Industry-specific Corporate Tax Incentives

7 min read

With the corporate income tax standing at 17%, Singapore also provides numerous corporate tax incentives. These initiatives are mostly designed to support small and medium businesses.  

Does your company fall under specific business programmes and where and how to apply? Here’s the list of tax incentives for business you might enjoy.

What are corporate tax incentives about?
“Pioneers” in manufacturing and services industry
Banks & insurers & investors in financial Industry
Research, Development and Innovation
Trading industry
Maritime industry
Aircrafts
Other incentives
How the application for an incentive goes
Authorities granting business incentives

What are corporate tax incentives about?

In Singapore, tax incentives for business come either as an exemption from taxation or a reduction in the tax rates. The programmes cover a whole range of industries, including the manufacturing, shipping, investment, trading and financial sectors. Mind this:

  1. Even if you work in the sector offering tax incentives, you will still have to meet the qualifying criteria.
  2. The government bodies approve companies for the tax incentive schemes on a case-to-case basis. Moreover, the agency responsible for the scheme you pick, might need to seek another body’s approval before making the decision.
  3. The offer of the incentive can be revoked.
  4. For most of the tax incentives, you can get a tax relief only for the particular activity of your company that the scheme covers.

James created an innovative and less time-consuming way to convert the paper construction plans to the computer form and got the tax relief for any process that involves using this technology. However, the activities of his firm not built around this technology are still subject to tax.

5.   The conditions of any incentive or grant might be changed, or several grants might be merged into one. And the government also introduce new programmes. So it is always better to stay tuned to get the most out of the schemes.

“Pioneers” in manufacturing and services industry

If you have come up with an innovative technology or a skill set that will revolutionise your industry, and you are the first in Singapore to apply with the solution, you can prove it to the government and get a tax exemption. You can also grab a chance to get one if you prove your business expansion will contribute to Singapore’s economy.

Scheme For whom Tax relief Where to apply
Pioneer Certificate Incentive(PC) Those companies that can prove that their know-how is substantially more advanced than what Singapore already has Tax exemption for 5 years, can be up to 15 years ora reduced rate of corporate tax no less than 5% The Singapore Economic Development Board (EDB)
Development and Expansion Incentive (DEI) Those companies that can prove their development and expansion will bring Singapore economy closer towards global Concessionary tax rate of 5% for up to 10 years

Banks & insurers in the financial Industry

If you are a king or queen of all kinds of financial consultations — from corporate advice to insurance — there are several options of the tax incentives you might apply for. But still, only if your company is seen as boosting Singapore’s economy.

Scheme For whom Tax relief Where to apply
Finance & Treasury Centre (FTC) Incentive Those who have well-developed activities in providing corporate finance advisory services, management of interest rate, foreign exchange, etc. A reduced corporate tax rate of 8% on income The Singapore Economic Development Board (EDB)
Financial Sector Incentive (FSI) Scheme Licensed financial institutions (banks, fund managers etc), which perform a good mix of business and corporate functions Several concessionary tax rates for trading in loans, headquarter services (like risk management, business planning, etc.) and for fund management Monetary Authority of Singapore
Insurance Business Development Scheme Licenced insurers, providing quality services in risk consulting, claims handling etc. Concessionary rate of up to 10% Monetary Authority of Singapore

Research, Development, and Innovation

If your company leads projects aimed at bringing innovative approaches and researching ways of boosting industrial skills through the training programmed for your employees — the government is ready to support you through the following schemes.

Scheme For whom Tax relief Where to apply
Research Incentive Scheme for Companies (RISC) Those conducting quality research and development in science and technology Co-funding support of up to 30% of qualifying project costs (such as manpower, training, consultancy, etc.) The Singapore Economic Development Board (EDB)
Training Grant for Company (TGC) Those developing manpower capability in the application of new technologies, industrial and professional skills and know-how Up to 30% support on qualifying costs such as trainee salaries and overseas trainee expenses
Intellectual Property (IP) Development Incentive (IDI) Those IP developers who have a good track record, conduct expansionary projects and meet the required economic commitments A reduced corporate tax rate of either 5% or 10% on a percentage of qualifying IP income

Trading industry

For those whose business activity is all about trading — including on the internet —  and have shown significant achievements in this, some concessions are also available.

Scheme For whom Tax relief Where to apply
Global Trader Programme Those who trade commodities, futures, and other things internationally , and have a good track record. Should mostly operate in Singapore A concessionary corporate tax rate (5% or 10%) for a period ranging from 3 – 5 years on International Enterprise Singapore
Approved Cyber Trader Those conducting international trading and marketing on the internet, hosting the website and having at least a minimum personnel in Singapore Concessionary tax rate of up to 10%.

Maritime industry

Shipping companies seeking financial support from the government might get some tax concessions as well if they provide a proper business plan and show they have a good business history.

Scheme For whom Tax relief Where to apply
Approved International Shipping Enterprise (MSI-AIS) Shipping companies with a good track record and a solid business plan for boosting shipping operations in Singapore A tax exemption for shipping companies and a 10% concessionary tax rate for international freight and logistics operators Maritime and Port Authority of Singapore
MSI - Maritime Leasing (MSI-ML) Award Companies with a business plan showing that they will contribute to,Singapore’s economic growth through their ship or container financing operations A concessionary tax rate of 10% Maritime and Port Authority of Singapore
MSI - Shipping-related Support Services (MSI-SSS) Award Companies with a demonstrable business plan in respect of its ancillary shipping activities in Singapore A concessionary tax rate of 10% Maritime and Port Authority of Singapore

Aircrafts

If your company deals specifically with aircraft leasing in Singapore — this is for you.

Scheme For whom Tax relief Where to apply
Aircraft Leasing Scheme (ALS) Those providing quality aircraft leasing, including identifying and acquiring of aircraft engines to be leased, negotiating the leasing terms, managing the leases, etc. A concessionary tax rate of 8% on income The Singapore Economic Development Board (EDB)

Other incentives

Scheme For whom Tax relief Where to apply
International Growth Scheme (IGS) Companies that majorly function in Singapore, but want to grow overseas A concessionary tax rate of 10% International Enterprise Singapore
Regional & International Headquarters Awards Companies that plan to move their regional or international headquarters to Singapore Regional Headquarters Award is a concessionary corporate tax rate of 15%. While International Headquarters Award is a concessionary corporate tax rate of 5 to 10% The Singapore Economic Development Board (EDB)
Mergers & Acquisitions (M&A) Scheme SMEs planning to grow through acquiring shares Several reliefs, like a M&A allowance, stamp duty relief, Double Tax Deduction on the transaction cost The Singapore Economic Development Board (EDB)

The list of tax incentives above doesn’t cover all the possibilities Singapore offers to businessmen, as there is a huge number of tax reliefs and grants, including basic programmes from IRAS, Singapore’s chief tax authority.

How the application for an incentive goes

The application for an incentive and further negotiations with the government may take up to 6 months. Although the incentives are about taxes, your accounting company in Singapore will not be able to complete the procedure on its own — you will have an interview to pass and you will need to present your business plan.  

The application process usually goes through several stages:

  1. Getting ready for a meeting with a particular authority. First you need to understand if you qualify for the incentive. If you think you do, you organise a meeting with the relevant authority at which you will present your business plan.
  2. Meeting with the relevant authority for the first time. You present the plans, and the authority decides whether to give you the incentive support or not. If their answer is “yes”, they ask you to complete application forms.
  3. Application. You complete and submit the application forms and supportive documents.
  4. Incentive negotiations. The authority looks into your application and proposes you an offer of the incentive. You can review the terms and conditions and try to negotiate them with the authority.
  5. Final approval. A final Letter of Offer is issued.

Even after you get your corporate tax incentive, it is not over — you will have to report your activities in relation to the incentive to the government, and if they see that you don’t qualify for the programme anymore, they can revoke the agreement.

Authorities granting business incentives

In the tables above, we’ve mentioned several different government bodies offering tax incentives to businesses. Let’s have a closer look at what they are.

  1. Singapore Economic Development Board (EDB) — a government agency under the Ministry of Trade and Industry. It works to promote Singapore on the international stage as a global centre for business and innovations.
  2. International Enterprise Singapore (IE Singapore) — also being under the Ministry of Trade and Industry, it helps Singapore to establish a global presence in other countries and supports the growth of Singapore as a hub for trading and start-ups.
  3. Monetary Authority of Singapore (MAS) — the central bank of Singapore and the main financial regulatory authority. It conducts monetary policy, including issuing currencies and overseeing payment systems.
  4. Inland Revenue Authority of Singapore (IRAS) — a governmental body under the Ministry of Finance that deals with collecting taxes and also acts as a chief tax advisor to the government.

Conclusion

There is a whole range of government tax incentives for business, both in terms of industries which can enjoy them and types of tax reliefs. However, the path to get one might not be easy and it is better to consult a specialist on how to apply wisely and most efficiently. Once you get the corporate tax incentive, you are expected to report your activities to the government and keep proving that you are still eligible for it.

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