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February 22, 2024

Singapore Budget 2024 - Introduction of Refundable Investment Credit and additional concessionary tax rate tier on various incentives

  • New tax credits and incentives introduced in Singapore are aimed at encouraging investments in the country.
  • With Singapore's impending implementation of Income Inclusion Rule and Domestic Top-up Tax in 2025, companies will want to consider how the availability of the new incentives could be factored into their tax strategy.

The Singapore Budget 2024 introduces a Refundable Investment Credit (RIC), a Global Anti-Base Erosion (GloBE) rules-compliant qualified refundable tax credit with the aim to encourage sizeable investments in Singapore.

Adding to a suite of investment promotion tools, the Finance Minister also introduced an additional concessionary tax-rate tier to a number of tax incentives, namely the Development and Expansion Incentive (DEI), Intellectual Property Development Incentive (IDI), Global Trader Programme (GTP), Finance and Treasury Centre (FTC) incentive and Aircraft Leasing Scheme (ALS).

Both the RIC and the additional concessionary tax-rate tier are expected to have significant impact on companies' existing and future investment in Singapore.

Overview of RIC

Singapore announced the introduction of the RIC to encourage sizeable investments that bring substantive economic activities to Singapore in key economic sectors and new growth areas, such as:

  • Investing in new productive capacity
  • Expanding or establishing the scope of activities in digital services, professional services and supply chain management
  • Expanding or establishing headquarter activities or Centers of Excellence
  • Setting up or expanding commodity trading firms' activities
  • Carrying out research and development (R&D) and innovation activities
  • Implementing solutions with decarbonization objectives

Depending on project type, qualifying expenditure categories may include:

  • Capital expenditures
  • Manpower costs
  • Training costs
  • Professional fees
  • Intangible asset costs
  • Fees for work outsourced in Singapore
  • Materials and consumables
  • Freight and logistics costs

Salient points of the RIC include:

  • RICs will be awarded on an approval basis through Economic Development Board (EDB) and Enterprise SG (EnterpriseSG).
  • Each RIC award will have a qualifying period of up to 10 years.
  • Support rates will be commensurate with the economic outcomes (or decarbonization outcomes for decarbonization projects) that the project is expected to generate.
  • Up to 50% of support will be available on each qualifying expenditure category.
  • The credits are to be offset against corporate income tax payable.
  • Unutilized credits will be refunded in cash to the company within four years after the company satisfies the conditions for receiving the credits.


From a GloBE perspective, the RIC does not reduce the GloBE Effective Tax Rate (ETR) — unlike tax deductions — and could thus prove to be more attractive to companies affected by OECD Pillar Two GloBE rules, when compared to other tax incentive schemes such as enhanced tax deductions, tax holidays or concessionary tax rate incentives.

The list of economic activities and expenditures supported under the RIC appears to be broad and covers a spectrum of activities ranging from manufacturing to sustainability. This scope is wider than the tax credit schemes in other jurisdictions, which primarily focus on R&D activities.

The inclusion of intangible assets costs in the qualifying expenditure list provides an alternative to the current intellectual property (IP) writing-down allowance scheme and is noteworthy as it ensures that Singapore continues to remain attractive as a key IP hub.

Finally, although more details on the RIC are expected to be published in the third quarter of 2024, companies that are expecting to make incremental investments in Singapore may want to consider initiating discussions with the authorities before incurring these investment costs.

Overview of additional concessionary tax-rate tier

To enhance its suite of investment promotion toolkits and ensure that Singapore's tax incentives remain relevant and competitive, the Finance Minister also introduced an additional concessionary tax-rate tier for the following incentives, effective 17 February 2024:


Current concessionary tax rates (CTR)

Additional CTR tier

Development and Expansion Incentive (DEI)

5% or 10%


Intellectual Property Development Incentive (IDI)

5% or 10%


Global Trader Programme (GTP)

5% or 10%


Finance and Treasury Centre Incentive (FTC)



Aircraft Leasing Scheme (ALS)




Existing incentive recipients may have the option to engage the relevant government agencies to renegotiate their existing incentives to the CTR tier of 10% (for ALS and FTC) and 15% (for DEI, IDI and GTP) starting from 17 February 2024 (i.e., with immediate effect). The additional CTR tier offers existing incentive recipients and prospective applicants flexibility to choose the appropriate incentive award depending on their specific facts and circumstances. For FTC and ALS, given the CTR of 10% is still lower than the global minimum tax rate of 15% under the Pillar Two GloBE Rules, the impact from a top-up tax perspective will need to be considered.

The proposed introduction of the additional 10% CTR tier appears to be in response to the impending implementation of the Subject to Tax Rule (STTR) under the Base Erosion and Profit Sharing (BEPS) 2.0 initiative, to safeguard the tax revenue collection in Singapore and to ease compliance requirements under the STTR for Singapore companies. In brief, the STTR allows a source jurisdiction (i.e., the jurisdiction in which the income arises) to tax certain cross-border intragroup payments, including interest and rental payments, that are subject to a nominal tax rate of below 9% in the recipient's jurisdiction and where domestic taxing rights over that income have been ceded under a tax treaty. This means that for companies enjoying the CTR of 8% provided under the FTC incentive, any interest payments (for example) that they receive from foreign related parties may potentially be subject to the STTR. The same treatment potentially applies to ALS companies with lease income subject to the CTR of 8%.

Considerations for companies

Companies looking to make significant investments will want to consider the RIC in their investment strategy, together with other potential tax and non-tax incentives, and model its impact to GloBE ETR as part of this planning exercise.

Applicable US companies will also want to consider how the RIC would be treated from a US foreign tax credit perspective. Companies assessing whether there is value in moving to a higher concessionary tax rate will want to consider whether this could affect foreign tax credit claims in the US.

Existing incentive recipients and prospective applicants should model the tax costs under the respective CTR tiers before engaging in discussions with the EDB/EnterpriseSG on the suitable CTR tier incentive.

Existing incentive recipients should also consider how the RIC would interact with their existing incentives in Singapore.

Detailed updates

The EDB and EnterpriseSG are expected to release more details in the second quarter and third quarter of 2024 on the additional concessionary tax-rate tier and the RIC, respectively.

* * * * * * * * * *
Contact Information

For additional information concerning this Alert, please contact:

Ernst & Young Solutions LLP, International Tax and Transaction Services, Singapore       

Ernst & Young Solutions LLP, Business Incentives Advisory, Singapore      

Ernst & Young LLP (United States), Singapore Desk, New York

Ernst & Young LLP (United States), ASEAN Tax Desk, New York

Ernst & Young LLP (United States), Asia Pacific Business Group, New York

Ernst & Young LLP (United States), Asia Pacific Business Group, Chicago

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

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