Parliament yesterday approved changes to the law to attract more foreign direct investment here.
The updates to the Economic Expansion Incentives Act extend the maximum possible tax relief period for firms if they anchor their "pioneering activities" in Singapore.
Attracting foreign firms - or "queen bees" - to set up substantive operations here will allow Singapore to develop clusters in new industries and create good jobs for locals, Minister for Trade and Industry (Trade) Lim Hng Kiang said.
Singapore has traditionally drawn foreign investment to its shores by awarding Pioneer Certificates that come with tax incentives to firms if they undertake substantive economic activity here.
Yesterday's amendments clarify that the maximum tax holiday period of 15 years for certificate-holders applies only to the activity for which the firm got the certificate, instead of the company as a whole.
As firms are awarded multiple Pioneer Certificates when they anchor different economic activities over time, the updates keep Singapore's tax regime competitive, he added.
The updates also clarify that the maximum tax relief period of 20 years under the Development and Expansion Incentive (DEI) scheme applies to the firm's qualifying activities, not 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."
Mr Louis Ng (Nee Soon GRC) asked Mr Lim how local small and medium-sized enterprises (SMEs) and start-ups with the potential to become globally competitive could gain from the Pioneer Certificate and DEI schemes, and how many SMEs have received the certificates.
Mr Lim said 239 firms have been given certificates over the past decade. Between 2011 and 2015, 71 firms got certificates, including two SMEs, one of which was a local company.
"The Pioneer Certificate requires companies to commit to contributions of substantive scale. It's quite natural the bigger companies would tend to qualify," he said. There are other platforms to support local firms' growth, Mr Lim added.