Why Singapore: Intellectual Property Tax Incentives You Can Enjoy

Why Singapore: Intellectual Property Tax Incentives You Can Enjoy

Singapore is well known as a prime location for global businesses looking to expand into Asia. Located right in the middle of robust and booming markets in the region, it has a highly skilled pool of labour ready to be assimilated into any organisations. To attract more businesses and investors, the government has since put forward several incentives, making it easier than ever for entrepreneurs to set up their own companies in the City State.


In Singapore, tax incentives are catered towards organisations engaging in activities that provides value to the country’s economy and technological development. Intellectual Property (IP) activities are therefore regarded as high value activities, strengthening the nation’s innovative capabilities and creating a better business environment. As such, these incentives are offering compelling reasons that continue to put Singapore on the map as a preferred location for setting up IPs.

Here are several examples where Inland Revenue Authority of Singapore (IRAS) and Singapore Economic Development Board (EDB) lend support to the improvement of IP infrastructure within the country.

1. Tax Incentives from IRAS

Research & Development in SingaporeCompanies that qualify for research and development (R & D) projects performed in Singapore can enjoy a tax deduction between 150% to 250%. While research conducted could be unrelated to the company’s existing trade, businesses are still able to claim tax incentives as long as the R & D is conducted in Singapore.


According to the Business Times, this additional perk is in line with the R & D practises of regional economies, with Thailand and Hong Kong offering deductions of up to 300%. Still, given that Singapore has the lowest corporate tax, it still remains as one of the most competitive location for businesses to take root and flourish.


In addition to tax deductions, smaller businesses filing for patent and trademark protection with the Intellectual Property Office of Singapore (IPOS) will also enjoy lower IP registration costs. This meant that businesses can enjoy an additional 100% to 200% deduction for the first $100,000 of qualifying IP registration and in-licensing costs, making IP protection more affordable.


To ensure that Singapore remains competitive in innovation and R & D, writing-down allowances are granted on capital expenditures incurred when acquiring IPRs. The companies can then fill up a form to request for a claim for expenses incurred on patents, copyrights and trademarks, for instance.

The move by the government during Budget 2018 has been met positively from businesses and the Big 4 alike. Ultimately, these incentives allow for technological advance to push ahead at a breakneck pace, allowing for smart solutions to solve modern challenges, therefore creating a healthy and attractive economy for prospective investors as well as entrepreneurs looking to build businesses here.


 2. Tax Incentives from Singapore Economic Development Board

Intellectual property - Layout Design of Integrated CircuitsThe Intellectual Property Development Incentive, or IDI, is designed to attract companies engaging in high-tech industries and are looking to set up headquarters in the region. As per article on 1st July 2017, IDI ensures that any income derived from IP will be taxed at a lower rate than the 17% income tax in Singapore. In addition to the massive tax cuts for IP registration and licensing, a similar tax cut in income tax will prove a boon for businesses here in Singapore as well as have positive implications as an IP hub in the region.


Research Incentive Scheme for Companies (RISC) serves to encourage companies in Singapore to conduct / expand R & D activities specifically in Science and Technology. Companies that are eligible for the scheme can enjoy subsidy of up to 30% of expenses incurred on manpower, training, IP and material costs. In addition, staff expenses can also be subsidised up 50%. Businesses stand to enjoy an automatic 5 to 15 years write-down as long as both legal and economic acquisition of IP are met.

The table below provides full summary of the above incentives and rebates:

IP Tax Incentives Table 



Given the limited natural resources in Singapore, it is vital to encourage innovation within the economy. IP plays a huge part in maintaining a competitive economy as well as a healthy and evolving business environment for businesses to participate in.

In the recent Budget 2018, the government has therefore taken several key measures to ensure that IP continues to be key for companies in Singapore to evolve, especially given the subsidies and tax cuts registration and licensing of IP as well as R & D activities taking place within the country.

Given the many tax incentive schemes, businesses both local and foreign owned will continue to flourish, making Singapore an IP hub where entrepreneurs eagerly seek out to enjoy financial benefits, a strong workforce as well as a supportive government infrastructure.