The tax system in Singapore may be described as an exceptional one with tax rates that are very reasonable and uncomplicated, very unlike those implemented in most countries. But more than this, businesses may find it worthwhile to open shop in Singapore for the numerous incentive schemes they may enjoy. Indeed, taking advantage of these grants or tax credits would mean huge savings and vast opportunities for business expansion.

The Productivity and Innovation Credit (PIC) scheme is perhaps the most attractive incentive scheme that may be enjoyed by a business operating in Singapore. Once qualifying conditions are met, a company registered in Singapore may be able to enjoy a tax deduction or allowance of 400 percent or a 60 percent cash payout for investing in innovation and productivity improvements in six selected activities. In additions to this, a firm may be able to get a PIC bonus if requirements are fulfilled.

The six businesses activities covered under the PIC scheme are following:

  • Training of employees
  • Design projects approved by the Design Singapore Council
  • Acquisition or leasing of PIC information technology and automation equipment
  • Research and development activities
  • Registration of patents, trademarks, designs and plant varieties
  • Acquisition and in-licensing of intellectual property rights

The International/Regional Headquarters Award (IHQ/RHQ) is a unique program that offers reduced tax rates on incremental income to companies that comply with the requirements. These requirements would involve the submission of plans for regional or global activities that will be implemented in Singapore. Included in these plans would be the proposals of business spending and the creation of professional employment.

Under the Land Intensification Allowance (LIA), companies may be entitled to an initial tax allowance of 25 percent and annual tax allowance of 5 percent for capital expenditure in the construction or renovation of buildings or structures. These capital expenditures must conform with the qualifying conditions set by the government.

With mergers and acquisitions a common business practice today, there is more reason to do these in Singapore with the introduction of the Mergers and Acquisition (M&A) Scheme.

If such business actions conform to the requirements, an allowance of 25 percent of the value of the acquisition is given to the company, subject to a maximum of $5 million for every year of assessment. Deduction for transaction costs and stamp duty relief may also be availed.

In addition to those already mentioned, companies may also enjoy incentives under the following programs:

  • Integrated Investment Allowance (IIA)
  • Pioneer Incentive
  • Development and Expansion Incentive (DEI)
  • Finance and Treasury Centre (FTC) Tax Incentive
  • Aircraft Leasing Scheme (ALS)
  • Research Incentive Scheme for Companies (RISC)
  • Initiatives in New Technology (INTECH)
  • Land Productivity Grant (LPG)