Corporate Tax Relief and Rebates Granted to Companies Annually from 2011 to 2020

Parliamentary Question by Mr Pritam Singh:

To ask the Minister for Finance (a) in Singapore dollar terms, how much corporate tax relief and rebates respectively have been granted to companies from 2011 to 2020 on a yearly basis; and (b) of these, what amount of rebate or relief has been extended to and taken up by foreign companies respectively to entice them to set up branches or subsidiaries in Singapore over the same period.

Parliamentary Reply by Minister for Finance, Mr Lawrence Wong:

Corporate tax deductions and tax allowances are given to defray expenses incurred wholly and exclusively in the production of their income, or to meet certain policy objectives.  Such tax deductions and tax allowances are deducted from the companies’ gross income, together with other adjustments, before determining the amount of chargeable income to be taxed.

For instance, businesses can claim 100% tax deduction for wages, rentals and other relevant expenses incurred in the production of income. We provide 100% tax allowance for investment in plant and machinery, or for acquisition of intellectual property. To encourage businesses to invest in R&D especially R&D done in Singapore, we have up to 250% tax deduction for the relevant expenses. To encourage businesses to venture abroad, we have 200% tax deduction for qualifying expenses.

3. From time to time, the Government has provided Corporate Income Tax (CIT) Rebate, to ease cashflow for companies.  The CIT Rebate is typically given as a percentage of tax payable, subject to a cap. This cap ensures that the rebate benefits especially taxpaying SMEs which are companies with annual turnover of less than $100 million.

We do not differentiate corporate tax treatment based on the nationality of the business owner. This is also in line with the reciprocal obligation under tax treaties for non-discrimination. As IRAS does not track corporate taxpayers based on their ownership, we are unable to provide data for foreign-owned companies.

To ease taxpayers’ compliance burden, we generally allow taxpayers to claim tax deductions and allowance in their tax returns without prior approval from IRAS.  IRAS will then audit the taxpayers on a risk-based approach.  Hence, we do not have data on the total amount of corporate tax breaks that companies enjoy. Instead, taxpayers are only requested to declare in their tax returns a subset of identified tax deductions and allowance to facilitate periodic policy review, like the writing-down allowances for the cost of acquiring intellectual property rights. Based on this subset of tax deductions and allowances, the total annual amount of such tax deductions and tax allowances ranged from $128 billion in Year of Assessment (YA) 2011 to $218 billion in YA 2019.

CIT Rebate was granted from YA 2013 to YA 2019. The yearly amount of corporate tax savings to companies ranged from $200 million to $580 million.