LOGO

Singapore Business Incentives Scheme: Types & Governing Authority

Apart from the tax and financing plans, Singapore also offers business incentives schemes for businesses to draw businesses to Singapore and also to encourage the spirit of entrepreneurship and innovation within Singapore.

GET EXPERT
ASSISTANCE

Table of Contents

singapore business incentives scheme

Overview: Singapore Business Incentives Scheme

Singapore offers various incentives to businesses operating in specific areas. Every company in Singapore that is not a new venture or a medium and small enterprise (SME) or a foreign subsidiary of a well-established business, can benefit from these incentives when operating within the specific sector. 

As in this post we will be going to give you a  brief overview of the industry-specific incentives that are, currently available.

Sector-Specific Business Incentives Scheme

It is the Inland Revenue Authority of Singapore (IRAS) is the tax authority of Singapore and has a variety of tax programs that help companies lower their taxes. SPRING Singapore also provides financing schemes specifically targeted at the development of startups in Singapore. 

Apart from the tax and financing plans, they also offer incentive programs for businesses (in terms of grants or preference in different areas) which are offered in Singapore. 

Government officials like those of the Economic Development Board (EDB), and International Enterprise Singapore have created these incentives to draw businesses to Singapore and also to encourage the spirit of entrepreneurship and innovation within Singapore.

Authorities Granting Business Incentives

The following government agencies in Singapore provide and administer incentives to businesses for Singapore organizations:

  • Singapore Economic Development Board (EDB)

A government agency which works to help promote Singapore as a world-class business location and to encourage foreigners to establish their businesses in Singapore.

  • International Enterprise Singapore (IE Singapore

 A government-run agency was created to boost the export-oriented economy of the country. It also assists Singapore businesses to establish their presence internationally within other international countries.

  • Monetary Authority of Singapore (MAS) 

The financial regulatory authority & The central bank of Singapore.

  • Inland Revenue Authority of Singapore (IRAS)

 The tax-regulatory authority of Singapore.

Types of Incentives by Sector

1. Manufacturing & Services

     1. Development and Expansion Incentive (DEI)

  • OVERVIEW

A reward for Singapore registered companies to perform actions that provide an economic and social benefit to Singapore. This incentive also assists companies to expand their operations.

  • AUTHORITY

EDB

  • BENEFITS

A tax concession rate of 10%, 5% or 15% on the income earned from qualified actions.

 

     2. Land Intensification Allowance

  • OVERVIEW

A tax allowance that can help increase the efficiency of land owned by companies in the industry sector.

  • AUTHORITY

EDB

  • BENEFITS

A tax-free initial allowance of 25%, and the annual tax allowance is 5% for qualified capital expenditure. The capital expenditure that qualifies as qualifying is to be used to construct or renovate a regulated design or construction. 

The expense includes stamp duty to be paid as well as demolition costs, design fees for the building, and more.

 

     3. Approved Foreign Loan Incentive

  • OVERVIEW

A motivation to encourage businesses to invest in efficient equipment to run their businesses in Singapore.

  • AUTHORITY

EDB

  • BENEFITS

Tax rates for withholding taxes are lower on the interest payments to a non-resident lender in the purchase of production equipment. The rates are at 0% or 5%, or 10%.

 

     4. Investment Allowance

  • OVERVIEW

A capital allowance is granted to Singapore companies in connection with an approved project as well as the capital costs that businesses have to pay in the course of the project.

  • AUTHORITY

EDB

  • BENEFITS

An investment allowance is a proportion of permanent capital expense (not over 100 percent). This allowance is given on top of the standard capital allowance. 

The projects for that businesses are eligible for this allowance include research and development and construction, engineering, and technical services, for example.

 

     5. Integrated Investment Allowance (IIA)

  • OVERVIEW

A capital allowance is granted to Singapore companies to cover the cost for the placement of the equipment or plant outside Singapore to be used for a project approved by Singapore.

  • AUTHORITY

EDB

  • BENEFITS

This allowance is given as an addition to the regular capital allowance. Capital allowances are granted to any company that uses machinery, plant and equipment employed solely for business use. 

The IIA is a calculation of the percent of the approved fixed capital expense (not more than 100 percent) on equipment that is productive that is located outside of the country for an authorized project.

Finance

Book free end-to-end experts consultation with Odint legal, accounting and company formation experts.

GET EXPERT
ASSISTANCE

2. Research & Development

     1. Initiatives in New Technology

  • OVERVIEW

A grant for training to encourage technological advancement and industrial R&D and know-how for professionals.

  • AUTHORITY

EDB

  • BENEFITS

30% co-funding for items that qualify, such as the cost of training or for trainees.

 

     2. APPROVED ROYALTY INCENTIVE

  • OVERVIEW

A motivation to encourage the use of technology and know-how by Singapore businesses.

  • AUTHORITY

EDB

  • BENEFITS

Taxes on withholding are lower for royalties (0-5%) paid to non-residents by Singapore businesses compared to present taxes on withholding within Singapore.

 

     3. Research Incentive Scheme for Companies (RISC)

  • OVERVIEW

An incentive program that helps companies to set up R&D centres and facilities. The principal goal is to enhance capacities for research and development in key technological areas.

  • AUTHORITY

EDB

  • BENEFITS

Support for co-funding specific expenses such as manpower costs (30-50 percent) Equipment and materials (30 percent) licensing and royalty (30 percent) and so on.

3. Internationalisation

     1. Market Readiness Assistance (MRA) Grant

  • OVERVIEW

A grant was given for Singapore incorporated companies, to aid their global expansion.

  • AUTHORITY

IE Singapore

  • BENEFITS

Support for financing up to 70% of qualified expenses with a maximum annual limit of S$20,000 for each company. 

The admissible costs are the third-party expenses of marketing, including marketing through internet marketing, market research, feasibility studies, as well as others. For more details, refer to MRA Grant.

 

     2. Mergers & Acquisitions (M&A) Scheme

  • OVERVIEW

A program that encourages M&A of businesses to boost their growth by facilitating their acquisition processes. This program is primarily targeted at Small and Medium Enterprises (SMEs).

  • AUTHORITY

EDB

  • BENEFITS

The government will give an entity that acquires shares of the company that is targeted:

  • An M&A allowance is calculated on the cost total for the purchase of shares by the company of interest.
  • Stamp duty relief.
  • Double Tax Deduction (DTD) on the cost of a transaction.

The government alters allowances, relief from stamps and DTD periodically. For more, see M&A Scheme.

 

     3. International Growth Scheme (IGS)

  • OVERVIEW

A scheme to encourage the development of Singapore-incorporated firms to widen & thrive in the foreign market while operating their key business activities in Singapore.

  • AUTHORITY

IE Singapore

  • BENEFITS

A tax concession rate at 10% over a maximum of five years on marginal income qualifies as qualifying. 

It is only applicable to certain activities that qualify, such as the business and related activities that involve engineering and technical services manufacturing and related services and professional services.

 

     4. Regional & International Headquarters Awards

  • OVERVIEW

A plan to lure corporations to relocate their office in the region or internationally to Singapore.

  • AUTHORITY

EDB

  • BENEFITS

Regional Headquarters Award is a discount rate for corporate tax of 15%.
International Headquarters Award is a discount rate for corporate tax of 5-10%.

The tax rate is based on the additional income earned from activities that qualify under these programs. These rates for corporate tax are in contrast to the standard corporation tax of 17% which is available to Singapore businesses.

4. Trading

  1. Global Trader Programme
  • OVERVIEW

A program that is designed to help facilitate transactions in the market.

  • AUTHORITY

IE Singapore

  • BENEFITS

A corporate tax concession (5 percent or 10 percent) for a time period of between 3 and five years for the qualifying income from trading, which includes all income generated by physical transactions, derivative trading or derivatives, etc. 

Companies that are eligible for this tax benefit must be able to conduct the major portion of trading in Singapore. For more, see Global Trader Scheme.

5. Finance & Treasury

     1. Finance & Treasury Centre (FTC) Incentive

  • OVERVIEW

An incentive to boost Treasury and finance activities in Singapore.

  • AUTHORITY

EDB

  • BENEFITS

A tax concession of 8% for the income that qualifies for the FTC. In addition, FTCs are exempted from withholding tax for payments made to non-residents, such as the payment of interest to banks.

 

     2. Financial sector incentive scheme

  • OVERVIEW

The scheme encourages the expansion that the banking sector is experiencing in Singapore.

  • AUTHORITY

MAS

  • BENEFITS

Tax rates are low (either 5 %, 10 percent, or 12 percent) dependent on the type of financial transactions.

6. Other Tax Incentives

In addition to the business incentives mentioned above In addition to the above business incentives, there are numerous tax breaks and deductions that are available to Singapore companies generally. 

The incentives are tax exemptions and deductions, such as the Productivity and Innovation Credit Scheme (PIC Scheme) that is available to businesses that are investing in innovations, a tax exemption for startups as well as tax deductions for businesses who promote charitable activities and so on.

Finance

Book free end-to-end experts consultation with Odint legal, accounting and company formation experts.

GET EXPERT
ASSISTANCE

Conclusion

A well-designed incentive program can provide your company with numerous opportunities to grow and expand both in the short and long-term term. The primary benefit of the incentive programs is that they trigger behaviour changes, which means that your clients will be willing to be more generous, in order to earn more. 

Well, if you want to know more about Business Incentive Scheme, we are ODINT Consultancy, here to help you out in each & every step of yours.

FAQ’s

The author defines incentives as business aid programs that offer companies advantages such as tax breaks or cash grants, free land, as well as free training for employees. 

They could include low or no rates of interest loans, subordinated loans operating or maintenance grants as well as interest-related subsidies.

The most popular monetary incentives include; Pay & allowances. However, pay increases that are regular throughout the year, and allowances are effective motivators.

In the course of running an incentive plan, your company will see an increase in sales because clients will feel encouraged to purchase from your company. 

Incentive programs improve performance, as they will indirectly boost the performance of employees on average by 22%.

6 Steps To Effective Incentive Compensation

  • Find out what the plan is to achieve. 
  • Find the participants.
  • Set clear goals for performance. 
  • Decide on the logistics.
  • Re-rinse, repeat.

Follow us

Privacy Policy Terms and Conditions

©2021 ODINT Consulting LLP

Looking for an Expert Guidance?

Get 30 minutes of free consultation with our company formation experts!

Will help you to setup your company anywhere in the world

Get Dedicated company formation consultant

End-to-end management and consulting

GET EXPERT
ASSISTANCE

Share to...