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The Intellectual Property Development Incentive in Singapore

The Intellectual Property Development Incentive in Singapore

The Intellectual Property Development Incentive regime was established in order to encourage investors to explore research and development activities. The regime is based on a concessionary tax rate, a percentage of the intellectual property (IP) income that will be taxed at a preferential rate. The law is still in this draft stage and clarifications on this matter are expected.

Our team of accountants in Singapore can give you complete information about this regime. The measure is just one of the number of incentives available to investors that also make Singapore an attractive location to base a business.

The features of the IP development incentive

According to the draft Bill that introduces this regime, the incentive will be based on a concessionary tax rate. This means that a certain percentage of the income derived from IP rights (that qualifies for this purpose) will be taxed at a 5 percent or 10 percent rate. This taxation rate will be subject to an increased rate of at least 0.5% starting with the 11th year of the incentive period.

A condition applies in regards to the duration of the intellectual property development incentive: the initial tax relief cannot exceed a period of ten years and the subsequent extension cannot exceed ten years for each new period.

Awaiting approval

The exact regulations for the enforcement of this tax incentive have yet to be published, due to the fact that the Bill is still in a draft stage. The scope of the intellectual property development incentive will cover copyrights and patents and will not cover income from IP rights associated with trademarks.

Authorities in Singapore will need to determine the circumstances in which income from IP activities that were previously taxed at a concessionary tax would be afterward taxed at the normal rate. The agents at our accounting firm in Singapore can keep you up to date with the latest changes in this draft Bill.

Investors can contact our accounting firm in Singapore for more detailed information about the existing tax incentives.