Not only does Singapore have one of the lowest corporate income tax rates in the world, but it also offers a wide variety of incentives for investors, mainly tax exemptions, tax incentives, or subsidies, and is applicable to most industries.
For overseas companies wishing to set up their headquarters or develop international business in Singapore, the following incentives are available. International Headquarters Award(IHQ)A concessionary tax rate of 5% or 10% on the income of the head office business for companies that place their substantial head office functions in Singapore for the management, coordination, and control of their regional business operations. It is normally granted in conjunction with the Pioneer Enterprise Credit or the Growth and Expansion Scheme.Mergers and Acquisitions Scheme(M&A)The acquirer may receive an M&A allowance of 25% of the qualifying acquisition value (capped at S$40 million per tax assessment year) (capped at S$10 million) and a double pre-tax credit for transaction costs incurred in qualifying share acquisitions (capped at S$100,000)Double Tax Deduction for Internationalisation Scheme (DTDi)200% pre-tax deduction for eligible expenses incurred for international market expansion and investment development activities in the four categories of market preparation, market expansion, market promotion, and market placementMarket Readiness Assistance (MRA) GrantFunding support of up to 70% of eligible costs incurred for advance activities such as setting up overseas markets, business development, and marketing, up to a maximum of S$100,000 per company in each emerging market The maximum funding will be increased to 80%from 1 November 2020 to 31 March 2022
If you are in a manufacturing and service-related businessPioneer Certificate Incentive (PC)Tax exemption on income from eligible pioneering activities. With effect from 1 July 2018, intellectual property (IP) income will no longer be included in the new Pioneer Services Business Concession (PC-S), and excluded IP income will follow the international standard ‘grandfathered schedule’ guidelines.Development and Expansion Incentive (DEI)Incremental income generated from qualifying business activities is taxed at a reduced rate of 5% or 10%. With effect from 1 July 2018, intellectual property (IP) income will no longer be included in the new DEI scheme. Excluded IP income will follow the international standard “grandfathering schedule” guidelines. Investment Allowance (IA)A percentage allowance over and above the normal capital allowance will be paid for approved fixed capital expenditure Integrated Investment Allowance (IIA)For approved projects, a percentage of the approved fixed capital expenditure to be incurred on overseas production equipment or second-hand production equipment (excluding production equipment sold and repurchased) will be paid in addition to the normal capital allowance.Land Intensification Allowance (LIA)An initial allowance of 25% and 5% per annum thereafter is payable for the construction or refurbishment/extension of eligible buildings.Approved Foreign Loan (AFL) AllowanceA concessional or zero rates of withholding tax on interest paid on loans for the purchase of production equipment.The next section will share the incentives for the trade and finance sector, so stay tuned.