Singapore R&D tax credit

Singapore R&D Tax Credit: A Guide for Businesses

Singapore offers a robust tax incentive program to encourage innovation and technological advancement through its Singapore R&D tax credit schemes. These initiatives are designed to support companies engaged in research and development activities, helping them offset the costs associated with their R&D efforts.

What is the R&D Tax Credit in Singapore?

In Singapore, the R&D tax incentive is part of the Productivity and Innovation Credit (PIC) and is designed to allow businesses to claim tax deductions for qualifying R&D expenses. The program applies to both Singapore-based companies and non-resident companies with a local business presence. This relief can significantly reduce a company’s tax burden by allowing them to write off R&D-related costs.

Qualifying Expenses

Companies can claim tax deductions on a range of R&D-related costs, including:

• Staff costs: Salaries and wages for employees directly involved in R&D activities.

• Consumables: Materials and resources consumed during R&D projects.

• Software: Expenses related to the development or acquisition of software used for R&D purposes.

• Subcontractor costs: Payments made to third parties for conducting R&D on behalf of the company.

Eligibility Criteria

To qualify for the R&D tax incentives, businesses must meet certain conditions. The R&D activities should aim to achieve scientific or technological advancements and must involve systematic investigation or experimentation. The research should also aim to resolve technical uncertainties, whether in product development, process improvements, or other technical aspects.

Tax Deductions

The key benefits include:

1. Enhanced Deductions: Companies can claim up to 250% of qualifying R&D expenditure under the Enhanced R&D Tax Deduction scheme. This gives businesses a significant tax advantage.

2. Tax Credits: In some cases, businesses may be eligible to receive cash payouts based on the amount of R&D expenditure, providing immediate liquidity.

Conclusion

The Singapore R&D tax credit is a valuable tool for businesses focused on innovation, offering them financial relief to continue developing new products, services, and technologies. By leveraging this incentive, companies can boost their bottom line while investing in future growth.