To encourage pervasive R&D in Singapore and to build innovative capabilities of our people and businesses, businesses can enjoy a base tax deduction (of 100%, under section 14D of the Income Tax Act (ITA)) and enhanced tax deduction (of 50%, under section 14DA(1) of the ITA) on qualifying expenditure incurred on qualifying R&D activities up to YA 2025. The R&D can be carried out in areas unrelated to the taxpayer’s existing trade or business, as long as the R&D is conducted in Singapore.
In addition to the 150% tax deduction under sections 14DA and 14DA(1), businesses can claim a further 250% tax deduction on qualifying R&D expenditure up to $400,000 under the PIC scheme. R&D conducted overseas can qualify for the PIC scheme, as long as the R&D is related to the company’s existing trade or business.
To attract businesses to conduct large R&D projects in Singapore, Section 14E of the ITA also provides further tax deduction on expenditure incurred in relation to R&D projects, which are approved by EDB before 31 March 2020. The R&D can be carried out in areas unrelated to the taxpayer’s existing trade or business, as long as the R&D is conducted in Singapore and the expenditure incurred between the YA 2009 and YA 2020.
For more details on R&D tax deductions and their qualifying criteria, please refer to IRAS’ e-tax guide on R&D Tax Measures (published on 22 Jan 2015), which can be found on IRAS’ website.