Significant amendments to Singapore’s cornerstone investment incentive legislation were tabled in Parliament this week. The Economic Expansion Incentives (Relief from Income Tax) (Amendment) Bill 2024 (Bill No. 41/2024) received its first reading on 15 October 2024.
The Bill proposes modifications to the Economic Expansion Incentives (Relief from Income Tax) Act 1967 (EEIA), introducing several targeted changes aimed at refining the incentive framework for businesses, particularly those operating under the Development and Expansion Incentive (DEI) scheme.
Key Proposed Amendments Include:
- Concessionary DEI Base Rate: A concessionary corporate tax rate of 15% may be established as the base rate applicable to qualifying income derived by DEI companies on or after 1 January 2024. This provides greater clarity and potential stability for qualifying entities.
- Extended Tax Relief Periods: The Bill allows for the extension of tax relief periods granted to relevant DEI companies, potentially stretching these relief periods up to 31 December 2028. This extension offers longer-term certainty for existing incentive recipients.
- New Investment Allowance Activities: Regulations will be empowered to prescribe specific activities eligible for Investment Allowances under a newly proposed section 43(1)(m) of the EEIA. This introduces flexibility to target new or strategic economic activities.
- Streamlined Investment Allowance Approvals: Regulations may also be introduced to shorten the statutory approval period for investment allowance projects, aiming to accelerate the implementation of qualifying investments.
- Exclusion of Subsidised Expenditure: The Minister will be authorised to prescribe rules ensuring that expenditure on activities under the new s 43(1)(m) does not qualify as fixed capital expenditure for Investment Allowances to the extent it is subsidised by Government or statutory board grants. This prevents double benefits on publicly funded expenditures.
These amendments signal the government’s ongoing efforts to calibrate its tax incentive regime, balancing the need to attract and retain high-value investments with fiscal responsibility and targeted economic development goals. The focus appears to be on providing clarity for DEI companies, extending support horizons, enabling faster approvals for new investments, and precisely defining eligible expenditures, particularly concerning new activity areas.
Source: Government Gazette, 15 October 2024.