Government Assistance for Foreign Companies & Investors in Singapore
3 min Read
Singapore has evolved as a significant financial and economic powerhouse in Asia, thanks to its business-friendly tax regimes. The country’s transparent legal system, as well as efficient and cost-effective incorporation process, have also attracted entrepreneurs and investors from all over the world to do business there. Moreover, there are various government assistance programs available for foreigners setting up their companies in the city-state that might help them lower their final corporate income tax rate.
However, to obtain the government grants, applicants must meet stringent criteria, including committing to specific levels of investment, introducing cutting-edge skills and technology, and contributing to the expansion of research and development and innovation capabilities.
If you are a foreign company, you should talk to a registered local advisor to determine which government assistance programs are applicable to your business.
Government Assistance for Foreign Companies in Singapore
Here are several incentives from some Singapore government bodies that eligible foreign companies can apply for.
Research and Innovation Scheme for Companies (RISC)
The Research and Innovation Scheme for Enterprises (RISC) encourages companies to develop new products and processes by supporting their technology development and innovation operations. Under the RISC program, the government co-funds the development of strategic technologies, capacities, and the construction of centers of excellence in Singapore.
The following is a list of project costs that are supported by RISC:
- Human resources cost (30% to 50% support)
- Equipment, materials, consumables, and software (30% support)
- Singapore-based professional services (30% to 50% support)
- Intellectual property rights such as licensing, royalties, technology acquisition (30% support)
Job Support Scheme
Foreign companies that are hiring local employees (Singapore citizens and permanent residents (PRs)) can apply for the Job Support Scheme (JSS).
JSS payments are meant to supplement local workers’ incomes and help them keep their jobs. Employers must use the incentives properly and fairly, referencing the tripartite guidance on compensation and leave arrangements. Employers may be denied employment support (including JSS) and have their work permit privileges revoked if there is evidence of reckless and unjust treatment.
Even though it is still unknown whether JSS will be extended this year, the Singapore Business Federation (SBF) has requested a further extension of salary support and temporary bridging loans in its Budget 2022 wishlist to help businesses suffering uncertainties and cost challenges as they adapt to an endemic Covid-19.
It is specifically requesting that the government co-pay 25% of wages for existing qualifying enterprises under JSS. These include those in food and beverage (F&B), retail, fitness, the performing arts, education, tourism, museums, art galleries, historical sites, and family entertainment.
Productivity Solutions Grant
The Productivity Solutions Grant (PSG) assists businesses that want to improve their business processes by implementing IT solutions and equipment. PSG offers solutions for retail, food, logistics, precision engineering, construction, and landscaping industries. Aside from sector-specific solutions, PSG encourages the adoption of cross-industry solutions in areas such as customer management, data analytics, financial management, and inventory tracking.
Foreign companies can apply for PSG if they meet the following criteria:
- Your company is registered and operating in Singapore;
- Your company purchases/leases/subscribe to IT solutions or equipment in Singapore; and
- Your company has a minimum of 30% local shareholding, with the company’s group annual sales turnover less than S$100 million, or less than 200 employees (for selected solutions only).
Market Readiness Assistance (MRA) Grant
Foreign SMEs can apply for the Market Readiness Assistance (MRA) grant to help take their business overseas.
Eligible SMEs will receive the following support:
- Up to 70% of eligible costs, capped at S$100,000 per company per new market from 1 April 2020 to 31 March 2023, which covers:
-Overseas market promotion (capped at S$20,000
-Overseas business development (capped at S$50,000)
-Overseas market set-up (capped at S$30,000)
- Each application is restricted to a single activity in a single foreign market (e.g., market-entry or participation in a trade fair)
Enterprise Development Grant (EDG)
The Enterprise Development Grant (EDG) aids in the growth and transformation of Singapore businesses. Under three pillars: core capabilities, innovation and productivity, and market access, this fund supports projects that help you modernize your business, innovate, or expand internationally.
This grant covers qualifying project costs such as third-party consulting fees, software and equipment, and internal human costs. To be eligible for the EDG, you must:
- be a business entity registered and operating in Singapore;
- have a minimum of 30% local shareholding; and
- be in a financially viable position to start and complete the project.
International Co-Innovation Programmes
Singapore’s International Co-Innovation Programmes can assist your company’s growth and internationalization by sponsoring initiatives that catalyze cross-border collaboration on technology development and co-innovation.
These programs provide new avenues for the exchange of ideas and information among businesses in various nations. Your organization can co-innovate solutions, test them, and scale them up throughout the region by collaborating with an international equivalent.
SkillsFuture Enterprise Credit (SFEC)
Employers are encouraged to engage in company transformation and personnel capacities through the SkillsFuture Enterprise Credit (SFEC). Over and above the support levels of existing programs, eligible employers will get a one-time S$10,000 credit to cover up to 90% of out-of-pocket spending on qualifying costs for supportable activities.
Enterprise Financing Scheme (EFS)
The Enterprise Financing Scheme (EFS) helps Singapore businesses get funding at different stages of their development. It covers seven categories to satisfy the financial needs of companies. In the case of a company’s insolvency, Enterprise Singapore will share the loan default risk with the Participating Financial Institutions.
To be eligible for the EFS, you must:
- Be a registered and physically present business entity in Singapore
- Have a minimum of 30% local equity held directly or indirectly by Singaporeans or Singapore PRs, as defined by final individual ownership
- Have a maximum annual sales turnover of S$500 million as a group
Internationalisation Finance Scheme (IFS) – Non-Recourse
With the Internationalisation Finance Scheme for Non-Recourse Loans (IFS-NR), mid-sized businesses can get up to S$50 million in project finance for local and international development projects.
When granting project finance loans, Enterprise Singapore co-shares default risks with Participating Financial Institutions (PFIs) to look beyond the borrowers’ balance sheet and instead rely on project income streams.
IFS-NR is open to Singapore-based enterprises with principal business functions in Singapore and annual sales revenue (including subsidiaries) of less than S$500 million (for trading companies) and S$300 million (for non-trading companies).
Furthermore, the qualifying Singapore corporation must own at least a 30% equity share in the Special Purpose Vehicle. The overseas business must complement the Singapore company’s main operations and generate obvious economic benefits for Singapore.
Double Tax Deduction Scheme for Internationalisation (DTDi)
Companies planning to grow internationally can take advantage of the DTDi, which provides a 200 percent tax deduction on qualified expenses for international market expansion and investment development operations. You may refer to this page for a complete list of qualifying activities and expenditures available for DTDi.
Global Trader Programme (GTP)
The Global Trader Programme (GTP) offers a lower company tax rate of 5% or 10% on eligible trading income for three or five years. Income from physical trading, brokering of physical trades, derivative trading income, and income from structured commodity financing activities, treasury activities, and mergers and acquisitions advisory services are all examples of qualifying trading income.
To qualify for the GTP, companies must have significant operations in Singapore and meet stringent quantitative criteria (including employment and local expenditure). Larger companies with established operations in Singapore also need to handle strategic functions, including compliance and risk management and financial, derivatives, and logistical management. Companies must also commit to utilizing Singapore’s banking, financial infrastructure, logistics, arbitration, and other supporting services, as well as contributing to the country’s human development.
Government Assistance for Investors in Singapore
Investors in Singapore can benefit from the following incentives if they are eligible.
Venture Capital Fund Incentive (VCFI)
The Venture Capital Fund Incentive (VCFI) scheme aims to increase the entry of VC funds and investments into unlisted Singapore-based businesses (including startups). A VC fund that participates in the VCFI program is free from paying taxes on qualifying investment income. On revenue obtained from managing qualified VCFI funds, fund managers will get a 5% concessionary tax rate.
According to the VCFI scheme, the fund must:
- have a minimum fund size of S$10mil;
- Incur cumulative local business spending (LBS) of at least S$100,000 multiplied by the incentive tenure, to be met by the end of the incentive tenure; and
- invest a certain percentage into unlisted Singapore-based companies by year five of the incentive or by the end of the incentive, whichever is earlier.
Startup SG Equity
The Startup SG Equity scheme aims to encourage private sector investment in innovative Singapore-based technology startups with global market potential and intellectual property.
As part of the Startup SG Equity scheme, the government will:
- co-invest in qualifying companies with independent, qualified third-party investors; and
- invest in selected venture capital firms that will invest in eligible startups through a fund-of-funds approach.
Special Situation Fund for Startups (SSFS)
The Special Situation Fund for Startups (SSFS) aims to crowd-in private sector investments into a select group of early- to late-stage startups from a variety of industries, particularly those that were performing well before COVID-19, so that they can maintain their innovation activities and growth momentum in the face of adversity and emerge stronger. In addition, targeted startups should have created or commercialized innovative or strategic skills that can help Singapore achieve its national goals.
The startups should be registered as a Private Limited company in Singapore for a period of not more than ten years, with their headquarters and major value-added activities headquartered there. Startups should also have technology and innovation skills, as well as long-term competitive advantages, that can help Singapore achieve its national goals (e.g., aligned to the broader industry transformation plans or creating good jobs for our population). If available, startups should be prepared to give details about current investment interest from possible co-investors.
In addition, the following critical characteristics should be present in the startups:
- In-house produced or owned substantial innovation or intellectual property content.
- Able to show that its products or services have a financially viable business strategy.
- Able to demonstrate the value proposition and scalability potential in their target client segment(s) and across international marketplaces. Before Covid-19, startups should have secured paying clients and partners, as well as a commercially scalable business plan that generates significant yearly revenue growth.
- Have a dedicated and capable management team with suitable expertise and business acumen abilities (e.g., business, industry, technical capability) for their industry, and are open to investment advice.
As Enterprise Singapore’s investment arm, SEEDS Capital aims to invest smart money in early-stage technology firms in Singapore. It co-invests in new firms with high intellectual substance and worldwide market potential with institutional investors. It currently has over 100 deep tech startups in its portfolio and works with more than 40 co-investment partners. Institutional investors, such as venture capital firms and corporate investment arms, are among its partners.
SEEDS Capital’s goal is to catalyze private sector investments in qualifying Singapore-based entrepreneurs. Therefore, you will be evaluated based on your alignment with the Startup SG Equity co-investment scheme objectives and your capacity to bring value to companies.
EDBI is a Singapore-based global investor in high-growth technology areas such as ICT, Emerging Technology (ET), Healthcare (HC), and other critical industries.
By leveraging their vast network, resources, and expertise, EDBI helps businesses realize their ambitious goals as value creator investors. In addition, EDBI provides growth funding to firms looking to expand in Asia and globally through Singapore.
With so many government assistance programs available, it’s critical to determine whether they’re appropriate for your company. It is best to get the professional assistance of a corporate service provider who can examine your company and advise you on the best plans and incentives for your company.
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