Tax incentives in Asia-Pacific

Singapore

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The Singapore Government offers a wide range of incentive programs, both tax and non-tax, to businesses conducting specified activities ascertained as beneficial to Singapore’s economic development. Tax incentives are targeted at getting companies to anchor substantive high value activities and strengthen capabilities, such as innovation and know-hows in Singapore. Complementing Singapore’s attractive overall business environment, tax incentives have been an effective fiscal policy tool in strengthening Singapore’s value proposition as a compelling global hub for business and investments.

The Singapore Government in February 2017 outlined seven strategies which will shape Singapore’s economic roadmap for the next five to ten years. Also known as the recommendations put forth by the Committee on the Future Economy, one notable suggestion is the call for a review of the Singapore’s tax system so that it remains broad-based, progressive and fair, and be pro-growth and competitive at the same time. It is therefore expected that the use of the tax incentive regime as a fiscal tool to attract substantive activities to be based in Singapore will continue remain relevant to enable Singapore’s long-term economic success.

Singapore incentive regime overview

Singapore tax incentives can be divided into two broad categories; discretionary and statutory incentives.

Discretionary incentives:

Incentive administering body

Key government statutory boards based on industry segmentation include:

  • International Enterprise Singapore
  • Maritime Port Authority of Singapore for the shipping sector
  • Monetary Authority of Singapore for the financial sector
  • Singapore Economic Development Board
  • SPRING Singapore

General application process

  • The typical process begins from preparation of a business plan, meetings with authorities to present on the business plan, discussions on the terms and conditions of the incentive offer, application process and finally agreement on incentive conditions.
  • Generally, the incentive negotiations should commence before companies embark on the projects.

Incentive application timeline

Between three to six months

Things to note

Specific conditions, level of support and duration of the incentives are typically based on a negotiated outcome with the designated government statutory board.

The level of support rendered by the authorities (e.g., Singapore Economic Development Board (EDB)) will commensurate with the scope and scale of the company’s proposed activities and the following are broad key assessment parameters or considerations typically adopted:

  1. Quantitative aspects
    a. Total business expenditure in Singapore
    b. Incremental headcount
    c. Fixed assets investment
  2. Qualitative aspects
    a. How the project fits into the development blueprint for Singapore (in areas of technology, infrastructure, business and talent)
    b. Spin-offs generated to the rest of the economy
    c. Quality of project
    d. Skills and capabilities acquired from the project

Statutory incentives:

Incentive administering body

Inland Revenue Authority of Singapore (IRAS)

Things to note

  • Conditions and requirements are defined in the Income Tax Act.
  • Available to all taxpayers that can fulfil the conditions and requirements, typically claimed through the annual tax filing process.

We provide an overview of the key tax incentives and cash grants in Singapore that are available for manufacturing, headquarters, corporate support and trading, and research and development activities.

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