The Singapore government provides assistance to firms beyond domestic markets, including support for international expansion through programs like the Double Tax Deduction for Internationalisation Scheme.
In this article, we will delve into the details of the scheme, including eligibility criteria, benefits, application procedures, and any associated limitations. By the end of this article, you will have a clear understanding of the Double Tax Deduction Internationalisation Scheme and how it can benefit your business.
Starting on February 15, 2023, your Singapore company will be eligible to receive double tax deductions for qualifying startup expenses related to an “e-commerce campaign.” This new qualifying activity includes expenses such as e-commerce-related business advisory, account creation, content creation, and product listing and placement. However, all claims for double tax deductions under the “e-commerce campaign” activity must be approved by ESG and are subject to a one-year time limit per country.
WHAT IS DOUBLE TAX DEDUCTION FOR INTERNATIONALISATION (DTDI)?
Double Tax Deduction for Internationalisation (DTDi) is a scheme introduced by the Singaporean government to encourage local businesses to expand into overseas markets.
Under this scheme, companies can enjoy double tax deductions on qualifying expenses incurred when exploring and expanding into new international markets. Qualifying expenses include market surveys, participating in overseas trade fairs, overseas business development trips, and various other expenses related to internationalisation efforts.
The DTDi scheme aims to support local businesses in their global expansion efforts and increase Singapore’s international competitiveness.
Singapore Tourism Board, Enterprise Singapore, and Ministry of Trade and Industry is tasked with championing enterprise development. These are the organisations that will examine your DTDi application and determine which expenses are qualified for a tax deduction.
Automatic DTDi
Automatic DTDi enables enterprises to claim a 200 per cent tax deduction on the first $150,000 of qualified expenses made on the following activities per YA without first receiving ESG/STB approval:
- Advertising in a local trade publication that has been approved.
- Packaging design for international markets.
- Advertising and promotional initiatives in other countries.
- ESG has authorised product/service certification.
- ESG has approved virtual trade shows.
- Local trade shows that have been approved by ESG or STB.
- International trade shows.
- Investment study excursions and missions to other countries.
- Business development excursions and missions to other countries.
However, do take note that these activities are eligible as of February 17, 2021.
Upon IRAS request, your business will have to present certain documents as material proof therefore it is essential to keep records as proof of expenditure and purpose.
Your company can also request case-by-case approval from ESG or STB to claim a double tax reduction on:
- Qualifying expenses that exceed the stated expenditure cap on qualifying market growth and investment development activities
- Other expenses incurred for qualifying activities
ADVANTAGES OF DTDI
- Tax savings: DTDi allows eligible expenses related to internationalization to be deducted twice from the company’s taxable income, resulting in significant tax savings.
- Encourages global expansion: By offering tax incentives, DTDi encourages local businesses to expand their operations overseas and tap into new markets, which can help them grow and remain competitive.
- Supports innovation: DTDi also covers expenses related to research and development, technology adoption, and intellectual property registration, which can help businesses innovate and develop new products and services.
- Enhances company reputation: Internationalization can enhance a company’s reputation and brand value, helping it to stand out in a competitive market and attract more customers. If you are interested in establishing a new company in Singapore, refer to Singapore company registration to know more.
- Increases networking opportunities: Expanding into international markets can also provide businesses with new networking opportunities, allowing them to connect with potential partners, suppliers, and customers, and gain new insights into global markets.
WHAT ARE THE REQUIREMENTS FOR APPLYING FOR DTDi
- The company’s primary goal should be to promote the provision of services or the exchange of goods, and it should be based in Singapore.
- Even if your business already receives discretionary incentives, it may still be eligible for the Double Tax Deduction for Internationalization scheme with the Singapore Tourism Board’s or Enterprise Singapore’s permission.
Then, the projects for which you are requesting a deduction should:
- Promote the company’s current offerings in its existing markets.
- Promote to current customers the new services and goods offered by the business.
- Identify new consumers in the company’s target markets for its current services and goods.
- To reach new target markets, advertise the company’s new product lines.
APPLICATION PROCEDURE OF DOUBLE TAX DEDUCTION FOR INTERNATIONALIZATION
This should be completed prior to starting the project via https://incentives.enterprisesg.gov.sg/
- Firstly, you should use your company’s CorpPass credentials to log in to the system.
- To access various application forms, go to the “Forms” option on the navigation tab and click on it.
- You should choose a form based on the precise activity you want to cover with the scheme at this point.
- To open the form, click on it and fill in all of the relevant fields. This is where you’ll submit your company’s profile, project specifics, and any associated costs you expect to incur.
- Finally, complete the Declaration section of the form and submit it.
- Once the application has been renewed, an approval known as “Approval-In-Principal” will be emailed to you.
You can now proceed with the project as planned. Then, when you’re finished, return to ESG’s incentive portal and complete a project evaluation form.
If everything looks good, ESG will offer you a “Letter of Support,” which you must then show to the Inland Revenue Authority Singapore when filing the company’s yearly income tax return.
FAQs
How to claim for double deductions?
Revenue expenditure must be incurred for an approved qualified R & D activity in the basis period to qualify for a double deduction under sections 34A and 34B. Whereas, in order to qualify for a single deduction under paragraph 34(7) of the ITA, revenue expenditure for qualifying R & D activity must be incurred in the basis period.
Is it possible to deduct international withholding tax in Singapore?
The deduction of foreign income tax is not permitted in Singapore.
Is Singapore subject to double taxation?
This type of taxes results in double taxation. Singapore, like many other nations, uses a territorial taxation system, in which tax is only collected on income generated within the country. Individuals and enterprises based in Singapore are protected from double taxes as a result of this.
What is the concept of a double tax deduction scheme?
The DTDi (Double Tax Deduction Scheme for Internationalization) intends to encourage Singapore corporations and firms (hence “businesses”) to develop internationally. It permits qualified firms to deduct twice the amount of qualifying expenses incurred for qualifying activities from their taxable revenue.
Singapore has how many double tax treaties?
Singapore has one of the world’s most extensive double tax treaty networks, with 88 treaties in place and another five agreed but not yet ratified.
What is an example of taxation that is imposed twice?
The term “double taxation” refers to the imposition of two taxes on the same income or activity. Corporate profits, for example, may be taxed twice: once when they are earned (corporation tax) and again when they are delivered to shareholders as a dividend or other distribution (dividend tax).
