What is Internationalisation Scheme?
Imagine having figured your way into an international breakthrough and having to worry
about your expenses at the same time. And you thought to yourself, “Is there a way for me
to create more while paying less?”. Could all this be just a pipedream after all?
No. This is actually possible.
Enterprise Singapore (ESG) and Singapore Tourism Board (STB) have administered the Internationalisation Scheme (extended till 31 March 2025) to provide greater support for businesses expanding overseas and create skilled jobs for Singaporeans. The scheme falls under Section 14B, 14K, and 14KA of the Income Tax Act, which covers a wide array of qualifying activities and expenses that may be entitled to special or further deductions, depending on the nature of the expenditure.
Furthermore, businesses may claim automatic double deductions on qualifying expenses incurred from 1 April 2012 to 31 December 2025 of up to a specified expenditure cap of:
- $100,000 per YA for expenditure incurred between 1 April 2012 to YA 2018 OR
- $150,000 per YA for expenditure incurred between YA 2019 to 31 December 2015
That’s not all.
Businesses may also apply to ESG or STB for approval to claim a double tax deduction on:
- Qualifying expenses incurred on qualifying market expansion and investment development activities that exceed the specified expenditure cap; or
- Expenditure incurred for other qualifying activities on a case-by-case basis
What are the Qualifying Activities?
Under Section 14B, the qualifying activities include approved trade fairs, exhibitions/trade missions, or maintenance of overseas trade offices. This is also inclusive of:
- Overseas Business Development Trips/Missions
- Overseas Trade Fairs or Approved Local Trade Fairs (By ESG or STB)
- Overseas Advertising/Promotional Campaign
- Overseas Trade Office
- Market Survey/Feasibility Study done by 3rd Party consultants
- Design of packaging for overseas markets, products/service certification, master licensing & franchising
- Travel expenses for overseas trade fair/exhibition/mission/promotion activity capped at 2 employees per trip
Under Section 14K, the qualifying activities include Overseas Investment Development expenditure, which include:
- Overseas Investment Study Trips/Missions
- Investment Feasibility/ Due diligence study done by 3rd Party consultants
- Travel Expenses for Overseas Investment Study Trips/Missions capped at 2 employees per trip
Under Section 14K, the qualifying activities include salary expenditure for employees posted overseas. However, these activities are subjected to certain criteria, where:
- The employee must be a Singaporean or PR
- The Overseas posting must last for at least 1 year, and is designed to further the business’s expansion plans and provide the employee with opportunities to gain new skillsets
- The qualifying employees are capped at 5 per year
- The qualifying salaries are capped at $15,000 per month per employee
- The expenditure must be applicable for the first 3 years of establishment or acquisition of the overseas entity
How do you apply for Internationalisation Scheme?
You can automatically claim a 200% tax deduction on the first S$150,000 of eligible expenses for nine activities per year of assessment. No prior approval from ESG is required for the following activities in the image above!
However, eligible expenses on qualifying activities outside the nine areas, and expenses exceeding S$50,000 will require ESG’s approval. Furthermore, companies will need to apply to ESG for qualifying expenses under Overseas marketing development trips/missions & investment study trips/missions listed on their webpage! Many businesses may not be aware of such schemes available to support their overseas expansion.
But fret not! We will be consistently posting similar information every week, so do look out for it!
Written by: Keith Chiong (by Assembly Works)