Foreign investments in Southeast Asia continue to show resilience despite global economic uncertainties, according to the ASEAN Investment Report 2024 by the United Nations Conference on Trade and Development (UNCTAD).
In particular, Singapore, with a robust business and tax regime and world-class workforce, is a regional leader. The small but mighty city-state continues to serve as a major hub for multinational corporations and cross-border capital flows. According to a recent JLL report, Singapore now hosts the highest number of corporate regional headquarters in the past decade.
A significant portion of international investment is concentrated in key, rapidly growing industries. For example, NXP Semiconductors and Vanguard International Semiconductor Corporation recently unveiled plans to build a $7.8 billion factory in Singapore.
In this blog post, we explore the various incentives and grant programs making Singapore an attractive destination for international businesses.
Progressive Wage Credit Scheme (PWCS)
Introduced in the 2022 budget, the Progressive Wage Credit Scheme (PWCS) aims to help employers manage wage increases for lower-wage workers. It co-funds wage increases for Singaporean employees earning a gross monthly wage of up to S$3,000 (approximately US$2,213).
Eligible employers are automatically informed of any payouts without needing to apply.
| Qualifying Year | First-Tier (Wage < S$2,500) | Second-Tier (Wage S$2,500 – S$3,000) |
| 2022 | 75% | 45% |
| 2023 | 75% | 45% |
| 2024 | 30% | 15% |
| 2025 | 30% | – |
| 2026 | 15% | – |
Industry-Specific Tax Incentives
Four main agencies oversee business and tax incentives in Singapore:
- Economic Development Board (EDB)
- Inland Revenue Authority of Singapore (IRAS)
- Enterprise Singapore (ESG)
- Monetary Authority of Singapore (MAS)
Industries eligible for tax incentives include financial services, shipping, e-commerce and research and development (R&D). Detailed information can be found on the agencies’ respective websites.
Start-Up Tax Exemption Scheme (SUTE)
Launched in 2005, Singapore’s Start-Up Tax Exemption Scheme (SUTE) provides new businesses with a 75% tax exemption on the first S$100,000 (US$73,770) of chargeable income for the first three consecutive years. The next S$100,000 receives a 50% exemption.
Eligibility criteria include being a tax resident and not being an investment holding or property development company.
Partial Tax Exemptions
For businesses that do not qualify for SUTE, the Partial Tax Exemption (PTE) scheme may be an option. It extends a 75% exemption on the first S$10,000 (US$7,400) and 50% on the next S$190,000 (US$140,000) of chargeable income.
Enterprise Financing Schemes
Businesses may be able to take advantage of various financing programs:
- Trade Loan through EDB: Provides financing of up to S$10 million (US$7.3 million) with a 70% government risk share.
- Working Capital Loan through Enterprise Singapore: Offers loans for operating capital, with up to S$500,000 (US$373,000) available.
- Venture Debt Loan through Enterprise Singapore: Targeted at high-growth startups needing funds for growth without significant collateral.
Double Tax Deduction for Internationalization (DTDi)
The Double Tax Deduction for Internationalization (DTDi) scheme enhances support for businesses venturing into international markets. It covers various activities, such as overseas market exploration and advertising. Certain expenditures may not require prior approval.
Investment Allowance Scheme
Businesses can enjoy up to 100% tax exemption on fixed capital expenditures for qualifying projects over a five-year period. This includes significant investments in automation and R&D.
Startup SG Tech
Startup SG Tech is a specialized grant aimed at technology startups. It offers financial support for projects in advanced manufacturing, biomedical science and clean technology. Grant caps are S$250,000 (US$185,000) for Proof-of-Concept and S$500,000 (US$371,000) for Proof-of-Value projects.
Enterprise Development Grant (EDG)
The EDG supports businesses in three areas: core capabilities, innovation and productivity and market access. These grants can cover up to 50% of project costs from April 1, 2023, to March 31, 2026.
Pioneer Tax Incentives and Enterprise Innovation Scheme
The Pioneer Tax Incentives and Enterprise Innovation Schemes offer tax exemptions and enhanced tax deductions for companies engaged in high-value manufacturing and innovation activities. The goal is to incentivize R&D and new technologies.
Taking Advantage of These Incentives
Singapore’s incentives and grant programs strengthen its position as a global business hub and fuel its innovation and economic growth. These strategic initiatives are attracting foreign investment and creating a vibrant ecosystem for thriving businesses.
However, accessing these benefits may come with challenges. Applicants must meet rigorous requirements, including substantial investment commitments and introducing specific, cutting-edge skills. Additionally, advancing R&D and complying with local ownership regulations are critical components for sharing economic benefits with Singaporeans.
Given the complexity of available tax incentives, foreign investors should consult registered local advisors for tailored guidance. By engaging local experts, businesses can effectively leverage Singapore’s offerings to achieve their expansion goals.
Learn more about regulations and hiring in Singapore here: Hire in Singapore | GoGlobal
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