companies) are given a tax exemption of 75% on the first S$100,000 of chargeable income (income to be taxed at the prevailing corporate tax rate) and a further exemption of 50% on the next S$100,000. Profit exceeding S$200,000 is taxed at the standard rate of 17%.
As an alternative to the exemption for start-up companies, all companies can enjoy a 75% exemption on the first S$10,000 of normal chargeable income and a further 50% tax exemption on the next S$190,000 of normal chargeable income (maximum exemption to be enjoyed is S$102,500). Any profit exceeding $200,000 is taxed at 17%.
In addition to the tax exemption that may apply, all companies are currently given a corporate income tax rebate of 50% of the corporate tax payable, capped at a maximum amount of S$20,000.
In order to save companies the time and costs of an annual audit, Singapore introduced the concept of a “small company” in 2015. A small company is exempt from the requirement for an annual audit and any private company qualifies as a small company if it meets at least two of the following three criteria: