New MNCs Granted Economic Expansion-related Tax Incentives

Mr Chua Kheng Wee Louis asked the Minister for Trade and Industry (a) in each of the last 10 years, what is the number of new MNCs that are granted (i) the Pioneer Certificate Incentive (ii) the Development and Expansion Incentive and (iii) any other economic expansion-related tax incentive; (b) what is the average concessionary tax rate granted for each incentive scheme; and (c) what is the current number of MNCs and the average effective tax rate paid for each incentive scheme in the most recent year of assessment.

In the last 10 years, about 600 MNC groups were awarded economic expansion-related tax incentives. This is less than 10% of about 7,000 MNC groups with a presence in Singapore today.

The Pioneer Certificate Incentive is granted to companies that locate “pioneering” activities that are not carried out in Singapore at the time. As these frontier investments are assessed to bring significant direct and indirect economic returns to Singapore over time, their qualifying activities are exempted from tax so as to attract them here.

The Development and Expansion Incentive, on the other hand, encourages companies to develop capabilities and/or expand their activities in Singapore. The concessionary tax rate for this incentive is either 5% or 10%, depending on the size of economic investments these companies commit to bringing into Singapore.

Other economic expansion incentives include the Investment Allowance and Approved Royalty incentives. These are given to encourage companies to carry out projects with economic, technical or other merits, for example to encourage companies to use productive equipment, and to support projects with broader economic spillovers.

Every company’s effective tax rate depends on several factors, including tax incentives as well as other measures such as corporate tax rebates. As each company’s situation varies, so too will their effective tax rates across industries and time.