Double Tax Deduction Overview

Double Tax Deduction
for Internationalisation
Ms Tan Ee Loo
Tax Development Division
23 Feb 2016
This material contains confidential and/or official information. The terms and conditions
governing its use can be found at www.iesingapore.gov.sg/Terms-of-Use.
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What is Double Tax Deduction for
Internationalisation (DTDi)?
“To encourage Singapore companies or firms to expand overseas by
supporting their market expansion and investment development efforts”
S14B of the Income Tax Act
S14K of the Income Tax Act
Overseas Market Development
Overseas Investment Development
i.e. to encourage Singapore companies to
expand their overseas market presence by
supporting companies’ market
development activities for new markets,
new products and/or new customers
i.e. to encourage local companies to
explore overseas investment opportunities,
which will enable them to enhance their
competitiveness, expand and grow
DTD Benefits
You can claim 200% tax deduction on eligible
expenses for qualifying market expansion and investment
development activities.
What is Double Tax Deduction for
Internationalisation (DTDi)?
DTD Benefits
You can claim 200% tax deduction on eligible
expenses for qualifying market expansion and investment
development activities.
DTD helps companies to enjoy tax savings
Extra deduction (i.e. 200%) of eligible expenses against chargeable income
DTD is still useful for companies not currently turning a profit
Unutilised losses can be carried forward, carried back, or transferred to related
coys via Group Relief
DTD is quick and easy to use
Automatic DTD for certain activities; Online Application < 10 min
DTDi covers 14 internationalisation activities
NEW
* Automatic DTD
^ Activities supported under Section 14K of the Income Tax Act. All the other activities are supported under Section 14B.
Examples of eligible expenses depending on the activity (more details in Annex):
•
Trips: airfare & accommodation, meals, overseas transport
•
Fairs: stand rental, stand construction, freighting for exhibits, insurance for exhibits, airfare &
accommodation, etc
•
Market Studies: 3rd party consultancy fees
•
A&P campaigns: 3rd party consultancy fees, in-store promotions, roadshows, etc
•
Employee Postings: basic salary
What is Auto DTD?
From 1 Apr 2012
Automatically claim DTD in their tax filing
First $100,000 of eligible expenses* for 4 qualifying activities,
No need for IE or STB approval
Expenditure ≥S$100,000 of these 4 activities, and all other activities, will still require IE's
approval
Qualifying Activities for Auto DTD:
•
Overseas business development trips and missions
•
Overseas investment study trips and missions
•
Overseas trade fairs
•
Local trade fairs approved by IE Singapore or STB
*not already supported by other govt financial
assistance program e.g. IMAP grants
What is DTD for Employee Overseas Posting?
Most recently enhanced at Budget 2015 – Employee
Overseas Posting – increasing support to Sg businesses
expanding overseas as well as creating skilled jobs for
S’poreans.
•
200% tax deduction for basic salary of the employees sent overseas
•
For Singaporeans and PRs posted for at least 1 year or more
•
New overseas entities: either newly incorporated or new M&A (i.e. new purchase of
existing entity)
•
For up to 3 years: From date of incorporation or date of ownership
•
Support cap of qualifying expenses:
• Up to 5 employees per year,
• Up to $15,000 of monthly basic salary per employee, and
• Total of S$1 million deduction per company per YA
•
When to apply to IE: before posting the employee
•
S14KA of Income Tax Act
How DTDi can benefit companies
How DTDi can benefit companies
How to apply for DTDi?
1
2
3
Preparation for
Overseas Activity
Execute DTD
supported
activities
Prepare Annual
accounts/Tax
returns
Auto DTD
•Coys can proceed with their trips/projects
without approaching IE or STB. DTD will be
allowed automatically up to the first
$100K of qualifying expenditure per YA
incurred on the 4 mentioned activities.
Other than Auto DTD
• IE and STB will continue to administer for
businesses on quantum exceeding the first
$100K under the automatic DTD and other
qualifying activities under S14B & S14K.
• All application via DTD incentive portal
for each trip/project to IE or STB must be
submitted BEFORE project start date.
For application submitted
to IE we will inform coy via
email notification whether
their application is
Approved In Principal (AIP)
or rejected.
For each AIP trip, project coy
will need to submit
evaluation form. Upon
submission of the form, coy
will then receive the Letter
of Support.
Company should attach the
Letter of Support to IRAS
when filing their annual
income tax returns. For all
other relevant supporting
documents (e.g. invoices,
receipts, etc), company
should compile and made
available to IRAS upon
request.
Qualifying criteria for DTDi
• Singapore-registered company and firms; AND
• Have a permanent establishment and carry on business in
Singapore with the primary purpose of promoting the trading
of goods or provision of services
Thank You
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This material contains confidential and/or official information.
The terms and conditions governing its use can be found at www.iesingapore.gov.sg/Terms-of-Use.
Annex
Qualifying Expenses for
each Qualifying Activity
Qualifying Expenses for the 4 Qualifying Activities
Qualifying Activities
Qualifying Expenses
Overseas business development trips /missions  Airfares*
or overseas investment study trips/missions
• Hotel Accommodation & Meals
• Overseas Transportation
Overseas trade fairs / missions
•
•
•
•
•
•
•
•
•
Stand Rental
Stand Design/Decoration
Stand Construction
Production of Corporate Brochures of Catalogues
Freighting of Exhibits
Insurance of Exhibits
Airfares*
Hotel Accommodation & Meals
Overseas Transportation
Local trade fairs approved by IE Singapore or
STB
•
•
•
•
•
•
Stand Rental
Stand Design/Decoration
Stand Construction
Production of Corporate Brochures of Catalogues
Insurance of Exhibits
Cost of inviting up to 2 overseas buyers
 Airfares*
 Hotel Accommodation & Meals for the duration of the fair
* Airfares include airport tax, visa fees, fuel surcharge. Excludes GST/CESS/Carrier Surcharge/VAT Bank
Charges/Insurance/Amendment Fees/Excess Baggage. Qualifying expenses on airfares, hotel accommodation & meals are based
on an incurred basis. The support is up to a max of 2 company’s representatives per trip.
Other Qualifying Activities and its Expenses
Other Qualifying Activities
Qualifying Expenses
Market Survey/Feasibility Study
• Third-Party Consultancy Fees
Investment Feasibility/Due Diligence Study
• Third -Party Consultancy Fees
Design of Packaging for Overseas Markets
• Third Party Consultancy Fees
• Cost of prototype production
Product/Service Certification
• Cost of preliminary assessment
• Cost of application and issuance of certification
Overseas Advertising Campaign
• Third -Party Consultancy Fees
• Cost of purchasing advertising space
Overseas Promotional Campaign
•
•
•
•
•
•
Third Party Consultancy Fees
Costs associated with in-store promotions/sales campaign
Costs associated with promotional roadshows/seminars
Costs associated with direct mailing campaigns
Airfares *
Hotel Accommodation and meals
* Airfares include airport tax, visa fees, fuel surcharge. Excludes GST/CESS/Carrier Surcharge/VAT Bank
Charges/Insurance/Amendment Fees/Excess Baggage. Qualifying expenses on airfares, hotel accommodation & meals are based
on an incurred basis. The support is up to a max of 2 company’s representatives per trip.
Other Qualifying Activities and its Expenses
Other Qualifying Activities
Qualifying Expenses
Master Licensing & Franchising
• Third -Party Consultancy Fees
• Legal Fees for the development of the licensing/franchising agreement
Overseas Trade Office
•
•
•
•
•
•
•
•
•
•
•
Advertising in Approved Local Trade
Publication
• Cost of advertising space
Basic salary for OMO representative (Singaporean/PR only)
Rental of accommodation
Rental of office premises & equipment
Maintenance of office facilities
Rental and maintenance of vehicle
Telecommunication charges/postage
Stationery and other office supplies
Airfares*
Hotel accommodation & meals
Cost of Advertising/Promotional Campaign
Maintenance of Showroom/Display Area
* Airfares include airport tax, visa fees, fuel surcharge. Excludes GST/CESS/Carrier Surcharge/VAT Bank
Charges/Insurance/Amendment Fees/Excess Baggage. Qualifying expenses on airfares, hotel accommodation & meals are based
on an incurred basis. The support is up to a max of 2 company’s representatives per trip.
Other Qualifying Activities and its Expenses
Other Qualifying Activities
Qualifying Expenses
Production of Corporate Brochures for
Overseas Distribution
•
•
•
•
•
•
•
•
Employee Overseas Posting
• Basic Salary which excludes bonuses, commissions, taxes,
allowances, overtime and other benefits (e.g. relocation cost, tax
equalisation package, benefits-in-kind etc).
NEW
Third-Party Consultancy Fees
Art Work
Colour Separation & Typesetting
Copy-writing
Cost of Design
Photography
Printing production cost
Translation