Singapore Tax Incentives

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SINGAPORE TAX INCENTIVES - 2013
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OVERVIEW OF SINGAPORE TAX INCENTIVES
What tax incentives are available in Singapore?
The Singapore Government providestax incentives
for business activities
that enhance the countrys economic
ortechnological development.
The Singapore Government provides tax incentives
for businessactivities that enhance the
countrys economic or technologicaldevelopment.
Tax incentives are available to a wide
range ofindustries, including manufacturing,
shipping, trading, investmentand financial
services sectors.
How are tax incentives offered to companies?
Tax incentives are either in the form of an
exemption from taxation ora reduction in the tax
rates.
Last updated on 18 February 2013
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MANUFACTURING SERVICES INDUSTRY
What are the tax incentives offered to the
manufacturing and services industry?
MANUFACTURING AND SERVICES
Scheme Description
Tax Incentive
Full tax exemption forperiods 5 to 15 years.
Pioneer Enterprise Enterprises which incur
significant capital expenditure
in Singapore or introduce leading edge technology
andmanufacturing skills to Singapore may be
approved as
pioneer enterprises. Tax exemption depends on a
few keyfactors include nature of product,
technology involved andamount invested in
Singapore.
Concessionary tax rate of5 for up to 10 years.
Development Enterprises engaging in projects
which bring significant
Expansion Incentive economic benefit to Singapore
in terms of overall business
spending and nature of activities in Singapore
Full tax exemption forperiods 5 to 15 years.
Pioneer Service A company engaged in qualifying
services, including
Company engineering or technical services,
computer or information
based services, industrial or production based
services andother services as may be prescriber,
may be approved as apioneer service company.
Regional HQ Company should provide corporate
support and
Concessionary tax rate of15 for up to 5 years.
Program headquarters-related services and
business expertise on
regional basis must meet stipulated
requirements.
International HQ Company should provide corporate
support and
Concessionary tax rateas low as 0 for up to
5years.
Program headquarters-related services and
business expertise on
global basis must exceed stipulated
requirements.
Last updated on 18 February 2013
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MARITIME INDUSTRY
What are the tax incentives offered to the
maritime industry?
MARITIME INDUSTRY
Scheme
Description
Tax Incentive
International
Singapore Flagged Ships
Tax exemption is
Shipping Operations
The exemption applies to the income derived from
the carriage in
granted on certain
international waters of passengers, mail,
livestock or goods by seagoing
income derived.
Singapore vessels and includes the income derived
from the charter of suchvessels.
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
carriagearising solely from transhipment from
Singapore.
Approved
The AIS incentive was introduced to increase the
competiveness of shipping
Tax exemption is
International
companies operating from Singapore. Targeting
established international
granted on certain
Shipping Enterprise
ship operators with established worldwide
networks, the scheme seeks to
income derived.
(MSI-AIS)
encourage international ship owners and ship
operators to establish their
commercial shipping operations in Singapore.
Maritime (Ship or
Approved Shipping Investment Enterprise
Tax exemption is
Container) Leasing
Income from chartering or leasing of sea-going
ship (foreign Singapore)
granted on certain
(MSI-ML (Ship) or
outside Singapore port limits, exchange and risk
management activities
income derived.
MSI-ML (Container)
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 incentiveis till 31 May
2016.
Concessionary tax
Approved Container Investment Enterprise (ACIE)
rate of up to 10
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 istill 31 May 2016.
Shipping-related
Approved Shipping and Logistics Scheme (ASL)
Concessionary tax
Support Services
ASL scheme is targeted at companies with an
established track record in the
rate of up to 10,
(MSI-SSS)
provision of freight and logistics services.
Qualified income from approved
applications must be
ship agencies, ship management companies, freight
forwarders and logistics
made before 31 May
operators may be subject to tax exemption.
2016.
Ship Broking and Forward Freight Agreement
Trading Incentive
Companies carrying on ship broking activities and
/ or forward freightagreement 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 theircommitment to expanding
their ancillary shipping activities in
Singaporewould be able to enjoy a concessionary
tax rate arising from providingqualifying
corporate service to qualifying approved related
parties who arecarrying on business of shipping
- related activities.
Last updated on 18 February 2013
Copyright 2013 Rikvin Pte Ltd
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TRADING INVESTMENT SECTORS
What are the tax incentives offered to the
trading sector?
TRADING
Scheme
Description
Tax Incentive
Global Trader
Companies that are carrying on the business of
international
Concessionary
Program
trading of commodities, future, derivative
instruments with
tax rate of up to
good track record may benefit from the incentive.
10
Approved Cyber
A company that is well established and uses the
internet to
Concessionary
Trader
conduct its international trading and marketing
activities, hosts
tax rate of up to
its website and contents in Singapore and bases
a minimum
10
number of personnel in Singapore.
What are the tax incentives offered to the
investment sector?
INVESTMENT
Scheme
Description
Tax Incentive
Enterprise
Start-up companies engaged in innovative and
high-growth
Deductions of
Investment
activities with substantial RD content in
relation to a specific
losses incurred
Incentive
product, process or service. Overseas start-ups
may also be
on disposal
approved on a case-by-case basis.
of shares or
liquidation
Overseas
This incentive is designed to encourage companies
to invest in
Tax exemption
Enterprise
approved overseas investments and projects.
on qualifying
Incentive
instruments
Last updated on 18 February 2013
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FINANCIAL SERVICES INDUSTRY
What are the tax incentives offered to the
financial services industry?
The Financial Sector Incentive (FSI) scheme aims
to promote and encourage the developmentof
Singapores financial services sector. Initial
award periods may vary from 5 to 10 years
basedon headcount and scope of activities
undertaken. Any subsequent renewal of these
incentiveswould depend on the incremental
commitments to Singapore.
Under FSI scheme, qualifying activities can
generally be categorized as follows
ENHANCED TIER
STANDARD TIER
High growth, high value-added activities
Broad range of financial activities
Qualifying Activities
Qualifying Activities
Bond Market (FSI-BM) Derivatives Market
(FSI-DM) Equity Market (FSI-EM)
Lending and Related Activities Debt
Capital Market
Equity Capital Market Treasury
Credit Facilities Syndication (FSI-CFS)
Project Finance (FSI-PF)
Fund Management, Trust Administration, Custod
ian and Other Advisory Services
Islamic Finance (FSI-IF)
Headquarter Services and Qualifying Processin
g Services Company (FSI-HQ)
Last updated on 18 February 2013
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FINANCIAL SERVICES INDUSTRY
FINANCIAL SERVICES INDUSTRY
Scheme
Description
Tax Incentive
Real Estate
A REIT is established as a unit trust and is
regulated by the MAS. The
Tax exemption
Investment Trust
REIT is managed by an asset manager and
administered by a trustee.
on qualifying
(REITs)
A number of tax concessions, subject to the
meeting of conditions,
instruments
may be granted to listed REITs and they include
Tax transparency treatment at the trustee
level were the trustee is not assessed to tax on
the REITs taxable income that is distributed to
the unitholders in the same financial year that
the income is earned.
Tax exemption of individuals regardless of
their nationality or residence status are
granted tax exemption.
Transfer of Singapore properties into listed
REITs would be granted remission of stamp duties
Foreign-sourced income may be exempted from
tax in Singapore
Withholding tax rate of non-resident
non-individual investors is at the reduced rate
of 10
Designated Unit
Under the DUT, specified income derived from
designated
Tax exemption
Trust (DUT)
investments are exempt from Singapore income tax
at the trust level.
on qualifying
DUTs are taxed only on interest income.
instruments
CPF Approved Unit
Under the CPF Unit Trust scheme, specified income
derived from
Tax exemption
Trust (CPF Unit
designated investments are exempt from Singapore
income tax at the
on qualifying
Trust)
trust level. CPF Unit Trusts are taxed only on
interest income
instruments
Approved Unit
AUTs are subject to Singapore income tax in
respect of their
Tax exemption
Trusts (AUTs)
investment income and on one-tenth of the gains
realised from the
on qualifying
sale of their investments.
instruments
Foreign Trusts
Subject to conditions, specified income earned by
a foreign trust or
Tax exemption
an eligible holding company from designated
investments would be
on qualifying
exempt from Singapore income tax.
instruments
Philanthropic
Any fund or asset in any foreign account of a
philanthropic purpose
May be subject to
Purpose Trusts
trust constituted and administered by a trustee
company in
full tax exemption
Singapore and income derived from any fund or
assets of an eligibleholding company established
for the purposes of that philanthropicpurpose
trust which are held for the foreign account of
that trust maybe exempted from tax.
Last updated on 18 February 2013
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FINANCIAL SERVICES INDUSTRY
FINANCIAL SERVICES INDUSTRY (continued)
Scheme
Description
Tax Incentive
Prescribed Locally
Specified Singapore-sourced investment income and
foreign-sourced
Tax exemption
Administered
income derived by LATs may be exempted from tax.
To qualify as
on qualifying
Trusts (LATs)
a LAT, settlors must be individuals and the
beneficiaries must be
investment income
individuals, charitable institutions, trusts or
bodies of persons
established for charitable purposes only.
Non-Resident Fund
Income derived by a qualifying fund managed or
advised by any fund
Tax exemption
Incentive
manager in Singapore in respect of designated
investments would
on qualifying
be exempted. This is applicable to funds
constituted as trusts and
investment income
companies outside Singapore provided that the
funds are not whollyowned by investors in
Singapore. The funds or its trustees should
alsonot have a permanent establishment in
Singapore and should notcarry on a business in
Singapore.
Resident Fund
Specified income derived by an approved company
incorporated and
Tax exemption
Incentive
resident in Singapore from designated investments
arising from funds
on qualifying
managed in Singapore by a fund manage in
Singapore can benefit
investment income
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.
Enhanced Tier
This incentive is available for funds with a
minimum fund size of
Enhanced tax
Fund Incentive
SGD 50 million at the point of application. Under
this scheme, tax
exemption
incentives under the Qualifying Fund and Resident
Fund Exemption
on qualifying
Schemes would be enhanced as follows
investment income
no restriction on the residence status of the
fund vehicles and investors
extended to funds constituted as limited
partnerships
lifting of the investment limit imposed on
resident non-individual investors
Finance and
Approved companies which provide finance and
treasury services
Concessionary tax
Treasury Centre
to related and associated companies outside
Singapore enjoy
rate of up to 10
concessionary tax rates from provision of
qualifying services.
on provision of
Approval for this incentive has to be obtained by
31 March 2016.
qualifying services
Last updated on 18 February 2013
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FINANCIAL SERVICES INDUSTRY
FINANCIAL SERVICES INDUSTRY (continued)
Scheme
Description
Tax Incentive
Approved Trustee
Income derived from specified trust and custodian
services to
Concessionary
Company
non-residents in respect of non-Singapore dollar
investments,
tax rate of up to
specified person such as foreign companies and
foreign mutual
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fund corporations.
Offshore Leasing
Income of a leasing company derived from
Singapore in
Concessionary
offshore leasing of machinery or plant may be
subject to
tax rate of up to
tax exemption. Offshore leasing defined for the
purpose of
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Singapore taxation as the leasing of machinery or
plant where
the leased asset is used outside Singapore
Leased payments are denominated in currencies
other than the Singapore Dollar and are not
deductible against any income derived from
Singapore.
Insurance
An approved insurance company engaging in the
business
Concessionary
of insuring and reinsuring offshore risks will
taxed at
tax rate of up to
concessionary rates on
10
Income arising from the business of insuring
and reinsuring offshore risks
Dividends and interest derived from outside
Singapore, gains or profits from the sale of
offshore investments and interest from Asian
Currency Unit (ACU)
Islamic Bonds
Concessionary
Payouts earned by companies and bodies of persons
in Singapore
from Islamic debt securities substantially
arranged by financial
tax rate of up to
institutions will be taxed at concessionary
rates.
10
Payouts of income derived by resident and
non-resident individuals
from Islamic debt securities are exempt from tax.
Last updated on 18 February 2013
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RESEARCH AND DEVELOPMENT (RD) INDUSTRY
What are the tax incentives offered to the RD
Industry?
RESEARCH AND DEVELOPMENT (RD) INDUSTRY
Scheme Description
Tax Incentive
Enhanced RD The enhanced deductions for RD are
not limited to businesses
400 tax
Deductions whose core activity is research but
also for any businesses that
deduction onfirst 400,000for RD done
inSingapore
demonstrate projects meeting the RD definitions
as follows
conduct of a study in a systematic,
investigative and experimental manner.
___
Involves novelty or technical risks in the
field of science or technology.
150 taxdeductionson balancequalifying
Object of study includes production or
improvement of materials, devices, products,
produce or processes.
expenditure forRD done inSingapore
Companies with projects meeting the RD
definition areallowed enhanced deductions as
follows
___
400 tax deduction for the first 400,000 of
qualifying
expenditure incurred on RD done in Singapore,
oroverseas RD which is related to an existing
trade orbusiness.
100 tax
deductions onbalance for RDexpenditure
150 tax deduction for the balance qualifying
expenditure
incurred on RD done in Singapore.
100 tax deduction for the balance of all other
RD
expenditure, including expenditure incurred on
overseasRD which is related to an existing
business.
Last updated on 18 February 2013
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PRODUCTIVITY INNOVATION CREDIT (PIC) SCHEME
PRODUCTIVITY AND INNOVATION CREDIT (PIC) SCHEME
Scheme
Description
Tax Incentive
Productivity and
The PIC Scheme provides enhanced deduction or
allowance for qualifying
400 tax deduction
Innovation Credit
expenditure incurred on each of the six
activities
on first 400,000
on qualifying
expenditure
1. Research and Development (RD)
___
Please refer to the above.
2. Investments in Approved Design
100 tax deductions
on balance qualifying

400 tax deduction for the first 400,000 of
qualifying expenditure
expenditure
incurred on eligible design activities done in
Singapore on year of
assessment.

100 tax deduction for the balance of
expenditure.
Tax incentive is must be applied through and
is administered by the
DesignSingapore Council.
3. Acquisition of Intellectual Property

400 allowance for the first 400,000 of
qualifying expenditure.

100 allowance for the balance expenditure.
4. Registration of Intellectual Property

400 allowance for the first 400,000 of
qualifying expenditure
incurred on the registration of patents,
trademarks, designs and plant
varieties.

100 allowance for the balance expenditure.
5. Investments in Automation Equipment
400 allowance or tax deduction for the first
400,000 of expenditure
incurred on qualifying investments in automation.
100 allowance or tax deduction for the balance
of expenditure.
Qualifying investments in automation is based
on the list of automation equipment as
prescribed in the PIC Automation Equipment List
published by the IRAS.
6. Training
400 deduction for the first 400,000 of
qualifying training expenditure
incurred on all external training courses, and
in-house training coursesapproved by the
Workforce Development Agency (WDA) and
theInstitute of Technical Education (ITE).

100 tax deduction for the balance of
expenditure.
For each qualifying activity, the following
combined expenditure cap would
apply

800,000 for years of assessment 2011 and 2012

1,200,000 for years of assessment 2013 to 2015
For more information, please proceed to
http//www.rikvin.com/taxation/productivity-innova
tion-credit/
Last updated on 18 February 2013
Copyright 2013 Rikvin Pte Ltd
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