Page 7 - RSM Budget 2023 Highlights

CORPORATIONS AND BUSINESSES

Enterprise Innovation Scheme
Current

Currently, tax deductions/allowances between 100% and 250% are available to encourage research and
development (“R&D”), intellectual property (“IP”) registration, IP rights acquisition and IP rights licensing.

Proposed changes
To encourage businesses to engage in R&D, innovation and capability development activities, a new Enterprise
Innovation Scheme (“EIS”) was introduced. Under the EIS, existing tax measures are enhanced and a new tax
measure introduced. In addition, eligible businesses may opt to convert up to $100,000 of the total qualifying
expenditure across all the qualifying activities for each YA into a non-taxable cash payout at a conversion rate of
20% in lieu of tax deductions/allowances.

 Enhancements to existing tax measures and the introduction of a new tax measure are summarised below.

Current Amount of tax
Qualifying sunset Amount of tax deductions/allowances deductions/allowances granted
activities granted before YA 2024
clause from YA 2024 to YA 2028

a) Qualifying YA 2025  100% tax deduction on qualifying  100% tax deduction on qualifying
R&D project R&D expenditure [section 14C of R&D expenditure
undertaken ITA]  Additional 300% tax deduction on
in Singapore
 Additional 150% tax deduction on first $400,000 of qualifying R&D
qualifying R&D staff costs and staff costs and consumables (net
consumables [section 14D of ITA] of Government grant and
subsidy)
 Additional 150% tax deduction on
balance of qualifying R&D staff
costs and consumables in excess
of $400,000 (net of Government
grant and subsidy)

b) Registration YA 2025  200% tax deduction on first  400% tax deduction on first
of IPs 1 $100,000 of qualifying IP $400,000 of qualifying IP
registration costs [section 14A of registration costs
ITA]
 100% tax deduction on balance of
 100% tax deduction on balance of qualifying costs in excess of
qualifying expenditure in excess of $400,000
$100,000 [section 14A of ITA]

1 To qualify for the enhanced tax deduction and cash payout option, businesses must own the related IP rights registration for a minimum period
of one year (“one-year-ownership period”). Claw-back provisions shall apply if the one-year-ownership period requirement is not complied
with.

BUDGET 2023 HIGHLIGHTS | 5