We have used tax incentives ever since Independence to promote economic development. The pioneer and post-pioneer incentives have played a major role in attracting high value-added investments to Singapore. There are however no appropriate incentives today for companies which either do not qualify for pioneer status or whose post-pioneer status has expired. To encourage companies which engage in high value-added activities to operate in Singapore and continue to invest in high technology projects and the major upgrading of equipment and operations, I intend to introduce a new incentive which will replace the post-pioneer incentive.

Under this new incentive, which will be known as the Development and Expansion Incentive, income from qualifying activities will be taxed at a concessionary rate of not less than 10 per cent. The incentive is intended for companies which engage in new projects and expansion or upgrading of their operations. For a company awarded this incentive, the initial period of the incentive will not exceed 10 years. Extensions of the incentive after the initial period may be granted. Each extension will not exceed a period of 5 years and the total period for this incentive will not exceed 20 years.

The Development and Expansion Incentive will apply to qualifying income derived from any period beginning in or after 1996. When this incentive comes into operation, it will replace the post-pioneer incentive. Further details of this incentive will be announced shortly.