If your Singapore group has one profitable company and another loss-making company in the same year, you may be able to shelter the profit from corporate tax by transferring the loss across — without paying anyone anything. The mechanism is Section 37C of the Income Tax Act 1947, Singapore’s group relief regime. Used correctly, it can defer or eliminate millions of dollars of tax. Used incorrectly, it can trigger IRAS denial of the relief and assessment penalties.
This article explains how group relief works, the 75% ownership test, the matching of qualifying deductions and qualifying income, the surrender mechanics, the common errors, and how Section 37C interacts with the Section 37E loss carry-back relief and the wider tax loss carry-forward rules.
What Group Relief Does
Group relief allows a Singapore-incorporated company that has unused current-year capital allowances, trade losses, or donations (“qualifying deductions”) to transfer them to another Singapore-incorporated company in the same group that has assessable income (“qualifying income”). The transferring company is the “transferor”; the receiving company is the “claimant”.
The economic effect is that the claimant’s tax bill is reduced and the transferor gives up the right to carry forward the deduction. Because the transfer is intra-group, no consideration changes hands — it is purely a tax election.
Group relief is current-year only. It cannot be used to transfer brought-forward losses or unutilised capital allowances from prior years.
The 75% Group Test
For two companies to be in the same group, the following ownership conditions must be satisfied throughout the relevant period:
- The transferor and claimant are both Singapore-incorporated companies.
- One is at least 75% directly or indirectly owned by the other; or both are at least 75% directly or indirectly owned by a third Singapore-incorporated company.
- The 75% test looks at ordinary share capital, beneficial entitlement to distributable profits, and beneficial entitlement to assets on a winding-up.
- The relationship must exist throughout the relevant accounting periods of both companies.
Foreign-incorporated holding companies are problematic. If the Singapore parent is a subsidiary of a Hong Kong or Cayman holding company, the 75% test must be satisfied through Singapore-incorporated entities only. Many startup groups with offshore holdcos fail this test and must restructure to access group relief.
What Counts as a “Qualifying Deduction”?
- Current-year unabsorbed capital allowances under Section 19, 19A, 19B, 21.
- Current-year trade losses from a Singapore business carried on by the transferor.
- Current-year approved donations under Section 37(3).
Brought-forward losses and unabsorbed allowances cannot be surrendered as group relief. They remain with the company that incurred them, subject to the shareholding continuity test in Section 23.
What Counts as “Qualifying Income”?
The claimant’s assessable income (after deduction of its own current-year deductions) for the year of assessment. Group relief is applied last — after the claimant’s own deductions, before any brought-forward losses.
How the Election Is Made
Group relief is claimed in the corporate tax return ( Form C or Form C-S ) for the relevant year of assessment. Both the transferor and the claimant must complete and sign the relevant declaration. The Group Relief Form is part of the IRAS tax return package.
The election must be made within the time allowed for filing the corporate tax return — typically by 30 November of the year of assessment. Once made, it is generally irrevocable for that year.
Worked Example
Singapore Holding Pte Ltd owns 100% of two subsidiaries:
- OpCo A: profit of S$1,500,000 for YA 2026.
- OpCo B: trade loss of S$800,000 and capital allowances of S$400,000 for YA 2026 (it acquired new plant during the year).
Without group relief:
- OpCo A’s tax (after partial exemption): approximately S$240,000.
- OpCo B’s loss and CAs are carried forward, subject to Section 23 continuity.
With group relief (assuming the election is made):
- OpCo B surrenders S$1,200,000 of qualifying deductions to OpCo A.
- OpCo A’s assessable income falls to S$300,000.
- OpCo A’s tax (after partial exemption) is roughly S$24,000.
- Tax saved: approximately S$216,000 in YA 2026, accelerating value that would otherwise sit in OpCo B’s carry-forward.
The acceleration effect is meaningful even where the carry-forward would eventually be utilised — money has time value, and the carry-forward is conditional on continued shareholding and unchanged business operations.
Common Errors and Disallowances
- Mismatched accounting periods. The transferor’s accounting period must align with the claimant’s. Mismatched periods require apportionment of the deduction.
- Failure of the 75% test mid-year. A change in ownership during the relevant period can disqualify the relief for the entire year unless the change is within a permitted reorganisation.
- Foreign holding structure. A Singapore subsidiary held through a foreign holdco may be unable to access group relief if a sister Singapore subsidiary has the loss.
- Dormant transferor. A genuinely dormant company has no qualifying deduction to surrender. Some dormant subsidiaries are mistakenly entered as transferors with nothing to give.
- Surrendering brought-forward losses. Only current-year deductions qualify. Brought-forward losses must use Section 23 or Section 37E.
- Late or incomplete signature. Both companies must sign the Group Relief Form before the filing deadline. Late or missing signatures void the election.
Group Relief vs Other Loss Mechanisms
| Mechanism | What it does | Statutory basis |
|---|---|---|
| Group Relief (Section 37C) | Transfer current-year deductions between Singapore group companies | Section 37C ITA |
| Loss Carry-Back | Carry current-year losses back 1 year (up to S$100,000 ordinary cap) | Section 37E ITA |
| Loss Carry-Forward | Carry losses and allowances forward indefinitely, subject to continuity | Section 23 ITA |
| Donation Relief | Approved Section 37(3) donations transferable as part of group relief | Section 37(3) ITA |
The mechanisms are complementary. A loss-making company can use Section 37E for a small carry-back, surrender excess to a profitable group company under Section 37C, and carry the residual forward under Section 23 — all in the same year.
Group Relief and BEPS Pillar Two
For multinational groups within the scope of the OECD’s GloBE rules (consolidated revenue above EUR 750 million), group relief affects the Singapore effective tax rate computation. The GloBE rules allow most domestic group relief regimes to be respected for ETR purposes, but the timing differences must be tracked. Multinational groups should model the Pillar Two effect before optimising Section 37C.
Statutory Provisions and References
The full text of Section 37C is at sso.agc.gov.sg. IRAS’ e-Tax Guide on Group Relief and the Group Relief Form are at iras.gov.sg (search “Group Relief”).
How RCS Can Help
Our tax team prepares the group relief computation, drafts the Group Relief Form, and files the election with the Form C package. For groups with foreign holding structures or complex ownership chains, we model the 75% test and advise on restructuring options before YA close.
For related guides see Section 37E loss carry-back, Singapore Corporate Tax 2026, and Form C-S vs Form C-S (Lite) vs Form C.
— The Editorial Team, Raffles Corporate Services