The primary R&D tax incentive in Singapore is the Enhanced Deduction for R&D Expenses. To qualify for this incentive (which typically provides a deduction of up to on qualifying expenses), your company must meet the following detailed conditions as set out by the Inland Revenue Authority of Singapore (IRAS):
Table of Contents,
1. Conditions for Qualifying R&D Activities
R&D activities must meet a strict definition under tax law:
- Systematic and Investigative: The activity must be systematic investigation, experiment, or research.
- Scientific/Technological Advancement: The main purpose of the activity must be to achieve a new scientific or technological advancement (e.g., creating new or significantly improving existing materials, products, or processes).
- Resolution of Uncertainty: The activity must be aimed at resolving scientific or technological uncertainty (meaning the outcome or the method to achieve it cannot be readily determined by a person skilled in that field).
❌ Activities that DO NOT qualify include:
- Market research or social research.
- Routine quality control or testing.
- Internal software development activities that do not lead to a scientific or technological advancement.
2. Conditions for Qualifying R&D Expenses
Only costs that are directly related and actually incurred during the R&D process are eligible:
| Type of Expense | Detailed Qualification Criteria |
| Manpower Costs | Salaries, wages, Central Provident Fund (CPF) contributions, and bonuses for employees directly engaged in R&D activities (e.g., scientists, engineers, technicians). |
| Consumable Costs | Cost of raw materials, supplies, and consumable goods used during R&D trials or experiments. |
| External Payments | Payments to third parties for R&D work performed in Singapore (e.g., payments to eligible Research Institutes and Technology Organizations (RIs) or qualified private technology research organizations in Singapore). |
| Overhead Costs | General costs directly related to the R&D (e.g., utility costs, lab rental), which are limited and often require approval. |
3. General Conditions and Additional Requirements
To claim the tax incentive, the company must also satisfy these general legal requirements:
- Business Relevance: The R&D expenditure must be incurred directly in connection with the trade or business carried on by the company in Singapore.
- Non-Subsidized: Expenses that have already received a grant or subsidy from the Singapore Government or statutory boards DO NOT qualify for the R&D tax deduction. Only the non-subsidized portion of the expense is eligible.
- Supporting Documentation: The company must maintain detailed and complete records substantiating the nature of the R&D activity (objectives, results achieved, uncertainty resolved) and the associated expenses. IRAS has the right to request review of these records.
- Regulatory Compliance: The company must comply with all other tax filing and reporting requirements under the Singapore Income Tax Act.