SINGAPORE - Paving the way for more foreign direct investment into Singapore, Parliament on Monday (March 14) passed an amendment to the Economic Expansion Incentives Act, which extends the maximum possible tax relief period for firms if they anchor their "pioneering activities" here.
By attracting foreign companies or "queen bees" to set up substantive operations here, Singapore can build up clusters in new industries and create good jobs for Singaporeans, said Minister for Trade and Industry (Trade) Lim Hng Kiang.
The updated Act clarifies that for firms awarded the "Pioneer Certificate" by the Government, the maximum tax holiday period of 15 years applies only to the incentivised pioneer activity, instead of to the company as a whole.
"A company can be awarded multiple Pioneer Certificates when it anchors different qualifying economic activities in Singapore over time," Mr Lim noted, adding that firms currently enjoy only a maximum 15 years of tax relief regardless of the number of Pioneer Certificates they have.
The updated Act also clarifies that the maximum tax relief period of 20 years under the Development and Expansion Incentive (DEI) scheme applies to a firm's qualifying activities, and not to the company as a whole.
Mr Lim said: "These enhancements will encourage companies engaged in high value-added manufacturing or services activities, including existing ones, to continue to expand in Singapore."
Nee Soon GRC MP Louis Ng asked Mr Lim how local small and medium-sized enterprises (SMEs) and startups with the potential to become globally competitive could benefit from the Pioneer Certificate and DEI schemes, and how many SMEs have received Pioneer Certificates.
Mr Lim said that 239 firms have been awarded certificates over the past 10 years. Between 2011 and 2015, 71 companies were awarded certificates, including two SMEs, one of which was a local SME.
"The Pioneer Certificate requires companies to commit to contributions of substantive scale and therefore it's quite natural that the bigger companies would tend to qualify," said Mr Lim, noting that there are other platforms to support local firms' growth.