Singapore: Tax credits as incentives for innovation, R&D

Singapore: Tax credits as incentives for innovation

The current “production and innovation credit” regime was designed with an objective of spurring productivity growth and promoting innovation. Some believe that this goal has not been met, and it has been suggested that the credit would benefit from being “more calibrated” to address different needs that businesses have.

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For instance, one solution put forward would be to provide a hybrid framework under the “production and innovation credit” regime, offering a combination of targeted incentives for different activities during the life journey of each Singapore business.

 

Read a March 2016 report [PDF 422 KB] prepared by the KPMG member firm in Singapore: Boosting value creation through Budget 2016

R&D incentives for biomedical sector

Singapore’s research and development (R&D) incentives for the biomedical sector include the productivity and innovation credit that provides a 400% tax deduction on R&D—but subject to a cap of S$400,000 or S$600,000 (approximately U.S. $292,000 or $437,000, respectively). 

Singapore also has an “angel investors tax deduction” program that provides a tax deduction for 50% of the investment amount, up to a cap of S$500,000. Concerning both incentives, it has been asserted that the dollar-amount caps are too low to benefit the biomedical sector and the risks associated with R&D in this sector.

 

Read a March 2016 report [PDF 202 KB] prepared by the KPMG member firm in Singapore: Growing Singapore’s biomedical R&D

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