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Industry specific and special purpose tax incentives in Singapore

There are special purpose income tax incentives and concessionary tax rates offered under the Singapore Income Tax Act for certain industries.

The Singapore Government through the Inland Revenue (IRAS) and other government agencies has adopted a series of schemes and incentives to support small and medium (SMEs) enterprises and economic development.

Of the many schemes available, we will introduce the major features of the following three grant and assistance programs:

1. PRODUCTIVITY AND INNOVATION CREDIT SCHEME (PIC)
The PIC scheme supports companies’ investments aiming at increasing their productivity and developing innovative projects. The scheme will expire after year of assessment 2018.

The PIC scheme offers companies a cash payout or tax breaks when they invest in equipment or activities to boost productivity and develop innovative projects. Specifically, eligible companies can benefit from up to 400% in PIC tax deductions for expenses incurred in the 6 qualifying activities or convert up to 40% of eligible costs into cash payouts.

The 6 qualifying activities are:

  • Acquisition and leasing of Information Technology and Automation Equipment
  • Training of Employees
  • Acquisition and licensing of Intellectual Property Rights
  • Registration of Patents, Trademarks, Designs and Plants Varieties
  • Research and Development
  • Investment in Design Projects
The PIC scheme is available to all company legal forms under the condition that they carry on active business operations in Singapore.  To qualify for the cash payout, companies must have a minimum of three local employees. The minimum qualifying expenditure for each cash payout application is S$400.

Cash payouts applications must be filed electronically only while tax deductions can be claimed in the income tax return for the relevant year of assessment with no prior approval from IRAS being required.

2. CAPABILITY DEVELOPMENT GRANT (CDG)
The CDG is a financial assistance program in the form of grants managed by SPRING Singapore to help SMEs build business capabilities in 10 development areas:

1. Brand & Marketing strategy development
2. Business Excellence
3. Business Strategy Innovation
4. Enhancing Quality and Standards
5. Financial Management
6. Human Capital Development
7. Intellectual Property & Franchising
8. Service Excellence
9. Productivity Improvement
10. Technology Innovation 

Only the last two areas are not taxable as considered capital in nature.

The grant will cover up to 70% of qualifying costs such as consultancy, training, product development, business development capabilities, productivity increase, manpower. There is no upper limit on the project costs with each application being evaluated on its own merits.

To be eligible, companies must be registered and operating in Singapore, with a minimum 30% local shareholding and a group annual turnover of less than S$100m or less than 200 employees and the project cannot have already started prior to SPRING’s approval.

Companies must provide when applying online via the SPRING portal the latest ACRA search of instant information and its corporate shareholders (if applicable), a project proposal, a quotation for the project costs, the latest audited financial statements of the company.

Once approved by SPRING, the company will be notified by email and the grant will be disbursed within 6-8 weeks after completion of the project.

3. MARKET READINESS ASSISTANCE GRANT (MRA)
The MRA is a financial assistance program in the form of grants managed by International Enterprise Singapore. MRAs grants aim at accelerating the international expansion of Singapore SMEs. Grants support pre-determined activities focused on helping SMEs in their overseas market set-ups, identification of overseas business partners and overseas market promotion.

Funding support is provided by covering up to 70% of the eligible cost for activities listed above, capped at S$20,000 per company per fiscal year.

The grant will be disbursed after project completion.
To be eligible, companies must be registered and operating in Singapore, with their global HQ in Singapore and a group annual turnover of less than S$100m based on the most recent audited report.

The project cannot have started upon application and companies must request a cost quotation from the third party professional that they wish to appoint, then log on to the Business Grant Portal to submit their application and send all claims with the relevant supporting documents to IE via email or post within three months of the project support period.

Once approved, the grant amount will be credited directly into the company’s bank account.

The Singapore Government will look at developing further specific programs and is setting aside a total of $4.5 billion under a new Industry Transformation Programme to support enterprises and industries.

Rosemont in Singapore can assist you with obtaining these incentives. Any further inquiries, please contact us.