Singapore

Tax credit for R&D and Patents

• Deductions up to 400% on qualifying R&D expenditure available as a tax deduction for R&D performed in Singapore.
• Partial government grants available for approved R&D projects.

Description of Incentive

The R&D tax allowance in Singapore allows a 150% enhanced tax deduction on qualifying R&D expenditure in Singapore. This allowance if further enhanced to 400% for the first SG$400,000 of eligible R&^D expenditure for assessment years 2011 through to 2015. A combined expenditure cap of SG$1,200,000 applies from years of assessment 2013 to 2015 with respect to the 400% enhanced deduction.

R&D may benefit from other discretionary tax incentives including a 200% tax deduction on R&D expenditure incurred on projects approved by the Economic Development Board (EDB). However, conditions must be negotiated and additional R&D project approval for the 200% deduction ceased post 31 March 2015. Partial government grants are available to offset costs from qualifying R&D projects.

How to benefit

The enhanced tax deduction is claimable against the company’s taxable profit in the expenditure year that it is incurred. Losses which are underutilized may be carried forward subject to the satisfaction of the shareholders’ continuity test.

The central R&D tax scheme allows an eligible business to convert up to SG$100,000 (but not less than SG$400_ of its qualifying expenditure for each year of assessment into cash at the rate of 60%. This is available for the years of assessment 2013 to 2015.

Definition of R&D

Under the corporate tax statute, R&D is defined as any systematic, investigative and experimental study that involves novelty or technical risk. This must be carried out in the filed of science or technology, with the main objective of acquiring new knowledge or using the result of the study for the production or improvement of materials, devices, products, produce, or processes. Activities which are directly supporting core R&D activities may also qualify.

Eligibility Requirements

Expenditure – includes staff costs, consumables and contracted R&D expenditure, net of Government grants or subsidies.

Industries – Any business conducting qualified R&D project in Singapore may be eligible for the enhanced tax deduction. Research conducting in the social sciences or humanities sciences cannot be claimed unless they are activities which support the qualifying R&D project.

Services

Swanson Reed offers the following services:

• Advice on tax preparation relevant to claiming the R&D tax credits incentive
• Preparation of documents relating to filing and substantiating a R&D taxation claim
• R&D tax advice and consultations
• R&D tax claim planning and preparation