Global

Details

  • Service: Tax, International Corporate Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 7/23/2012

Singapore - R&D tax incentives for software development 

July 23:   Singapore’s Inland Revenue Authority in July 2012 posted examples on its website to clarify what is not considered eligible research and development (R&D) for software development.

The guidelines also indicated that previous exclusions—e.g., a “multiple sale” requirement—were being withdrawn, or not implemented, related to the R&D incentive for software development.

Summary

Singapore’s R&D tax incentive allows for a 400% tax deduction on the first $400,000 of qualifying R&D expenditures for each assessment year from 2011 to 2015. Thereafter, the qualifying R&D expenditure in excess of $400,000 is entitled to a 150% tax deduction.


Historically, there were certain “restrictive” rules governing the manner in which software development could be claimed as R&D.


The tax authorities have revised the eligibility rules, by removing a “multiple sale” requirement and by not implementing a proposed internal business administration restriction (thereby allowing the development of internal business software to be eligible for the R&D tax incentive, regardless of whether the software was internally or externally focused).


Singapore’s Inland Revenue Authority provided seven examples across a broad range of software development categories that it considers do not constitute eligible R&D expenditures.


Read a July 2012 report [PDF 392 KB] prepared by the KPMG member firm in Singapore:
Changes to the R&D Tax Incentive for Software—A boost for software development




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