Singapore And Its Common Legal Tax Incentives For BusinessesQuBY2E | July 20, 2019 | 2 | Blog , Tax Attorney
The Singapore Income Tax Act And Its Subsidiary Legislations
Under the Singapore IT Act and the legislations that come within it, each industry gets many incentives. For small and medium-sized enterprises, there are bountiful tax exemptions. Each industry has its own incentive. The corporate tax rate is as low as a mere 17%. There are investment-related tax concessions.
The move by the Government of Singapore was made to position the country as a competitive economy at a global level. As long as an industry can prove that the direction, they are taking is similar to the one the state has planned for economic development, they get a whole package of tax incentives and concessions.
In this article, we explore some of the legal tax incentives given to Stainless steel fabricators operating out of Singapore.
Tax Incentive for Innovation And Product Development In Steel Industry
Under the Development and Expansion Incentive, industries like stainless-steel based in Singapore get a reduction in tax of five to ten percent. This is offered on the added income the company earns from qualifying activities. Qualifying activities are defined as:
- high value-addition business activities
- expanding their operations in the country
- procuring advanced machinery and equipment
The DEI essentially encourages companies to develop their business through various means and get reduced tax rate on it. Check Out about the tax incentives for the metal industry.
The Pioneer Incentive Scheme is another incredible tax concession a Singapore-based company gets. It is given to manufacturing firms whose activities raise the benchmark of the entire industry standard. If they achieve this feat, the business is eligible to get a complete corporate tax exemption on any qualifying profits. The waiver can be awarded for a decade and a half.
The PIC scheme is proof that Singapore leaves no stone unturned to promote manufacturers like those of stainless steel to set up shop in the country. The Productivity and Innovation Credit Scheme was introduced nine years back. It encouraged businesses to dive into productive as well as innovative operations. The tax benefits under the scheme are:
- Up to 400% deductions or
- Up to $400,000 allowance
This is given on expenditure the business incurs on the qualifying innovative or productive activity. Some of the activities that are considered to be innovative are:
- Design activities
- Training of employees
- Research & Development
- Intellectual Property registration
- Intellectual Property acquisition
- Automation through technology or software
While most of the concessions given are for plants and setups based in Singapore, there is an investment allowance for overseas. A company in Singapore can claim on its plant and equipment based outside a capital allowance. Some conditions need to be fulfilled for this, and the plant should be in connection to the trade.
In 2012, an Integrated Investment Allowance Scheme was introduced. This scheme offers additional allowance on any fixed capital expense borne on plants and equipment installed overseas. The allowance is given only for approved projects.
Using Singapore As Regional Or Global Headquarters
Besides the tax incentives the government gives for manufacturing and services, there are additional schemes meant to promote the state. With two particular plans, Singapore encourages businesses to keep it as their base:
- Under the International Headquarters Award, the tax incentive is given to every trade or business that sets up their firm in Singapore. The setup should be the worldwide headquarters of all their activities. If the company also surpass the minimum requirements mentioned in the Regional Headquarters Award, they enjoy further concessionary tax rate. The lower tax can range from five to ten percent on the added income gained from qualifying activities.
- Under the Regional Headquarters Award, a company doesn’t need to pay the standard 17% corporate tax rate of Singapore. They enjoy a concessionary 15% tax rate for five years. RHQ is given only to qualifying firms that have placed their Asia Pacific headquarters in Singapore and on income from abroad.
These were just some of the common legal tax incentives for businesses such as stainless-steel fabricators that Singapore tenders.