Singapore aims to promote business by enhancing corporate tax incentives: key points in one chart

International Tax News

Singapore’s government, faced with an environment of rising business costs due to near full employment and escalating rents, has proposed enhanced incentives intended to support business transformation and upgrading, in particular for small to medium sized enterprises (SMEs). 

 

SMEs are defined as enterprises having not more than 200 workers or turnover of not more than S$100 million. 

 

This chart conveniently sets out some of the key corporate incentive enhancements Singapore intends to provide.

 

Proposed Change

Details

 

Extending the Productivity and Innovative Credit (PIC) Scheme through 2018 Year of Assessment (YA)

 

The PIC scheme applies a 300% tax deduction allowance on the first S$400,000 of qualifying expenditures:

(1) automation equipment

(2) training

(3) research and development

(4) design

(5) acquisition of intellectual property and (6) registration of intellectual properties.

 

 

Introducing PIC+ scheme for SMEs for YA 2015 to YA 2018

 

The expenditure cap for each qualifying activity will be increased from S$400,000 to S$600,000 from YA 2015 to YA 2018.

 

 

Extending PIC benefits to training of individuals under centralized hiring arrangements

 

Business will be permitted to claim PIC benefits on training expenses for individuals hired under centralized hiring arrangements.

 

 

Extending and refining the Section 19B Writing Down Allowance (WDA), which will be extended 5 years to YA 2020 and for 3 years till YA 2018 for accelerated WDA applicable to Media and Digital Entertainment Companies (MDE)

 

Section 19B WDA  accords 100% WDA to business over a period of 5 years on certain qualifying Intellectual Property Rights.

 

The accelerated WDA for MDE, which allows MDEs to accelerate the writing down period from 5 years to 2 years, will be extended for 3 years to YA 2018.

 

 

Extending the Section 14A Tax Deduction Scheme for Registration Costs of Intellectual Property for 5 years, to YA 2020

 

Businesses may claim 100% tax deduction on registration costs for certain qualifying intellectual property.

 

 

Waiving the withholding tax requirement for payments made to Singapore branches of non-resident companies

 

Payers will no longer need to withhold tax on Section 12(6) and 12(7) payments made to Singapore branches of non-resident companies. 

 

 

Streamlining the stamp duty regime

 

There is no change to the effective rates; the rate structure will change from dollar based to percentage based.

 

 

In addition to other conditions, eligibility for some of the incentive schemes may also require a minimum local shareholding percentage.  Many details about the proposed incentives are not yet available, and we anticipate further details in the near future. 


The information in this article is based on a 2014 memorandum by Pioneer Associates Pte Ltd.

 

For more information on Singapore’s enhanced corporate tax incentives, please contact: