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Singapore Tax Incentives 2013

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The Singapore Government provides tax incentives for business activities that enhance the country’s economic or technological development. …

The Singapore Government provides tax incentives for business activities that enhance the country’s economic or technological development.

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  • 1. SINGAPORE TAX INCENTIVES - 2013
  • 2. OVERVIEW OF SINGAPORE TAX INCENTIVES The Singapore Government provides What tax incentives are available in Singapore? tax incentives for business activities that enhance the country’s economic or technological development. The Singapore Government provides tax incentives for business activities that enhance the country’s economic or technological development. Tax incentives are available to a wide range of industries, including manufacturing, shipping, trading, investment and financial services sectors. How are tax incentives offered to companies? Tax incentives are either in the form of an exemption from taxation or a reduction in the tax rates.Last updated on 18 February 2013 Copyright © 2013 Rikvin Pte Ltd
  • 3. MANUFACTURING & SERVICES INDUSTRY What are the tax incentives offered to the manufacturing and services industry? MANUFACTURING AND SERVICES Scheme Description Tax Incentive Pioneer Enterprise Enterprises which incur significant capital expenditure Full tax exemption for in Singapore or introduce leading edge technology and periods 5 to 15 years. manufacturing skills to Singapore may be approved as pioneer enterprises. Tax exemption depends on a few key factors include nature of product, technology involved and amount invested in Singapore. Development & Enterprises engaging in projects which bring significant Concessionary tax rate of Expansion Incentive economic benefit to Singapore in terms of overall business 5% for up to 10 years. spending and nature of activities in Singapore Pioneer Service A company engaged in qualifying services, including Full tax exemption for Company engineering or technical services, computer or information periods 5 to 15 years. based services, industrial or production based services and other services as may be prescriber, may be approved as a pioneer service company. Regional HQ Company should provide corporate support and Concessionary tax rate of Program headquarters-related services and business expertise on 15% for up to 5 years. regional basis; must meet stipulated requirements. International HQ Company should provide corporate support and Concessionary tax rate Program headquarters-related services and business expertise on as low as 0% for up to 5 global basis; must exceed stipulated requirements. years.Last updated on 18 February 2013 Copyright © 2013 Rikvin Pte Ltd
  • 4. 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 such vessels. 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 carriage arising 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 incentive is till 31 May 2016. Approved Container Investment Enterprise (ACIE) Concessionary tax Leasing of containers to onshore/offshore leassess. Expiry of incentive is till rate of up to 10% 31 May 2016. Approved Container Investment Manager (ACIM) Strategic control and management of ACIEs can qualift. Expiry of incentive is till 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 freight agreement 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 their commitment to expanding their ancillary shipping activities in Singapore would be able to enjoy a concessionary tax rate arising from providing qualifying corporate service to qualifying approved related parties who are carrying on business of shipping - related activities.Last updated on 18 February 2013 Copyright © 2013 Rikvin Pte Ltd
  • 5. 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 R&D 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 instrumentsLast updated on 18 February 2013 Copyright © 2013 Rikvin Pte Ltd
  • 6. 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 development of Singapore’s financial services sector. Initial award periods may vary from 5 to 10 years based on headcount and scope of activities undertaken. Any subsequent renewal of these incentives would 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) • Lending and Related Activities • Derivatives Market (FSI-DM) • Debt Capital Market • Equity Market (FSI-EM) • Equity Capital Market • Credit Facilities Syndication (FSI-CFS) • Treasury • Project Finance (FSI-PF) • Fund Management, Trust Administration, Custodian and Other Advisory Services • Islamic Finance (FSI-IF) • Headquarter Services and Qualifying Processing Services Company (FSI-HQ)Last updated on 18 February 2013 Copyright © 2013 Rikvin Pte Ltd
  • 7. 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 REIT’s 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 eligible holding company established for the purposes of that philanthropic purpose trust which are held for the foreign account of that trust may be exempted from tax.Last updated on 18 February 2013 Copyright © 2013 Rikvin Pte Ltd
  • 8. 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 wholly owned by investors in Singapore. The funds or its trustees should also not have a permanent establishment in Singapore and should not carry 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 servicesLast updated on 18 February 2013 Copyright © 2013 Rikvin Pte Ltd
  • 9. 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 10% 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 10% 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 Payouts earned by companies and bodies of persons in Singapore Concessionary 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 Copyright © 2013 Rikvin Pte Ltd
  • 10. RESEARCH AND DEVELOPMENT (R&D) INDUSTRY What are the tax incentives offered to the R&D Industry? RESEARCH AND DEVELOPMENT (R&D) INDUSTRY Scheme Description Tax Incentive Enhanced R&D The enhanced deductions for R&D are not limited to businesses 400% tax Deductions whose core activity is research but also for any businesses that deduction on demonstrate projects meeting the R&D definitions as follows: first $400,000 for R&D done in • conduct of a study in a systematic, investigative and Singapore experimental manner. ___ • Involves novelty or technical risks in the field of science or technology. 150% tax deductions • Object of study includes production or improvement of on balance materials, devices, products, produce or processes. qualifying expenditure for R&D done in Companies with projects meeting the R&D definition are Singapore allowed enhanced deductions as follows: ___ • 400% tax deduction for the first $400,000 of qualifying expenditure incurred on R&D done in Singapore, or 100% tax overseas R&D which is related to an existing trade or deductions on business. balance for R&D expenditure • 150% tax deduction for the balance qualifying expenditure incurred on R&D done in Singapore. • 100% tax deduction for the balance of all other R&D expenditure, including expenditure incurred on overseas R&D which is related to an existing business.Last updated on 18 February 2013 Copyright © 2013 Rikvin Pte Ltd
  • 11. 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 1. Research and Development (R&D) expenditure • Please refer to the above. ___ 2. Investments in Approved Design 100% tax deductions • 400% tax deduction for the first $400,000 of qualifying expenditure on balance qualifying incurred on eligible design activities done in Singapore on year of expenditure 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 courses approved by the Workforce Development Agency (WDA) and the Institute 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-innovation-credit/Last updated on 18 February 2013 Copyright © 2013 Rikvin Pte Ltd
  • 12. Helpful Links:Company RegistrationSingapore Work VisasBusiness ServicesAccounting ServicesOffshore CompanyRIKVIN PTE LTD20 Cecil Street, #14-01, Equity Plaza, Singapore 049705Main Line : (+65) 6320 1888Fax : (+65) 6438 2436Email : info@rikvin.comWebsite : www.rikvin.comReg No 200100602KEA License No 11C3030This material has been prepared by Rikvin for the exclusiveuse of the party to whom Rikvin delivers this material.This material is for informational purposes only and hasno regard to the specific investment objectives, financialsituation or particular needs of any specific recipient.Where the source of information is obtained from thirdparties, Rikvin is not responsible for, and does not acceptany liability over the content. Copyright © 2013 Rikvin Pte Ltd