What tax incentives are available in Singapore?
The Singapore Government provides tax incentives for business activities that enhance the country’s economic or technological development. Tax incentives are available to a wide range of industries, including manufacturing, shipping, trading, investment and financial services sectors.
How are tax incentives offered to companies?
Tax incentives are either in the form of an exemption from taxation or a reduction in the tax rates.
Below is a list of industry and/or sector-specific incentives for Singapore companies:
What are the tax incentives offered to the manufacturing and services industry?
|Pioneer Enterprise||Enterprises which incur significant capital expenditure in Singapore or introduce leading edge technology and manufacturing skills to Singapore may be approved as pioneer enterprises. Tax exemption depends on a few key factors include nature of product, technology involved and amount invested in Singapore.||Full tax exemption for periods 5 to 15 years.|
|Development & Expansion Incentive||Enterprises engaging in projects which bring significant economic benefit to Singapore in terms of overall business spending and nature of activities in Singapore.||Concessionary tax rate of 5% for up to 10 years.|
|A company engaged in qualifying services, including engineering or technical services, computer or information based services, industrial or production based services and
other services as may be prescriber, may be approved as a pioneer service company.
|Full tax exemption for periods 5 to 15 years.|
|Regional HQ Program||Company should provide corporate support and headquarters-related services and business expertise on regional basis; must meet stipulated requirements.||Concessionary tax rate of 15% for up to 5 years.|
|International HQ Program||Company should provide corporate support and headquarters-related services and business expertise on global basis; must exceed stipulated requirements.||Concessionary tax rate as low as 0% for up to 5 years.|
What are the tax incentives offered to the maritime industry?
|International Shipping Operations||Singapore Flagged Ships
The exemption applies to the income derived from the carriage in international waters of passengers, mail, livestock or goods by seagoing Singapore vessels and includes the income derived from the charter of such vessels.Foreign Flagged Ships
The income which qualifies for exemption is from the carriage of passengers, mails, livestock or goods shipped in Singapore but excludes such carriage arising solely from transhipment from Singapore.
|Tax exemption is granted on certain income derived.|
|Approved International Shipping Enterprise (MSI-AIS)||The AIS incentive was introduced to increase the competitiveness of shipping companies operating from Singapore. Targeting established international ship operators with established worldwide networks, the scheme seeks to encourage international ship owners and ship operators to establish their commercial shipping operations in Singapore.||Tax exemption is granted on certain income derived.|
|Maritime (Ship or Container) Leasing (MSI-ML (Ship) or MSI-ML (Container)||Approved Shipping Investment Enterprise
Income from chartering or leasing of sea-going ship (foreign & Singapore) outside Singapore port limits, exchange and risk management activities which are carried out in connection with and incidental to the above operations.Approved Shipping Investment Manager
Managing a portfolio of an approved shipping enterprise. Expiry of incentive is till 31 May 2016. Approved Container Investment Enterprise (ACIE)
Leasing of containers to onshore/offshore leassess. Expiry of incentive is till 31 May 2016. Approved Container Investment Manager (ACIM)
Strategic control and management of ACIEs can qualift. Expiry of incentive is till 31 May 2016.
|Tax exemption is granted on certain income derived.Concessionary tax rate of up to 10%|
|Shipping-related Support Services (MSI-SSS)||Approved Shipping and Logistics Scheme (ASL)
ASL scheme is targeted at companies with an established track record in the provision of freight and logistics services. Qualified income from approved ship agencies, ship management companies, freight forwarders and logistics operators may be subject to tax exemption. Ship Broking and Forward Freight Agreement Trading Incentive
Companies carrying on ship broking activities and / or forward freight agreement trading that are approved may be subject to tax exemption. Qualifying Corporate Services
Approved entities which have a strong record and are able to show their commitment to expanding their ancillary shipping activities in Singapore would be able to enjoy a concessionary tax rate arising from providing qualifying corporate service to qualifying approved related parties who are carrying on business of shipping – related activities.
|Concessionary tax rate of up to 10%, applications must be made before 31 May 2016.|
What are the tax incentives offered to the trading sector?
|Global Trader Program||Companies that are carrying on the business of international trading of commodities, future, derivative instruments with good track record may benefit from the incentive.||Concessionary tax rate of up to 10%|
|Approved Cyber Trader||A company that is well established and uses the internet to conduct its international trading and marketing activities, hosts its website and contents in Singapore and bases a minimum number of personnel in Singapore.||Concessionary tax rate of up to 10%|
What are the tax incentives offered to the investment sector?
|Enterprise Investment Incentive||Start-up companies engaged in innovative and high-growth activities with substantial R&D content in relation to a specific product, process or service. Overseas start-ups may also be approved on a case-by-case basis.||Deductions of losses incurred on disposal of shares or liquidation|
|Overseas Enterprise Incentive||This incentive is designed to encourage companies to invest in approved overseas investments and projects.||Tax exemption on qualifying instruments|
What are the tax incentives offered to the financial services industry?
The Financial Sector Incentive (FSI) scheme aims to promote and encourage the development of Singapore’s financial services sector. The FSI Scheme awards concessionary tax rates of 5, 10 and 12% on income derived from qualifying financial activities conducted in Singapore.
Initial award periods may vary from 5 to 10 years based on headcount and scope of activities undertaken.
The application period for the FSI Scheme – apart from the FSI-Islamic Finance (FSI-IF) scheme – will be extended to 31 December 2018.
With effect from 1 January 2014, several FSI sub-schemes will merge. For example, the range of incentivised activities and financial instruments will be broadened for the FSI-ST, FSI-CM and FSI-CFS awards. The categories are as follows:
|Scheme||New treatment||Concessionary tax rate (%)|
|FSI-Standard Tier (FSI-ST)||The FSI-Islamic Finance (FSI-IF) award has expired on 31 March 2013. The existing qualifying Islamic Finance activities will be incentivised under the FSI-ST award.||12|
|FSI-Headquarter Services (FSI-HQ)||Withholding tax exemption will be granted automatically to FSI-HQ award recipients on interest payments made during the period of their FSI-HQ award for qualifying loans. Effective 25 Feb 2013.||10|
|FSI-Fund Management (FSI-FM)||New applicants will have to satisfy an additional Asset under Management (AUM) requirement of at least S$250m.||10|
|FSI-Capital Market (FSI-CM)||A merger of the FSI Bond Market (FSI-BM) and FSI-Equity Market (FSI-EM). Effective 1 Jan 2014.||5|
|FSI-Credit facilities Syndication (FSI-CFS)||TBC||5|
|FSI-Derivative Market (FSI-DM)||All five separate FSI-DM sub-schemes will merge into this scheme.||5|
|Real Estate Investment Trust (REITs)||A REIT is established as a unit trust and is regulated by the MAS. The REIT is managed by an asset manager and administered by a trustee. A number of tax concessions, subject to the meeting of conditions, may be granted to listed REITs and they include:
||Tax exemption on qualifying instruments|
|Designated Unit Trust (DUT)||Under the DUT, specified income derived from designated investments are exempt from Singapore income tax at the trust level. DUTs are taxed only on interest income.||Tax exemption on qualifying instruments|
|CPF Approved Unit Trust (CPF Unit Trust)||Under the CPF Unit Trust scheme, specified income derived from designated investments are exempt from Singapore income tax at the trust level. CPF Unit Trusts are taxed only on interest income||Tax exemption on qualifying instruments|
|Approved Unit Trusts (AUTs)||AUTs are subject to Singapore income tax in respect of their investment income and on one-tenth of the gains realised from the sale of their investments.||Tax exemption on qualifying instruments|
|Foreign Trusts||Subject to conditions, specified income earned by a foreign trust or an eligible holding company from designated investments would be exempt from Singapore income tax.||Tax exemption on qualifying instruments|
|Philanthropic Purpose Trusts||Any fund or asset in any foreign account of a philanthropic purpose trust constituted and administered by a trustee company in Singapore; and income derived from any fund or assets of an eligible holding company established for the purposes of that philanthropic purpose trust which are held for the foreign account of that trust may be exempted from tax.||May be subject to full tax exemption|
|Prescribed Locally Administered Trusts (LATs)||Specified Singapore-sourced investment income and foreign-sourced income derived by LATs may be exempted from tax. To qualify as a LAT, settlors must be individuals and the beneficiaries must be individuals, charitable institutions, trusts or bodies of persons established for charitable purposes only.||Tax exemption on qualifying investment income|
|Non-Resident Fund Incentive||Income derived by a qualifying fund managed or advised by any fund manager in Singapore in respect of designated investments would be exempted. This is applicable to funds constituted as trusts and companies outside Singapore provided that the funds are not wholly owned by investors in Singapore. The funds or its trustees should also not have a permanent establishment in Singapore and should not carry on a business in Singapore.||Tax exemption on qualifying investment income|
|Resident Fund Incentive||Specified income derived by an approved company incorporated and resident in Singapore from designated investments arising from funds managed in Singapore by a fund manage in Singapore can benefit from tax incentives as long as the company is not wholly owned by investors in Singapore. Approval for this incentive has to be obtained by 31 March 2014.||Tax exemption on qualifying investment income|
|Enhanced Tier Fund Incentive||This incentive is available for funds with a minimum fund size of SGD 50 million at the point of application. Under this scheme, tax incentives under the Qualifying Fund and Resident Fund Exemption Schemes would be enhanced as follows:
||Enhanced tax exemption on qualifying investment income|
|Finance and Treasury Centre||Approved companies which provide finance and treasury services to related and associated companies outside Singapore enjoy concessionary tax rates from provision of qualifying services. Approval for this incentive has to be obtained by 31 March 2016.||Concessionary tax rate of up to 10% on provision of qualifying services|
|Approved Trustee Company||Income derived from specified trust and custodian services to non-residents in respect of non-Singapore dollar investments, specified person such as foreign companies and foreign mutual fund corporations.||Concessionary tax rate of up to 10%|
|Offshore Leasing||Income of a leasing company derived from Singapore in offshore leasing of machinery or plant may be subject to tax exemption. Offshore leasing defined for the purpose of Singapore taxation as the leasing of machinery or plant where:
||Concessionary tax rate of up to 10%|
|Insurance||An approved insurance company engaging in the business of insuring and reinsuring offshore risks will taxed at concessionary rates on:
||Concessionary tax rate of up to 10%|
|Islamic Bonds||Payouts earned by companies and bodies of persons in Singapore from Islamic debt securities substantially arranged by financial institutions will be taxed at concessionary rates. Payouts of income derived by resident and non-resident individuals from Islamic debt securities are exempt from tax.||Concessionary tax rate of up to 10%|
What are the tax incentives offered to the R&D Industry?
|Enhanced R&D Deductions||The enhanced deductions for R&D are not limited to businesses whose core activity is research but also for any businesses that demonstrate projects meeting the R&D definitions as follows:
Companies with projects meeting the R&D definition are allowed enhanced deductions as follows:
|400% tax deduction on first $400,000 for R&D done in Singapore___150% tax deductions on balance qualifying expenditure for R&D done in Singapore___100% tax deductions on balance for R&D expenditure|
|Productivity and Innovation Credit||The PIC Scheme provides enhanced deduction or allowance for qualifying expenditure incurred on each of the six activities:1. Research and Development (R&D)
2. Investments in Approved Design
3. Acquisition of Intellectual Property
4. Registration of Intellectual Property
5. Investments in Automation Equipment
For each qualifying activity, the following combined expenditure cap would apply:
For more information, please proceed to:
|400% tax deduction on first $400,000 on qualifying expenditure___100% tax deductions on balance qualifying expenditure|
Need more information on industry and sector-specific corporate tax incentives?
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