SINGAPORE Law and Practice Contributed by: Yang Shi Yong, Drew & Napier LLC
• an additional deduction of 300% on up to SGD400,000 of staff costs and consumables for in-house R&D conducted wholly in Singapore, and another additional deduction of 150% on the balance of qualifying expenses in excess of SGD400,000 until the year of assessment 2028. In lieu of the tax deductions for R&D, eligible busi - nesses may instead opt to convert up to SGD100,000 of the total qualifying expenditure for each year of assessment into cash at a conversion rate of 20%. The non-taxable cash payout is capped at SGD20,000 per year of assessment until year of assessment 2028. 2.3 Special Incentives There are various tax incentives available for different industries, including those explained below. • The Financial Sector Incentive (FSI) scheme, which applies to licensed financial institutions such as banks and fund managers. The FSI scheme was extended to 31 December 2028 and provides for concessionary tax rates of 10% and 13.5% for new and renewal awards approved on or after 1 Janu - ary 2024. Additionally, a concessionary tax rate of 15% is available for awards approved on or after 19 February 2025. The applicable rate depends on the applicable FSI scheme relevant to the qualify - ing FSI activity. • The Global Trader Programme (GTP) scheme, which applies to companies engaged in the busi - ness of international trading of commodities or commodities derivatives, or of brokering interna - tional trades in commodities, or both. The GTP scheme provides for concessionary tax rates of 5% 10% or 15% (for awards approved on or after 17 February 2024) on prescribed qualifying transac - tions. No company may be designated as a global trading company after 31 December 2026. • The Finance and Treasury Centre (FTC) scheme, which applies to companies providing treasury, investment or financial services in Singapore. The FTC scheme provides for a concessionary tax rate of 8% or 10% on income derived, by companies approved under the FTC scheme on or after 17 February 2024, from qualifying FTC services to approved network companies and qualifying FTC activities carried out by the financial and treasury
centre company for its own account with funds obtained from qualifying sources. No company may be designated as an approved FTC after 31
December 2026. 2.4 Loss Relief Carry Forward
Any unabsorbed losses can be carried forward indefi - nitely to be deducted against the statutory income in the following year of assessment, subject to the fulfilment of the shareholding test, where at least 50% of the total number of issued shares of the company must be held by the same persons on: • the last day (ie, 31 December) of the year in which the loss was incurred; and • the first day (ie, 1 January) of the year of assess - ment in which such loss would be deducted. A company may apply for the shareholding test to be waived if there were genuine commercial reasons for the substantial change in shareholders, and this was not undertaken merely to obtain a tax advantage. Carry Back Current year unutilised losses of up to SGD100,000 can be carried back for one year of assessment imme - diately preceding the year of assessment in which the losses were incurred. To carry back losses, an irrevo - cable election must be made by the time the income tax return is lodged. This is subject to the fulfilment of the same shareholding test on: • the first day (ie, 1 January) of the year in which the loss was incurred; and • the last day (ie, 31 December) of the year of assessment in which the loss would be deducted. To carry back the current year’s unutilised losses, the company must also continue to carry on the same trade or business for which the losses were incurred. Offset of Income Losses Against Capital Gain Where a capital gain on the sale of a foreign asset is taxable in Singapore, losses incurred by the seller entity from the sale or disposal of any other foreign asset can be deducted from such gains. This applies where had such other sale or disposal resulted in capi -
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