Singapore is no stranger to investments from tech companies from all over the world. 80 of the world’s top 100 tech companies have expanded to Singapore. These big companies include Zoom, Snap, Tencent, Twitter, and Rakuten Mobile.
Why are these big-time tech companies flocking Singapore? It is because tech startups seek jurisdictions that have potential consumer market, talent, and healthy competition. Most of all, tech companies are looking for good funding. And Singapore has all of these. And that gives the city-state means to attract foreign tech companies in Singapore.
Here are the most prominent opportunities and incentives available for tech companies in Singapore.
Development and Expansion Incentives
Singapore offers Development and Expansion Incentives (DEI) to Singapore-based tech companies. This is to help companies move to high value-adding business activities. Simply, this incentive allows companies to expand their operations within Singapore. Through the DEI, companies can acquire advanced machinery and equipment with less tax. Tax reduction on their incremental income from qualifying activities ranges from 5% to 10%.
Innovation companies may claim capital allowance on certain fixed assets that are used overseas for trade and or business. The introduction of the Integrated Allowance Scheme will provide an additional allowance on fixed capital purchases. The qualification of the capital acquisitions to be eligible for the allowance is it must be a productive asset to be used for approved overseas projects.
Digital Economy Agreements
Singapore continues to strive to remove barriers for the benefit of the companies. As such, in June 2020, Singapore, Chile, and New Zealand signed the Digital Economy Partnership Agreement (DEPA). The DEPA allows for the economic engagement and trade between these countries. This agreement will facilitate end-to-end digital trade, enable data flows across borders, and build reliable digital systems.
Further, also in 2020, Singapore co-signed the Singapore-Australia Digital Economy Agreement (SADEA). This agreement maps collaboration projects in tech areas like artificial intelligence, and personal information protection.
Pioneer Incentive Scheme
This scheme provides companies that manufacture tech products and provide tech services up to full tax exemption. These exemptions are specific to qualifying profits. Foreign tech companies in Singapore can avail this incentive if they put up a base in the city-state. Eligible tech companies can take advantage of this corporate tax exemption for up to 15 years.
Productivity and Innovation Credit Scheme
Productivity and Innovation Credit (PIC) is put in place to encourage innovative and productive activities. It is a tax benefit where companies can enjoy up to 400% deduction or up to $400,000 allowance for their innovative expenditures. Further, companies may combine the 400% allowable deduction and the $400,000 allowance, with a ceiling of $1,200,000 for over three years.
The activities that would qualify under this scheme include research and development (R&D), intellectual property registration, design activities, automation, and training of employees. Additionally, companies can opt to their innovative expenditure of up to $100,000 into non-taxable cash payout at a conversion rate of 30%
As Singapore has limited tech talents within its people, it faces the challenge of supplying talents to the increasing number of tech companies in Singapore. Its remedy is to lure in foreign talents from other countries. As such, Singapore creates an initiative to attract foreign tech talents into the country.
The new tech pass Singapore, in the form of Tech.Pass is a visa that allows foreign nationals who specialize in the tech industry to stay for 2 at least two years. Initial acquisition of the Tech.Pass will give the holder 2 years to stay and invest, start a business, mentor, or work in the tech industry of Singapore.
Invest in the Tech Industry of Singapore
Opening company in the tech industry of Singapore is much easier now than ever. This is because Singapore is looking to boost the tech industry, and in turn wants to make it easier for companies to settle here.
Expand your foreign tech company in Singapore. We can help you set up your company in a few easy steps. Contact 3E Accounting Singapore to know how.