Chapter 1: Introduction to Singapore Taxation
The tax system in Singapore operates on a territorial basis. The charging section of the Income Tax Act (ITA) can be found in S10(1) which states that:
“Income tax shall, subject to the provisions of this act, be payable at the rate or rates specified hereinafter for each year of assessment upon the income of any person accruing in or derived from Singapore or received in Singapore from outside Singapore in respect of:

S10(1) (a) Gains or Profits from Trade, Business, Profession or Vocation.
S10(1) (b) Gains or profits from Employment.
S10(1) (c) Delete by Act 29/65
S10(1) (d) Dividends, Interest or Discounts
S10(1) (e) Pension, Charge or Annuity
S10(1) (f) Rents, Royalties, Premium & other Profits arising from Property
S10(1) (g) Any Gains or Profits of income nature not falling within any preceding paragraphs

Tax Exemption Scheme (Theory)
Full Tax Exemption
Companies Limited by Guarantee (CLGs) will be allowed to qualify for the tax exemption scheme for new start-up companies effective from YA2010.

For new start-up companies, tax exemption will be granted on the first $300,000 of a qualifying company’s normal chargeable income for any of its first three consecutive YAs, as follows: * Up to the first $100,000 normal chargeable income, 100% of the income shall be exempt from tax. * Up to the next $200,000 normal chargeable income, 50% of the income shall be exempt from tax.
A “qualifying company” means a company incorporated in Singapore, which for each of the first three years of assessment is resident in Singapore for that, YA; and has its total share capital beneficially held directly by no more than 20 shareholders: * All of whom are individuals throughout the basis period of that YA, or * At least one of whom is an individual ordinary shares of the company throughout the basis