Double Tax Deduction for Internationalisation Scheme

To encourage internationalisation, businesses may claim automatic double tax deduction on qualifying expenses incurred from 1 Apr 2012 to 31 Dec 2025 of up to a specified expenditure cap on certain qualifying activities. This is provided for under Sections 14B and 14K of the Income Tax Act.

Businesses may also apply to Enterprise Singapore (ESG) or Singapore Tourism Board (STB) for approval to claim double tax deduction on:

a. Qualifying expenses incurred on qualifying market expansion and investment development activities that exceed the specified expenditure cap; or

b. Expenditure incurred for other qualifying activities,

on a case by case basis.

 

Specified Expenditure Cap

The expenditure cap for the automatic double tax deduction under the scheme is $100,000 per YA for qualifying expenses incurred from 1 Apr 2012 to YA 2018 and $150,000 per YA for those incurred from YA 2019 to 31 Dec 2025.  

The following table illustrates the expenditure cap:

 Expenditure incurred during the periodSpecified Expenditure Cap 
 1 Apr 2012 to YA 2018 $100,000 per YA
 YA 2019 to 31 Dec 2025 $150,000 per YA

Qualifying Activities

As announced in Budget 2021, the list of qualifying activities under automatic double tax deduction has been expanded with effect from 17 Feb 2021. Businesses may claim double tax deduction on qualifying expenses incurred in the following nine qualifying activities up to the specified expenditure cap, without the need to seek prior approval from ESG or STB:

  1. Overseas business development trips/ missions;
  2. Overseas investment study trips/ missions;
  3. Overseas trade fairs;
  4. Local trade fairs approved by ESG or STB;
  5. Virtual trade fairs approved by ESG;
  6. Product/ service certification approved by ESG;
  7. Overseas advertising and promotional campaigns; 
  8. Design of packaging for overseas markets; and
  9. Advertising in approved local trade publication.

Businesses should maintain documentation as proof of expenditure and purpose. Expenditure exceeding the specified expenditure cap will require prior approval from ESG or STB. Please refer to ESG's website for the eligibility criteria, list of qualifying activities and the corresponding qualifying expenses on which double tax deduction can be claimed.

Enhancement of Scheme to Expand the List of Qualifying Expenses

The scheme was enhanced in Budget 2020 to expand the list of qualifying expenses to include the following expenses with effect from 1 Apr 2020:

1) Third party consultancy costs relating to new overseas business development to identify suitable talent and build up business network; and

2) Expenses incurred for overseas business missions (subject to ESG's approval) for:

  1. speaking spots to pitch products/ services at overseas business and trade conferences;
  2. transporting materials/ samples used during the business missions; and
  3. engaging third party consultants to arrange business networking events to promote products/ services.

To continue supporting the internationalisation efforts of businesses, the scheme was further enhanced in Budget 2021 to expand the scope of qualifying expenses to cover the following fees incurred on or after 17 Feb 2021:

1) Specified fees incurred on approved virtual trade fairs:

  1. Package fees charged by event organisers for virtual exhibition hall and booth access, collateral creation, business meeting/ match sessions, pitches/ product launches/ speaking slots, webinar/ conference and post event analytics; 
  2. Third party costs incurred to design and produce digital collaterals and promotion materials for the virtual trade fair; 
  3. Logistics costs incurred to send materials/ samples overseas to potential clients met at the virtual trade fair. The following conditions need to be met: 
    1. Both the business and the recipient of the materials/ samples have attended the approved virtual trade fair; and
    2. The materials/ samples are sent within six months from the end of the approved virtual fair.

2) Logistics costs to transport materials / samples used during overseas investment study trips/ missions. 

Extension of Scheme to Qualifying Salary Expenses Subject to Approval

To provide greater support for businesses expanding overseas and create skilled jobs for Singaporeans, the scheme was further enhanced to include qualifying salary expenses incurred between 1 Jul 2015 and 31 Dec 2025 for Singaporean and Permanent Resident employees posted to an overseas establishment of the approved firm or company. The total amount of qualifying salary expenses incurred for employees posted overseas (Section 14KA) and qualifying overseas investment development expenses (Section 14K) incurred on airfare, hotel accommodation, etc. to be allowed further/ double tax deduction is capped at $1 million per approved entity per YA, subject to conditions. Businesses will have to apply to ESG to enjoy the double tax deduction on qualifying salary expenses incurred from 1 Jul 2015 to 31 Dec 2025.

Qualifying Period of Scheme

The Double Tax Deduction for Internationalisation Scheme will apply over the following qualifying period: 

  1. Automatic double tax deduction will apply for qualifying expenditure incurred from 1 Apr 2012 to 31 Dec 2025; and
  2. Approval window for qualifying expenditure incurred in excess of specified expenditure cap and on other qualifying activities will be from 1 Apr 2012 to 31 Dec 2025.