In a bid to meet growing global competition for investments, the government will be offering a tax credit for high-value and substantive economic activities, including investments in manufacturing innovation, R&D and activities in support of the green transition.
Called the Refundable Investment Credit scheme, the credits are to be offset against corporate income tax.
“Essentially, this new tax credit is to help Singapore stay competitive and attract investments from global companies with the right know-how and create good jobs for Singaporeans,” says Deputy Prime Minister Lawrence Wong.
In his Budget 2024 speech, Wong explains such efforts have helped Singapore remain competitive globally in key sectors such as semiconductors.
While Singapore does not produce the most cutting-edge chips, companies here nonetheless are able to play key roles in the global semiconductor supply chain in specific areas such as testing and manufacturing of certain components used in the capital equipment needed by the industry.
As a complement, Wong has a few further measures announced. First, there will be a $2 billion top-up to the Financial Sector Development Fund administered by the Monetary Authority of Singapore to extend Singapore’s lead in the financial services sector.
See also: What may be included in Singapore's unemployment benefits for retrenched workers?
The government will be setting aside a further $3 billion focused on R&D in the current five-year national R&D masterplan launched in 2020 worth $25 billion. Administered by the National Research Foundation, the Research, Innovation and Enterprise 2025 (RIE2025) plan helps fund deep R&D activities, fund start-ups and co-fund innovation with big tech companies, among others.
“Besides attracting new investments, we must build on our existing strengths and upgrade the sectors where we have competitive advantages. These advantages did not come about by chance. They are the result of many decades of hard work, to restructure and to upgrade our economy.
“We didn't just keep costs competitive; we also enhanced our capabilities and moved up the value chain so as to justify the higher premiums for operating optimally," says Wong.
Read more about Budget 2024 on The Edge Singapore.
