In 2024, when the global economic landscape is accelerating the restructuring, Singapore will continue to consolidate its strategic position as the preferred location for the Asia-Pacific regional headquarters by virtue of its unique geographical location, stable political environment and efficient business system. According to the latest data from the Singapore Economic Development Board (EDB), as of the end of 2023, more than 7,000 multinational companies have set up their regional headquarters in Singapore, of which about 46% are Fortune 500 companies from Europe and the United States, and another 35% are from mainland China. and leading companies in Hong Kong, Macao and Taiwan.
The Singapore government’s recently launched “Future Economic Transformation Plan 2030” has further strengthened its position as a regional hub. The plan provides strong support for the development of enterprises in the post-epidemic era through multi-dimensional measures such as improving the tax preferential system, optimizing the business environment, and strengthening innovation support. It is particularly worth noting that the series of new tax policies implemented in early 2024 not only maintain the low corporate tax rate benchmark of 17%, but also launch differentiated preferential programs for enterprises of different industries and sizes, demonstrating Singapore’s competitiveness in global tax competition. significant advantages.
In the context of accelerating regional economic integration, Singapore, as an important member of the RCEP (Regional Comprehensive Economic Partnership Agreement), has established close economic and trade ties with more than 180 countries and regions around the world through a network of 15 free trade agreements. This unique “connector” role allows companies settled in Singapore to make full use of the benefits of various trade agreements, significantly reduce operating costs, and expand market access space. According to PwC’s 2024 Asia-Pacific Investment Environment Report, Singapore has topped the list of regional headquarters suitability assessments for five consecutive years.
For Chinese companies that plan to go overseas or have already deployed overseas, Singapore not only provides an efficient business platform, but also a strategic fulcrum to connect to the global market. By setting up a regional headquarters in Singapore, companies can make full use of its complete financial system, professional service packages and significant tax incentives to achieve global business expansion. It is worth mentioning that the “Digital Economy Partnership Plan” launched by Singapore in 2024 specifically provides more attractive tax incentives for technological innovation companies, which has special strategic significance for Chinese companies seeking digital transformation.
Through the in-depth analysis of this article, readers will have a comprehensive understanding of Singapore’s latest tax preferential system, master the key points of policy application, and thus formulate a tax planning plan that is most suitable for corporate development. In the new era of in-depth development of economic globalization, grasping Singapore’s preferential tax policies is not only related to the optimization of corporate tax burdens, but also an important strategic choice for building international competitive advantages.
Overview of Singapore’s tax system
Singapore’s tax system is known for its transparency, fairness and efficiency, providing companies with a highly competitive business environment. According to the latest statistics from the Inland Revenue Authority of Singapore (IRAS) in 2024, Singapore’s overall tax burden level ranks 15th among 175 economies in the world, and the actual tax burden rate is significantly lower than the average level in the Asia-Pacific region. This advantage is particularly prominent in the global economic recovery in the post-epidemic era.
In terms of corporate income tax, Singapore adopts a single tax rate system, with the standard tax rate maintained at 17%. It is worth noting that the partial taxable income preferential policies implemented from 2024 have further increased support: the first S$10,000 of taxable income can enjoy a 75% tax reduction, and the subsequent S$190,000 of taxable income can enjoy a tax reduction of 75%. The amount can be reduced by 50%. This means that a small and medium-sized enterprise with an annual profit of S$200,000 can have an actual tax rate as low as about 8.5%. According to fiscal year 2023 data released by IRAS, about 85% of newly registered companies had an actual tax rate of less than 10% in the first three years.
At the tax collection and administration level, Singapore implements the principle of territory plus residence. This means that companies only need to pay tax on income sourced in Singapore and income repatriated to Singapore, while income generated overseas and not repatriated does not need to be taxed in Singapore. In early 2024, Singapore further optimized its overseas income taxation system, stipulating that if the overseas income has paid no less than 15% tax at the source, it can be exempted from income tax when repatriated to Singapore. This policy has significantly enhanced the taxation of multinational enterprises. Planning space.
Singapore’s tax advantages are reflected on many levels. The first is the extensive network of tax treaties. As of March 2024, Singapore has signed double taxation avoidance agreements with 89 countries and regions, including major economies along the “Belt and Road”. The second is the comprehensive group tax arrangement, which allows loss transfers and tax credits between Singapore companies within the same group. This policy will further relax the applicable conditions in 2024, and the group shareholding ratio requirement will be reduced from 75% to 70%. The third is the unique tax exemption system, such as preferential tax rates for intellectual property income, super deductions for R&D expenses, etc. These measures effectively reduce the actual tax burden of enterprises.
The tax reform in 2024 shows several obvious characteristics. The first is the implementation of new regulations on taxation of the digital economy, which clarifies the tax obligations of e-commerce platforms and digital service providers, and also introduces preferential tax rate policies for digital service income. Secondly, there is the strengthening of green development incentives, providing 200% tax deduction for equipment investment that meets environmental protection standards, which is expected to benefit approximately 3,000 companies. The third is the optimization of innovation and entrepreneurship support policies. The tax exemption limit for angel investors has been increased to S$500,000. This policy has driven more than S$1 billion in early-stage investment since its introduction.
What deserves attention is the “Future Industry Tax Preferential Plan” launched in 2024, which provides a minimum 5% preferential tax rate for strategic emerging industries such as artificial intelligence, biotechnology, and clean energy, and the application conditions are significantly simplified compared to before. According to EDB forecasts, this policy will attract more than S$20 billion in high-tech industry investment in the next three years. At the same time, in order to support the digital transformation of small and medium-sized enterprises, Singapore has also launched the “SME Go Digital” tax support plan, which provides a 300% super deduction for digitalization-related expenses.
In terms of collection and administration services, the Singapore Inland Revenue Authority comprehensively upgraded the myTax Portal system in 2024, enabling 95% of tax matters to be handled online. The new system introduces artificial intelligence auxiliary functions, which can automatically recommend applicable preferential policies based on corporate historical data, with an accuracy rate of 92%. At the same time, the launch of the cross-border electronic invoice system has greatly simplified the VAT declaration process for international trade companies, saving an average of 40% of compliance costs.
When planning a Singapore tax structure, companies are advised to focus on the following aspects: first, the rational use of the advance ruling system. IRAS promises to respond within 30 working days after receiving the application, which can provide tax certainty for major investment decisions; Secondly, it is to make full use of the advantages of the group’s tax system and optimize the tax burden through reasonable equity structure design; finally, it is to timely track policy updates. IRAS will issue policy interpretation documents every quarter and recommend that enterprises designate dedicated personnel to be responsible for policy tracking and evaluation.
Detailed explanation of preferential policies for key industries
2.1 Preferential policies for manufacturing industry
As an important pillar of Singapore’s economy, the manufacturing industry enjoys the most comprehensive tax preferential system. In 2024, the manufacturing industry’s contribution to Singapore’s GDP will reach 21.5%, and the government’s goal is to increase it to 23% by 2025. To support this goal, Singapore has launched a series of targeted preferential policies.
The Pioneer Certificate is one of the most attractive preferential policies. Qualified enterprises can enjoy a preferential tax rate of 0-5% for 5-15 years. The latest policy adjustment in 2024 will relax the application threshold from the previous “must introduce technology that has not been widely used in Singapore” to “significantly improve the level of existing manufacturing technology.” Specifically, companies need to meet any of the following conditions: investment in fixed assets exceeds S$5 million, or create no less than 30 local professional and technical jobs (with a median monthly salary of no less than S$7,000). According to EDB data, a total of 67 companies will receive Pioneer Certificates in 2023, of which 35% are from the semiconductor industry and 25% are from the biomedical field.
The Extensibility Incentive Scheme (DEI) is mainly open to manufacturing companies that are already operating in Singapore but plan to expand their scale. The policy update in 2024 will extend the preferential period from the previous maximum of 5 years to 10 years, and maintain the preferential tax rate between 5% and 10%. Applicant companies must commit to increasing fixed asset investment by no less than S$10 million or creating 20 new high-skilled jobs during the preferential period. It is worth noting that DEI now allows R&D expenditures to be included in investment commitments, which greatly benefits high-tech manufacturing companies.
The Productivity and Innovation Concession (PIC) scheme gets a major upgrade in 2024. The new version of the PIC+ plan provides a more generous investment deduction for automation equipment. Qualified equipment investments can enjoy a 400% tax deduction, with the upper limit increased from the previous S$600,000 to S$1 million. Of particular concern is the additional 50% super deduction policy for “Industry 4.0” related equipment, which means that companies investing in smart manufacturing equipment can actually receive a 450% tax deduction.
2.2 Preferential policies for the financial services industry
As an international financial center, Singapore provides financial institutions with a highly competitive tax environment. In 2024, the financial services industry will contribute 14.2% of Singapore’s GDP, and the government continues to improve relevant preferential policies.
Financial and Treasury Center Incentive (FTC) is the core preferential policy. The new regulations in 2024 will reduce the eligible corporate income tax rate to 8%, with a preferential period of up to 5 years. Application conditions include: annual business expenditure of no less than S$3 million and employment of at least 10 financial professionals (at least 5 of whom are Singaporeans). In particular, the new policy allows digital transformation expenditures to be included in business expenses, which provides additional incentives for traditional financial institutions to transform.
The Global Trader Program (GTP) targets commodity trading companies. Qualified enterprises can enjoy a preferential tax rate of 5% or 10% on income from specific commodity transactions. The policy update in 2024 expanded coverage and included new commodities such as carbon credits and renewable energy certificates in the preferential list. Applicant companies need to establish substantial operations in Singapore, have an annual turnover of not less than S$100 million, and employ at least 3 full-time traders.
The FinTech Discount Plan will receive a major upgrade in 2024. Eligible fintech companies can enjoy a 0% tax rate on the first S$3 million of taxable income, and an 8% tax rate on the subsequent S$2 million. Applicant companies must hold relevant licenses issued by MAS and at least 50% of their revenue come from innovative financial technology services. Since its launch, the program has supported more than 200 financial technology companies to establish and develop in Singapore.
2.3 Preferential policies for digital economy industry
In order to promote the development of the digital economy, Singapore will significantly strengthen relevant tax support in 2024. The digital economy currently accounts for 17% of GDP and is expected to reach 22% by 2025.
The super deduction for R&D expenses is the most popular preferential policy. The 2024 policy will increase the super deduction ratio of basic R&D expenditures to 250%, with no upper limit. If the R&D project is certified by the Agency for Science, Technology and Research (A*STAR) of Singapore, an additional 50% super deduction can be obtained. Companies can choose to convert tax credits generated by R&D expenditure into cash subsidies at a rate of 60% of eligible expenditures, up to a maximum of S$400,000 per year.
The intellectual property preferential policy framework has undergone major adjustments. Starting from 2024, companies can enjoy a preferential tax rate of 5% on income derived from independent research and development of intellectual property, and a preferential tax rate of 8% on income related to intellectual property purchased and further developed in Singapore. Patent application fees are subject to a 200% super deduction, up to a maximum of S$250,000 per patent.
The digital transformation support plan provides comprehensive support for enterprise digital upgrades. Eligible digital spending can enjoy a 300% tax deduction, including cloud services, data analysis tools, cybersecurity solutions, etc. In particular, a new category of “digital talent training expenditures” has been added in 2024, and relevant expenditures can receive a 400% super deduction, with an annual upper limit of S$500,000 per enterprise.
It is worth noting that the above preferential policies can be used in combination, but companies need to plan carefully to achieve the optimal combination. It is recommended that enterprises consult professional institutions before applying to ensure that they meet the specific requirements of various policies and prepare relevant documents. At the same time, the Singapore government has also established a one-stop service platform (GoBusiness Portal) to provide policy consultation and application support services to enterprises.
Differentiated preferential treatment for investment scale
Singapore’s tax policy system fully considers the characteristics and needs of enterprises with different investment scales and has designed clear-cut preferential schemes. According to data from Enterprise Singapore (ESG) in 2024, the distribution of enterprises of different sizes in Singapore is: large enterprises account for 2%, medium-sized enterprises account for 28%, and small and micro enterprises account for 70%. In response to this structural feature, the government has launched precise tax support policies.
3.1 Exclusive discount for large investment projects (>5 million S$)
Singapore provides the most generous tax treatment for large-scale projects with investments exceeding S$5 million. The “Major Investment Incentive” updated in 2024 stipulates that qualified companies can enjoy tax holidays for 5-10 years, with the actual tax rate as low as 5%. Application conditions include: investment in fixed assets of no less than S$5 million and creation of at least 50 local jobs, of which the proportion of high-skilled positions (with a monthly salary of more than S$7,000) is no less than 30%.
Of particular concern is the newly added “Strategic Industry Acceleration Plan” in 2024. Projects with investments exceeding S$100 million and belonging to strategic industries such as semiconductors, biomedicine, aerospace, etc. can apply for a preferential period of up to 15 years and receive a tax credit of 40% of the land cost. According to EDB statistics, a total of 12 large-scale projects will receive this discount in 2023, driving a cumulative investment of more than S$15 billion.
For the regional headquarters of multinational companies, Singapore has established the “International Headquarters Incentive Program”. Headquarters projects with an investment of more than S$50 million can enjoy a preferential tax rate of 8% for 10 years and receive executive talent introduction quotas. The policy update in 2024 allows investment in intangible assets (such as brands, patents, etc.) to be included in the total investment, which greatly improves the practicality of the policy.
3.2 Preferential scheme for medium-sized enterprises (S$1-5 million)
For medium-sized enterprises with an investment of S$1 million to S$5 million, Singapore has designed a more flexible preferential program. The “Enterprise Development Incentive” launched in 2024 is the core policy. Qualified enterprises can receive a preferential tax rate of 13% for three years, and at the same time enjoy accelerated depreciation of equipment investment of up to S$2 million.
The special support plan for technology upgrading of medium-sized enterprises will be significantly strengthened in 2024. Enterprises can receive a 300% tax deduction for purchasing automation equipment and digital systems, with the annual limit increased to S$800,000. In particular, if you purchase products from local technology solution providers, you can get an additional 50% super deduction.
Special support policy for “specialized, special and innovative” medium-sized enterprises. Enterprises with a market share of more than 20% in a segmented industry can apply for the “Industry Leading Enterprise Plan” and enjoy a combined discount of 400% super deduction for R&D expenditures (upper limit of S$2 million) and 200% super deduction for talent training expenditures. A total of 156 companies will receive this support in 2023, with an average tax reduction of S$500,000.
3.3 Small and micro enterprises (<1 million S$) support policy
For small and micro enterprises with an investment of less than S$1 million, Singapore has adopted a support policy that combines inclusiveness and precision. The “Small and Micro Enterprise Growth Plan” to be implemented in 2024 stipulates that for enterprises with an annual turnover of less than 5 million Singapore dollars, the first 100,000 Singapore dollars of taxable income will be exempted from income tax, and the subsequent 500,000 Singapore dollars will be levied at half the rate. The actual tax burden The rate can be as low as about 5%.
The three-year support plan for start-ups has been further optimized. Newly registered small and micro enterprises can enjoy a 75% tax reduction on taxable income of up to S$300,000 per year in the first three years. New regulations will be added in 2024. If the founder is a young person or a woman under 35 years old, the reduction ratio can be increased to 85%. Data shows that about 12,000 start-ups will benefit from this policy in 2023.
In terms of digital transformation, small and micro enterprises can apply for the “Small and Medium Enterprises Go Digital” plan, and can receive up to 70% of instant deductions on IT equipment investment and digital service subscription fees, with a cumulative limit of S$100,000 per enterprise. In 2024, a special e-commerce platform entry fee subsidy project will be added to support small and micro enterprises in expanding online sales channels.
In order to reduce the financing costs of small and micro enterprises, Singapore has also launched an innovative “Tax Credit Loan Plan”. Enterprises can use the expected tax deductions in the next three years as credit support and obtain preferential interest rate loans of up to S$500,000 from participating banks, with the government providing a 70% credit guarantee. Since its launch in March 2024, this program has helped more than 2,000 small and micro enterprises solve financing problems.
In order to ensure that the policy is implemented and effective, Singapore has established a “one-stop enterprise service center” to provide exclusive service managers for enterprises of different sizes to assist enterprises in selecting applicable preferential policies and completing the application process. It is recommended that enterprises proactively contact the service center to fully understand the specific requirements and operating procedures of various preferential policies to optimize tax planning. At the same time, enterprises should also pay attention to retaining relevant supporting documents to cope with possible tax audits.
Regional headquarters preferential plan
As an important business center in the Asia-Pacific region, Singapore has formulated comprehensive preferential headquarters policies to attract multinational companies to set up regional operation centers. According to data released by the Singapore Economic Development Board (EDB) in 2024, more than 4,500 multinational companies have set up regional headquarters in Singapore, and 46% of them use Singapore as their Asia-Pacific headquarters. In order to further enhance its competitive advantage, Singapore will make important updates to the headquarters preferential program in 2024.
When it comes to Regional Headquarters (RHQ) certification, Singapore has set clear and pragmatic entry requirements. The company needs to have a paid-up capital of no less than S$200,000 and employ at least 10 professional, managerial or executive-level employees locally, at least 5 of whom must be Singapore citizens or permanent residents. In addition, companies must have the ability to manage subsidiaries or branches in at least three Asia-Pacific countries. Enterprises certified by RHQ can enjoy a preferential tax rate of 15% for three years, which is 2 percentage points lower than the standard corporate income tax rate. The 2024 policy update specifically stipulates that if an enterprise expands its management scope to more than 5 countries, the preferential period can be extended to 5 years. Under this framework, enterprises can also enjoy supporting benefits such as withholding tax exemptions on management and technical service income and increased foreign talent introduction quotas.
The International Headquarters (IHQ) program sets higher standards for higher-level decision-making centers. The applicant company must have a paid-up capital of no less than S$2 million and employ at least 25 professional-level employees in Singapore, of which more than 12 must be local citizens or permanent residents. At the same time, annual business expenses must reach more than S$10 million and have the ability to manage business globally or across more than 3 continents. In return, IHQ certified companies can enjoy a preferential tax rate of 5-10%, with a preferential period of up to 10 years. The policy innovation in 2024 specifically emphasizes that companies that move key global functions to Singapore can receive a minimum preferential tax rate of 5%, reflecting Singapore’s determination to attract high-end headquarters functions.
In terms of application process, Singapore has adopted a scientific and rigorous “advance assessment, step-by-step certification” mechanism. Companies first need to submit a letter of intent and preliminary business plan to EDB. After a 2-4 week pre-evaluation, they will then enter the formal application stage, which lasts 6-8 weeks. During this period, companies need to submit detailed business development plans, talent training plans, expected economic contribution indicators and other materials. In 2024, requirements for digital transformation planning and sustainable development commitments have been specially added, reflecting Singapore’s new expectations for the future development direction of enterprises.
In terms of evaluation criteria, EDB mainly conducts comprehensive consideration from the dimensions of decision-making power level, business management scope, financial talent strength and innovation ability. Enterprises that pass the assessment will receive provisional certification and will be converted to formal certification after reaching various commitment indicators within 12 months. It is worth noting that Singapore will introduce a “dynamic monitoring mechanism” in 2024, requiring companies to submit regular progress reports to ensure that preferential policies are effective.
According to the latest statistics, the application success rates for RHQ and IHQ in 2023 are 65% and 42% respectively, reflecting the high entry threshold. It is recommended that the applicant company conduct a full assessment during the preparation stage to ensure that all conditions are met. Pay particular attention to the development of a talent localization plan, which is an important consideration in the evaluation process. Enterprises can also consider adopting a gradual strategy, applying for RHQ first and then upgrading to IHQ when conditions are mature. At the same time, corporate management should pay close attention to policy developments and seize new opportunities brought by policy adjustments to ensure that companies can benefit from Singapore’s preferential headquarters policies to the greatest extent.
In actual operations, companies often hire professional organizations to assist in preparing application materials, which not only improves the success rate of applications, but also helps companies better understand and plan long-term development strategies. As Singapore continues to improve its preferential policy system for headquarters, it is believed that it will attract more multinational companies to set up regional or global headquarters here, further consolidating Singapore’s status as an international business center.
Special Economic Zone Preferences
Singapore adopts an industrial cluster development strategy and promotes the development of key industries through the establishment of specialized industrial parks. According to the industrial plan released by the Ministry of Trade and Industry of Singapore in 2024, special economic zones play a key role in promoting industrial upgrading and technological innovation. Each park provides a series of differentiated preferential policies based on different industrial characteristics, effectively promoting industrial agglomeration and value chain integration.
As Asia’s leading petrochemical and specialty chemicals production base, Jurong Island Chemical Park has attracted more than 100 world-renowned chemical companies to settle in, and its output value will reach S$47.6 billion in 2023. In 2024, the park’s preferential policies have been significantly updated, focusing on supporting the development of green chemicals and circular economy. Newly settled chemical companies can enjoy preferential tax rates for up to 15 years, of which the tax rate is 5% for the first five years and 10% for the next 10 years. In order to encourage enterprises to carry out green transformation, the park has launched a “Green Chemical Incentive Plan” to provide an additional 20% energy cost subsidy to enterprises that use renewable energy and adopt carbon capture technology.
In terms of infrastructure, Jurong Island Chemical Park provides a comprehensive utility system, including steam, industrial water and special gas supplies. New policies in 2024 stipulate that companies investing in energy-saving and emission-reduction facilities can receive up to 50% of subsidies, and the upper limit for a single project is raised to S$5 million. What is particularly noteworthy is that the park has established an intelligent chemical warehousing system. Enterprises settled in the park can enjoy a 40% discount on warehousing costs by using this system, effectively reducing operating costs.
Seletar Aerospace Park is a high-tech industrial cluster that Singapore focuses on building. With the opening of the fourth runway and the new maintenance base in 2024, the park’s preferential policies have also been upgraded accordingly. Newly settled aerospace companies can enjoy a 10-year preferential tax rate. The specific tax rate is divided into three levels according to the investment scale: 5% tax rate for investment exceeding S$200 million, 8% for S$100-200 million, and 8% for S$5,000. 10% for S$10,000-S$100 million. At the same time, the park provides qualified enterprises with equipment purchase subsidies of up to S$2 million.
For aviation maintenance companies, the park has launched the “Smart Maintenance Improvement Plan” to support companies using artificial intelligence and Internet of Things technology to upgrade their maintenance processes. Enterprises can receive 70% subsidies for purchasing intelligent testing equipment and maintenance management systems. Policy innovations in 2024 also include the “Aviation Talent Cultivation Program”, under which companies can receive a subsidy of up to S$30,000 for each local technician they train, effectively alleviating the shortage of skilled talents in the industry.
In addition to the above-mentioned key parks, Singapore also has a number of specialized industrial parks. The Qiao Biomedical Park in the west focuses on the development of the life science industry. The “Biopharmaceutical Acceleration Plan” launched in 2024 provides tax incentives for up to 15 years and a 50% subsidy for clinical trial costs. The newly established Tuas Intelligent Manufacturing Park provides comprehensive support for Industry 4.0 projects, including robot automation subsidies, industrial Internet application subsidies, etc.
The preferential policies of each park usually adopt the model of “basic preferential + special incentives”. Basic benefits include tax exemptions and land rental concessions, while special incentives are targeted at specific areas such as technological innovation, talent training, and green development. Starting in 2024, the park administration will launch a “one-stop service platform” to provide policy consultation, application processing, project coordination and other services to settled enterprises, greatly improving the efficiency of policy implementation.
It is worth noting that enterprises applying for park discounts need to meet substantive operational requirements. Generally speaking, enterprises need to set up physical business premises in the park, invest in fixed assets to reach the promised amount, and complete local employment commitments as planned. The new regulations in 2024 specifically emphasize that companies need to regularly submit environmental impact assessment reports and social responsibility performance reports, which has also become an important condition for continuing to enjoy preferential policies.
According to the latest statistics, preferential policies for special economic zones have effectively promoted the development of industrial clusters. In 2023, various industrial parks will attract a total of S$17.2 billion in foreign direct investment and create 28,000 jobs. As Singapore continues to improve park supporting facilities and optimize policy systems, it is expected that more high-tech companies will choose to settle and develop in special economic zones in the future, further enhancing Singapore’s strategic position in the global industrial chain.
Application process and precautions
When applying for various preferential policies in Singapore, companies need to fully understand the specific requirements and operating procedures of different policies. According to the latest statistics from the Singapore Economic Development Board (EDB) in 2024, the overall success rate for preferential policy applications is approximately 58%, with the success rate for large enterprises being significantly higher than that of small and medium-sized enterprises. In order to improve application efficiency, Singapore launched a “one-stop application platform” for corporate preferential policies in early 2024, which significantly simplified the application process.
There are obvious differences in application conditions for different types of preferential policies. The pioneer enterprise preferential requirement requires that the applicant company has significant technological innovation capabilities or introduces new industries, the minimum investment must reach S$5 million, and it must commit to creating at least 30 local professional jobs within three years. The development and expansion preferential treatment focuses more on the company’s expansion plan, requiring the existing business scale to reach a certain level and the annual turnover to be no less than S$100 million. The international headquarters preferential threshold is the highest. In addition to the substantial investment commitment, it is also necessary to prove that the company has regional or global decision-making functions.
When preparing application materials, companies need to pay special attention to completeness and accuracy. Basic application materials include company registration documents, audited financial statements, detailed business plans, etc. The business plan is the focus of the evaluation and needs to clearly demonstrate the feasibility, market prospects, technical advantages and economic contribution of the project. In 2024, companies will be newly required to provide digital transformation planning and environmental social responsibility (ESG) commitment letters, which reflects Singapore’s emphasis on corporate sustainable development.
The application approval process is generally divided into three main stages. The first stage is the preliminary review. EDB will complete the data integrity check and provide preliminary feedback within 15 working days after receiving the application. The second stage is substantive evaluation, including technical evaluation, financial evaluation and on-site inspection, which generally takes 6-8 weeks. The third stage is final approval, and a formal approval will be issued to projects that have passed the evaluation. This stage takes about 2-3 weeks. If the entire process goes smoothly, it can usually be completed within 3 months.
In 2024, Singapore introduced the “fast track” mechanism. Enterprises that meet certain conditions, such as those that have a successful operating record in Singapore or are leading enterprises in key development industries, can enjoy an accelerated approval process, shortening the overall approval time to 6 weeks. At the same time, for companies that apply for multiple preferential policies, EDB provides “packaged approval” services to achieve parallel evaluation and improve efficiency.
In practice, common problems faced by enterprises mainly focus on several aspects. First of all, the understanding of preferential conditions is not accurate enough. It is recommended to fully consult EDB or professional institutions before applying. Secondly, the quality of the business plan is not high, lacking specific data support and a clear development plan. Thirdly, the local talent training plan is not perfect enough, which is often an important reason why applications are rejected.
In order to improve the application success rate, companies need to pay attention to the following key points. First of all, it is necessary to conduct an in-depth study of the specific requirements of each preferential policy and choose the plan that best suits the actual situation of the enterprise. Secondly, when preparing a business plan, you must highlight the project’s innovative nature and contribution to Singapore’s economy. In particular, specific measures in technology transfer, talent training and industrial upgrading should be detailed. In addition, it is recommended to maintain communication with relevant departments in advance to keep abreast of assessment developments and supplement and improve materials.
An important change in 2024 is the introduction of a “dynamic assessment mechanism”. Enterprises that receive preferential treatment are required to submit regular progress reports to explain the completion of promised indicators. If the promised target is not met, the company will face the risk of downgrading or canceling the preferential treatment. This requires enterprises to carefully evaluate their own capabilities and set reasonable and feasible development goals when applying.
According to EDB data, about 75% of companies that successfully obtained discounts were able to complete their promised targets as scheduled. In particular, companies that perform well in local employment and technological innovation are often able to obtain preferential period extensions or additional incentives. This also shows that when companies apply for preferential policies, they should take a long-term view and closely integrate policy support with the company’s own development to achieve mutual benefit and win-win results.
In terms of follow-up management, companies need to establish a dedicated team to be responsible for policy implementation and compliance management. Regularly check the completion of various indicators and find and solve problems in a timely manner. At the same time, attention should be paid to preserving relevant supporting materials for review by regulatory authorities. Through standardized management, we ensure that enterprises can continue to enjoy the development dividends brought by preferential policies.
Strategies for applying the combination of preferential policies
Singapore’s preferential policy system is carefully designed, and different policies are both independent of each other and can be flexibly combined. According to the policy evaluation report released by the Singapore Economic Development Board in 2024, the rational use of policy combinations can reduce enterprises’ comprehensive tax costs by 30-45% and significantly improve operational efficiency. The following is a detailed analysis of the optimal combination strategy of preferential policies from the three dimensions of industry characteristics, development stage and investment scale.
In the manufacturing field, companies can adopt a combination model of “basic discounts + special incentives”. Taking the semiconductor industry as an example, large-scale projects with an investment of more than S$500 million can apply for both the Pioneer Enterprise Discount (5% tax rate, 10-year period) and the Productivity Improvement Plan (50% equipment investment subsidy, with an upper limit of S$10 million). The new “Intelligent Manufacturing Incentive Plan” added in 2024 allows companies to use the super deduction of R&D expenses (250%) and intellectual property preferential treatment (50% tax reduction on royalty income) to further reduce innovation costs. According to the latest data, manufacturing companies adopting this combination can achieve an average comprehensive cost advantage of 15-20%.
Companies in the digital economy can focus on an innovation-oriented policy mix. Taking financial technology companies as an example, during the start-up period, they can apply for the “Digital Acceleration Program” (70% subsidy for operating expenses in the first year) and the “Talent Cultivation Subsidy” (up to S$30,000 per local employee). As your business develops, you can further apply for financial technology innovation fund support (up to S$2 million for a single project) and intellectual property discounts. The “Digital Services Export Plan” specially launched in 2024 allows qualified companies to reduce the tax rate on service income to 8%. This policy can be used at the same time as R&D incentives.
Due to the characteristics of long R&D cycles and heavy investment, biopharmaceutical companies can adopt a “combination of long-term and short-term” preferential combinations. In the early research and development stage, a combination of super deduction of research and development expenses and clinical trial subsidies (covering up to 30% of costs) can be used. After entering the commercialization stage, you can apply for intellectual property development preferential treatment (the actual tax rate can be as low as 5%) and production base construction subsidies. The newly added “Biopharmaceutical Value Chain Optimization Plan” in 2024 specifically supports the construction of local industrial chains. Companies setting up production bases in Singapore can receive land cost subsidies and infrastructure supporting support.
From the perspective of enterprise development stage, start-up enterprises should give priority to cash flow support policies. For example, the “Venture Investment Plan” provides up to 70% of the start-up capital matching, which can be combined with the “Talent Cultivation Subsidy” and “Technology Procurement Subsidy”. Enterprises in the rapid growth stage should pay attention to large-scale development policies. For example, development and expansion discounts can be used in conjunction with industrial transformation plans to support rapid expansion of enterprises. Mature companies can consider applying for headquarters discounts and setting up their regional operations centers in Singapore to enjoy comprehensive policy support.
The matching of investment scale and preferential policies also requires careful design. For small and medium-sized enterprises with an investment of less than S$10 million, it is recommended to give priority to application for industry-specific support plans and productivity improvement subsidies. The application threshold for such policies is relatively low and the approval cycle is short. Enterprises with an investment of S$10 million to S$50 million can consider development and expansion incentives and apply for relevant supporting support. Large-scale investment projects (more than S$50 million) can apply for pioneer enterprise status and cooperate with exclusive preferential treatment for industrial parks to maximize policy benefits.
The 2024 policy update particularly emphasizes the orientation of green development, and companies should fully consider this factor when designing their preferential packages. For example, manufacturing companies can combine traditional production concessions with the “Green Transformation Support Plan” to enjoy additional carbon emission reduction subsidies and energy efficiency improvement incentives. Financial companies can obtain issuance fee subsidies by issuing green bonds and enjoy preferential tax rates on related income.
In actual operations, companies need to pay attention to the timing of policy combinations. Some preferential policies have mutually exclusive terms and trade-offs need to be carefully evaluated. It is recommended that enterprises make comprehensive calculations before applying and choose the combination with the largest net income. At the same time, the company’s long-term development plan should be considered and room for policy upgrades should be reserved. For example, you can apply for industry-specific support first, and then upgrade to a more comprehensive headquarters discount when conditions are mature.
It is worth noting that the use of policy combinations needs to consider compliance requirements. Different preferential policies may have different assessment indicators, and companies need to ensure that they have the ability to meet various requirements at the same time. It is recommended to set up a dedicated project management team to coordinate the application and implementation of various policies, regularly evaluate the effects, and timely adjust and optimize the combination plan.
According to EDB statistics, companies that successfully use policy combinations in 2023 will receive an average of 25% more policy dividends than companies that use preferential policies alone. This shows that a scientific and reasonable policy combination can not only maximize corporate profits, but also promote the all-round development of enterprises and double the policy effects. As Singapore continues to optimize and improve its preferential policy system, companies should maintain policy sensitivity and actively seek the policy mix that is most suitable for their own development.
Case analysis
This chapter provides an in-depth analysis of how companies can effectively utilize Singapore’s preferential policies to achieve business development through three typical cases. These cases are all from companies that have successfully launched or transformed during 2023-2024, and have strong reference value and practical guidance significance.
Manufacturing Case: Transformation and Upgrading of ABT Semiconductor (pseudonym)
ABT Semiconductor was originally a traditional wafer manufacturing company. In 2023, it invested S$1.5 billion in Singapore to build a new generation of smart manufacturing base. Enterprises have successfully achieved digital transformation through carefully designed policy packages. First, the company obtained the status of a pioneer enterprise and enjoyed a preferential tax rate of 5% for 5 years. Secondly, it received S$45 million in equipment subsidies through the “Smart Manufacturing Incentive Scheme” to introduce smart production lines and Internet of Things systems. Third, use the R&D super deduction policy to invest S$200 million to develop a new generation of chip manufacturing technology, and enjoy a 250% tax deduction for related expenditures.
In terms of talent training, ABT cooperated with Singapore Institute of Technology to establish a training center and received support from the “SkillsFuture Program”, with each local employee receiving a 70% subsidy for the training cost. Through systematic policy support, ABT will double its production capacity in 2024, increase its yield rate by 15%, and increase its per capita output value by 35%. It is particularly worth mentioning that through the transformation of smart manufacturing, the company reduced energy consumption by 28% and received additional green development rewards. This case shows that manufacturing companies can achieve all-round upgrades through a combination of innovation, talent and environmental protection-related policies.
Technology enterprise case: CloudTech (pseudonym) implementation and development
CloudTech is a technology company focusing on enterprise-level artificial intelligence solutions. In 2023, it chose to set up its Asia-Pacific headquarters and R&D center in Singapore. The company first applied for the Digital Acceleration Program and received S$2 million in start-up support. Using this funding, CloudTech quickly established a local R&D team and obtained training funds of up to S$30,000 for each local engineer through the “Talent Cultivation Subsidy” project.
In terms of intellectual property layout, CloudTech has transferred 100 core patents in its global patent pool to Singapore through the intellectual property development preferential plan, and related income enjoys a preferential tax rate of 8%. At the same time, enterprises participate in the “Digital Services Export Plan” to provide cloud services to regional customers to obtain additional tax incentives. Through policy overlay, CloudTech achieved profitability in the first year of implementation, with the number of customers reaching 150% of expectations. By the second quarter of 2024, its team size in Singapore will expand to 200 people, 80% of which are local employees.
The key to the success of this case is that the company accurately grasped Singapore’s policy guidance for developing the digital economy and closely integrated business development with the local industrial ecology. In particular, efforts in talent localization have given enterprises more opportunities for policy support. CloudTech’s experience shows that technology companies landing in Singapore need to establish a complete local value chain rather than simply registering an office.
Service industry case: Digital transformation of GFS Logistics (pseudonym)
GFS Logistics is a traditional freight forwarding company. Facing the wave of digitalization, the company will launch a comprehensive transformation plan in 2023. The company first received S$1.5 million in support through the “Service Industry Transformation Plan” to build an intelligent logistics management platform. Then he applied for the “Productivity Solution Subsidy”, deployed a robot system in the warehousing process, and received a subsidy of 50% of the equipment investment.
During the transformation process, GFS paid special attention to improving employee skills and provided digital skills training to all employees through the “SkillsFuture Program”. At the same time, the company used Singapore as a regional digital operations center and developed cross-border logistics solutions for the Southeast Asian market. Therefore, it obtained preferential qualifications for international headquarters and the comprehensive tax rate was reduced to 10%.
The transformation has achieved remarkable results. By the first quarter of 2024, GFS’s manual operations will be reduced by 65%, order processing efficiency will be increased by 120%, and operating costs will be reduced by 25%. More importantly, the company has successfully transformed into a modern logistics service provider driven by technology, and the proportion of digital service revenue has increased from 15% to 55%. This case shows that traditional service industry companies can achieve leapfrog development through policy support. The key is to have a clear transformation path and a comprehensive execution plan.
These three cases have several common characteristics: first, the companies can accurately grasp the policy orientation and closely integrate their development plans with Singapore’s industrial policies; second, they all focus on talent training and local development, which is important for obtaining continued policy support. foundation; third, they have adopted a strategy of combining multiple preferential policies to maximize policy benefits; finally, they have paid special attention to digital transformation and sustainable development, which is highly consistent with Singapore’s future development direction.
The successful experience of these cases shows that enterprises must make full use of Singapore’s preferential policies and cannot be limited to a single tax preference or subsidy application. Instead, they must establish a long-term development perspective and closely integrate policy support with enterprise transformation and upgrading to achieve sustainable development. . At the same time, the case also shows the flexibility and adaptability of Singapore’s preferential policies, which can meet the needs of different types of enterprises at different stages of development.
Policy Outlook and Suggestions
According to the strategic plan released by the Singapore Economic Development Board (EDB) in 2024 and the government’s latest economic policy guidance, Singapore’s preferential policies will show several obvious trends from 2024 to 2025. By analyzing the latest policy evolution and market reactions, companies can be provided with practical application strategy recommendations while also needing to be alert to potential risks and ensure compliance.
From the perspective of policy trends, Singapore’s preferential policies in 2024-2025 will focus more on three major directions. The first is to deepen the transformation of the digital economy. It is expected that a new round of digital transformation deepening plan will be launched, and the subsidy ratio may be increased to 80%. In particular, application support in cutting-edge fields such as artificial intelligence and quantum computing will be significantly increased. According to EDB forecasts, the total scale of digital economy-related preferential policies will reach S$5 billion in 2025, an increase of 35% from 2024.
The second is to strengthen support for green development. Singapore has committed to achieving net-zero emissions by 2050 and will introduce a more stringent carbon tax policy by the end of 2024, with the tax rate rising from the current S$5 per ton to S$25. In line with this, green transformation support policies will be significantly expanded, including providing subsidies for research and development of low-carbon technologies and incentives for the use of clean energy. It is expected that the green development-related preferential fund pool will reach S$3 billion in 2025.
The third is to deepen the regional headquarters strategy. As the global supply chain is restructured, Singapore plans to introduce more competitive preferential policies for headquarters. It is expected to provide leading companies in specific industries with a more favorable tax rate of 5-8% on the basis of the existing preferential tax rate of 10-15%. At the same time, supporting support will be strengthened, including facilitating the introduction of executive talents and regional operating cost subsidies.
Based on these policy trends, companies need to make corresponding adjustments in their application strategies. First of all, it is recommended that enterprises make arrangements in advance, especially in terms of digital transformation and green development, and plan relevant projects as early as possible. For example, manufacturing companies can complete the design of smart manufacturing upgrade plans before the fourth quarter of 2024 so that they can apply for support as soon as possible when the new policy is released in 2025.
Secondly, companies should focus on maximizing the effect of the policy mix. For example, you can combine digital transformation projects with green development goals, optimize energy efficiency through intelligent systems, and apply for two types of policy support at the same time. According to EDB data, companies that adopt a diversified policy mix can receive an average of 30% more support than a single policy.
At the specific operational level, companies need to pay special attention to several key links. First, the project feasibility demonstration must be sufficient, especially in setting commitment indicators, and it must be realistic. Data from 2024 show that about 25% of preferential applications were rejected because the commitment indicators were too aggressive. It is recommended that companies reserve 15-20% buffer space when setting goals.
The second is to strengthen communication with the competent authorities. In 2024, Singapore launched a “preferential policy pre-examination mechanism” so that companies can obtain policy guidance before formal application. It is recommended to make full use of this mechanism and understand the policy guidance and application points in advance. Statistics show that pre-approved projects have a 35% higher approval rate.
In terms of risk prevention, companies need to pay special attention to several aspects. The first is policy compliance risk. In 2024, Singapore will strengthen the supervision of preferential policies. Companies that make false declarations or fail to fulfill their commitments will face high fines in addition to withdrawing preferential policies. It is recommended that enterprises establish a dedicated compliance management team to regularly check the completion of various indicators.
Secondly, we should pay attention to the risks of policy adjustment. As the economic environment changes, preferential policies may be adjusted. It is recommended that enterprises fully consider the sustainability of the policy when applying and avoid over-reliance on a single preferential treatment. For example, fixed-term tax incentives can be combined with flexible special subsidies to enhance the stability of the policy mix.
What needs special attention is that the requirements for talent localization may further increase. Data for 2024 show that failure to meet the local employee ratio requirement is one of the main reasons for the cancellation of the offer. It is expected that the proportion of local employees will increase from the current 60% to 70% in 2025. Enterprises need to make talent training and recruitment plans in advance.
In terms of compliance management, companies need to establish a complete internal control system. The first is to establish a special policy management file to record in detail the application process, approval documents and implementation status. The second is to establish a regular evaluation mechanism, check the completion status against the promised indicators every quarter, and promptly rectify any problems found.
At the same time, companies should pay attention to maintaining a good credit record. Singapore has established a credit file system for corporate preferential policies, and bad records will affect future applications. It is recommended that even if enterprises encounter difficulties and are unable to fulfill their commitments, they should proactively communicate with the competent authorities and apply for adjustment of plans to avoid passive breach of contract.
Finally, companies should pay close attention to new policy opportunities that may arise in 2025. For example, Singapore plans to launch an “Innovative Enterprise Acceleration Program” in 2025, which will provide supporting support of up to S$100 million to companies with disruptive innovation. Companies should plan early and seize opportunities when policies are introduced.
Overall, Singapore’s preferential policies will continue to develop in a more precise and in-depth direction from 2024 to 2025. Enterprises should formulate scientific application strategies and establish a sound risk prevention mechanism on the basis of grasping policy trends to maximize policy benefits. At the same time, attention should be paid to maintaining good compliance records to create favorable conditions for the sustainable development of the enterprise.
