Guide to Singapore Tax Incentives: Maximizing Benefits for Your Business

Singapore is renowned for its competitive tax regime and extensive tax incentives designed to attract businesses and foster economic growth. Whether you are a start-up, SME, or multinational corporation, leveraging these incentives can significantly enhance your business’s financial efficiency. In this guide, we outline the key tax incentives available in Singapore, eligibility requirements, and how they can benefit your business.

Why Singapore Offers Tax Incentives

• Encourage foreign investment.
• Support innovation and productivity.
• Facilitate international expansion.
• Foster growth in key industries such as technology, finance, and manufacturing.

By providing tax relief and exemptions, these incentives help businesses reduce operational costs and improve profitability.

1. Enterprise Innovation Scheme (EIS)

Overview: The EIS supports businesses in undertaking innovation-related activities, encouraging the development and commercialization of innovative ideas.

Benefits:

• Enhanced tax deductions of up to 400% for qualifying innovation-related expenditures.
• Cash payouts of up to $20,000 for qualifying SMEs that opt not to use enhanced deductions.

Eligibility Criteria:

• Registered and operating in Singapore.
• Engaged in qualifying innovation activities such as R&D, IP registration, and workforce upskilling.

2. Start-Up Tax Exemption (SUTE)

Overview: Designed for newly incorporated companies to ease their initial tax burden.

Benefits:

• 75% tax exemption on the first S$100,000 of taxable income.
• 50% tax exemption on the next S$100,000 of taxable income.

Eligibility Criteria:

• Company must be incorporated in Singapore.
• Must be a tax resident in Singapore.
• Cannot have more than 20 shareholders, with at least one holding 10% or more of the shares.

3. Partial Tax Exemption (PTE)

Overview: For companies not eligible for SUTE, PTE provides a partial tax relief.

Benefits:

• 75% exemption on the first S$10,000 of taxable income.
• 50% exemption on the next S$190,000 of taxable income.

Best For: Established companies and SMEs not qualifying as start-ups.

4. Productivity Solutions Grant (PSG)

Overview: The PSG supports businesses in adopting IT solutions and equipment to improve productivity and efficiency. It focuses on solutions in areas such as customer management, data analytics, and financial management.

50% for eligible costs related to pre-approved IT solutions and equipment.

Eligibility Criteria:

• Businesses registered and operating in Singapore.
• At least 30% local shareholding.
• Annual group sales turnover of not more than S$100 million or employment size of not more than 200 employees.

Application Process: Businesses can apply for the PSG through the GoBusiness portal, submitting necessary documents such as a quotation from a pre-approved vendor and the latest ACRA business profile.

5. Double Tax Deduction for Internationalisation (DTDi)

Overview: Helps businesses reduce costs associated with international expansion.

Benefits:

• Double tax deduction for eligible expenses such as overseas business trips, trade fairs, and market surveys.
• Maximum deduction capped at S$150,000 per year.

Eligibility Criteria: Singapore-registered businesses engaged in international market expansion.

6. Pioneer Certificate Incentive (PC)

Overview: Incentivizes companies in high-value industries to establish operations in Singapore.

Benefits: Full tax exemption on qualifying profits for up to 15 years.

Eligibility Criteria: Companies in industries such as advanced manufacturing, technology, and R&D.

7. Investment Allowance (IA)

Overview: Encourages businesses to invest in qualifying fixed assets for productive use.

Benefits: Additional tax deductions on capital expenditure.

Eligibility Criteria: Companies undertaking projects that improve productivity or innovation.

8. Research and Development (R&D) Tax Incentives

Overview: Supports innovation by incentivizing R&D activities.

Benefits:

• 250% tax deduction on qualifying R&D expenses.
• Cash payouts for qualifying SMEs.

Eligibility Criteria: Companies engaged in R&D activities benefiting Singapore.

Applying for Tax Incentives

There are various types of tax incentives available for companies, and these are provided in the Singapore Income Tax Act 1947 (ITA) and Economic Expansion Incentives (Relief from Income Tax) Act 1967 (EEIA). Some of the tax incentives available are listed in the table below.

Governing Legislation	Types of Incentives	Where to Apply
ITA/S13E	Exemption of international shipping profits	MPA www.mpa.gov.sg
ITA/S13G	Exemption of income of venture company	Enterprise Singapore www.enterprisesg.gov.sg
ITA/S13P	Exemption of income of shipping investment enterprise	MPA www.mpa.gov.sg
ITA/S14B	Further deduction for expenses relating to approved trade fairs, trade exhibitions, trade missions, or maintenance of overseas trade office	Enterprise Singapore www.enterprisesg.gov.sg
ITA/S14E	Further deduction for expenditure on research and development project	EDB www.edb.gov.sg
ITA/S43C	Exemption and concessionary rate of tax for insurance and reinsurance business	MAS www.mas.gov.sg
ITA/S43E	Concessionary rate of tax for Finance and Treasury Centre	EDB www.edb.gov.sg
ITA/S43I	Concessionary rate of tax for global trading company and qualifying company	Enterprise Singapore www.enterprisesg.gov.sg
ITA/S43J	Concessionary rate of tax for financial sector incentive company	MAS www.mas.gov.sg
ITA/S43L	Concessionary rate of tax for shipping investment manager	MPA www.mpa.gov.sg
ITA/S43P	Concessionary rate of tax for container investment enterprise	MPA www.mpa.gov.sg
ITA/S43Q	Concessionary rate of tax for container investment manager	MPA www.mpa.gov.sg
ITA/S43T	Concessionary rate of tax for ship broking and forward freight agreement trading	MPA www.mpa.gov.sg
EEIA/ Part 2	Pioneer Industries	EDB www.edb.gov.sg
EEIA/ Part 3	Pioneer Service Companies	EDB www.edb.gov.sg
EEIA/ Part 4	Development and Expansion Incentive	EDB www.edb.gov.sg
EEIA/ Part 8	Investment Allowances	EDB www.edb.gov.sg

Common Mistakes to Avoid

• Inaccurate Documentation: Ensure all submitted documents are accurate and complete.
• Missed Deadlines: Keep track of application and reporting deadlines.
• Misunderstanding Incentives: Seek professional advice to fully understand eligibility and benefits.

Why Work with Apexia Corporate Advisory?

Navigating Singapore's tax incentives can be complex. At Apexia Corporate Advisory, we provide:

• Incentive Identification: Assess which tax incentives best suit your business goals.
• Application Support: Assist with preparing and submitting applications to relevant authorities.
• Compliance Management: Ensure ongoing compliance with incentive requirements and reporting standards.
• Tax Planning Advisory: Optimize your tax strategy to maximize benefits.

Conclusion

Singapore's tax incentives provide businesses with powerful tools to reduce costs, drive innovation, and expand internationally. By understanding the available options and leveraging professional support, your business can unlock significant value. Ready to maximize your tax benefits? Contact Apexia Corporate Advisory today for expert guidance and tailored solutions!