Singapore has established various tax regimes to encourage companies to develop activities that are deemed beneficial to economic development. These regimes are called Singapore Corporate Tax Incentives, and they can apply to several types of activities if the taxpayer meets the specific requirements. Successful applicants must meet stringent requirements and are expected to make significant economic commitments to Singapore.
Here is a list of tax incentives currently in force in Singapore
1. Pioneer Tax Incentive
Companies providing qualifying services or high technological content can be exempt from tax on their qualifying profits for 5 to 15 years.
2. Development and Expansion Incentive
Reduced tax rates apply to companies engaging in new high value-added projects, expanding or improving their operations, or undertaking additional activities after their pioneering period. Income derived from these activities is subject to a 5% tax rate.
3. Intellectual Property (IP) Development Incentive
A 5% or 10% tax rate may apply to income from the commercialization of specific IP.
4. M&A Allowance
The M&A allowance allows for the amortization of 25% of the value of qualifying merger or acquisition transactions completed between April 1, 2015, and December 31, 2025. The amount of the allowance, which can be claimed over five years, is subject to a cap of 5 million SGD or 10 million SGD, depending on the transaction completion date.
This incentive is available to companies incorporated, tax resident, and carrying on business in Singapore. A 200% tax allowance is also provided on transaction costs (capped at SGD100,000 per year of assessment) incurred in connection with qualifying transactions.
5. Financial Services Incentives
a. Finance and Treasury Center Incentive
A reduced rate of 8% may apply to income arising from finance and treasury-approved activities.
b. Financial Sector Incentive
Financial institutions meeting specific criteria may apply for a reduced tax rate between 5% and 13.5% concerning income from certain high-growth and high-value-added financial activities.
c. Real Estate Investment Trusts (REIT)
Listed REITs may apply for a reduced tax rate and tax exemption concerning rental real estate income arising in Singapore or income received in Singapore arising from foreign investment.
d. Insurance Business Development Incentive
A 10% tax rate may apply to insurers’ income arising from insurance activities in Singapore. This rate also applies to income arising from insurance broking and advisory services.
6. Global Trader Programme Incentive
A preferential rate of 5% or 10% may apply to qualifying income from physical trading, brokering of physical trades, and derivative trading income made by international traders.
MyBusiness in Asia can assist you in determining if your business or activities are eligible for any Corporate Tax Incentives in force in Singapore. Do not hesitate to reach out to us and discuss your eligibility and how to structure your projects in Singapore and the rest of Asia.
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