SINGAPORE Law and Practice Contributed by: Azmul Haque, Ashley Chew, Hu Yutong and Aaron Leong, Collyer Law LLC
The IIR requires the parent entity of a multinational group to pay a top-up tax where group entities are subject to an effective tax rate below 15%, while the DTT ensures that such top-up tax is collected in Sin - gapore in respect of low-taxed Singapore entities. 5.3 Available Tax Credits/Incentives Singapore offers a range of tax incentives, exemp - tions, deductions and grants to support business activities and innovation. Some common examples are set out below. Start-Up Tax Exemption Newly incorporated companies may benefit from par - tial tax exemptions for their first three years of assess - ment, subject to conditions. The exemption applies to qualifying new companies incorporated in Singapore and provides for: • a 75% tax exemption on the first SGD100,000 of normal chargeable income; and • a 50% tax exemption on the next SGD100,000 of normal chargeable income. Partial Tax Exemption All companies are eligible for the following partial tax exemption, unless they are claiming the tax exemption for new start-up companies: • a 75% exemption on the first SGD10,000 of normal chargeable income; and • a further 50% exemption on the next SGD190,000 of normal chargeable income. Foreign-Sourced Income Exemption Foreign-sourced income refers to income derived from outside Singapore. As a general rule, such income is taxable in Singapore when it is received or deemed received in Singapore. However, several forms of relief are available to Sin - gapore tax residents, such as: • the exemption of specified foreign-sourced income – certain foreign-sourced income, such as foreign dividends, foreign branch profits and foreign- sourced service income, may be exempt from tax in Singapore, subject to conditions;
• relief under double taxation agreements (DTAs) – where a DTA exists, Singapore tax may be reduced or eliminated in accordance with the treaty provi - sions; or • foreign tax credit (FTC) – credit may be granted for foreign taxes paid, to offset Singapore tax payable on the same income. Enterprise Innovation Scheme (EIS) The EIS supports research, innovation and capability- building activities by providing enhanced tax deduc - tions and allowances for qualifying activities such as: • qualifying research and development (R&D) under - taken in Singapore; • the registration of intellectual property (IP) rights; • the acquisition and licensing of IP rights; • employee training and skills development; and • qualifying innovation projects conducted in collab - oration with polytechnics, the Institute of Technical Education, or other approved partner institutions. Other Investment and Industry Incentives In addition to the above, Singapore offers targeted incentive regimes administered by agencies such as the Economic Development Board and Enterprise Singapore. These incentives typically provide tax exemptions or concessionary tax rates to companies undertaking activities that contribute to Singapore’s economic development. Common schemes include the Maritime Sector Incentive (MSI) for maritime activities, the Finance and Treasury Centre (FTC) incentive for treasury and financing operations, and broader programmes such as the Pioneer Certificate Incentive and the Develop - ment and Expansion Incentive for strategic and high- value activities. 5.4 Tax Consolidation Singapore does not have a full tax consolidation regime. Each company within a group is generally taxed separately for corporate income tax purposes. Group Relief System Instead, Singapore provides a limited form of group relief through the group relief system, which permits qualifying Singapore-incorporated companies in the
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