This alert provides a recap of the IDI incentive and summarises the key points from the new Regulations.
The Intellectual Property (IP) Development Incentive (IDI) was first announced in Budget 2017, and came into effect on 1 July 2018. The IDI was introduced to encourage research and development (R&D) activities through a concessionary tax rate and is administered by the Singapore Economic Development Board (EDB). To align with the requirements specified in the Organisation for Economic Co-operation and Development (OECD) report on Base Erosion and Profit Shifting (BEPS) Action 5 and as expected, the IDI was amended to incorporate the “modified nexus ratio”.
On 22 January 2021, the subsidiary legislation, Income Tax (Concessionary Rate of Tax for IP income) Regulations 2021 (Regulations), was gazetted. The Regulations set out the details on the application of the IDI, such as:
- The percentage and computation of qualifying IP income subject to the concessionary rate of tax
- Change in the composition of the elected family of qualifying intellectual property rights (IPRs)
- Application of deemed income
- Record-keeping requirements
We provide a recap of the IDI incentive and also summarise the key points from the new Regulations.
