Tax incentives in Singapore | KPMG | GLOBAL

Singapore: Tax incentives proposed for companies relocating to Singapore

Tax incentives in Singapore

An inward re-domiciliation regime was introduced in March 2017 to increase Singapore’s competiveness as an international business hub. The Ministry of Finance recently issued the draft Income Tax (Amendment) Bill for public consultation that includes the proposed tax framework for companies re-domiciled in Singapore.

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The proposed tax treatment set out under the draft legislation is only applicable to a foreign corporate entity if it has not carried on any trade or business in Singapore before the date of re-domiciliation. The provisions are broadly as follows:

  • Capital allowances would be claimable on qualifying plant and machinery based on the lower of the net book value or the market value at the time of re-domiciliation.
  • Writing down allowances would be claimable on qualifying intellectual property rights based on the lower of acquisition cost (less accumulated amortisation and impairment) or the open market value at the time of re-domiciliation.
  • There would be no deduction for bad debts written off in respect of debts incurred before the date of re-domiciliation. Likewise, bad debts written off prior to re-domiciliation and that are recovered would not be taxable.
  • Trading stock would be valued at the lower of cost or net realisable value on the date of re-domiciliation for the purpose of tax deductions.
  • There would be no deduction for expenses incurred prior to re-domiciliation for which relief from tax was given in another jurisdiction. A deduction would be available in respect of the following costs incurred solely for the purposes of a trade in Singapore that was not conducted prior to the date of re-domiciliation—IP protection costs, R&D costs, renovation and refurbishment costs, qualifying design expenditure and pre-trading expenditure.
  • Relief for exit taxes would be available following re-domiciliation if the original place of incorporation of the foreign corporate entity imposes taxes on income that would also be subject to tax in Singapore (for example, an exit tax on unrealised profits that are subsequently taxed in Singapore). In such instances, a credit may be available against any additional tax arising, subject to conditions and approval by the Finance Minister.

 

Read an August 2017 report [PDF 415 KB] prepared by the KPMG member firm in Singapore

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