Sector Specific Grants
An often-overlooked way for businesses to obtain funds is through grants. In this article, we talk about the different types of grants that are available to Singaporean businesses or related to COVID-19, tax exemptions, and which government authorities administer this multitude of financial incentives.
Which Authorities Provide Grants in Singapore?
The three main government authorities that offer and administer grants for businesses in Singapore are:
- Singapore Economic Development Board (EDB) – The goal of the EDB is to promote Singapore as a global business destination and encourage foreigners to start a business in Singapore.
- Inland Revenue Authority of Singapore (IRAS) – IRAS is Singapore’s tax regulatory authority, thus making it one of the most important entities in the nation.
- Monetary Authority of Singapore (MAS) – MAS is the central bank and financial regulatory authority of Singapore.
Which Types of Grants Are Available to Businesses in Singapore?
Grants generally come in two forms: tax allowances and direct funding support. Here are the different types of grants currently available to Singaporean businesses.
- Manufacturing & Services. Grants in this sector mostly come in the form of tax allowances. Some examples of these incentives include the Development and Expansion Incentive, Land Intensification Allowance, Approved Foreign Loan Incentive, Investment Allowance, and Integrated Investment Allowance. These grants are all administered by the EDB.
- Research & Development. Grants in this sector, also administered by the EDB, are generally for technology-focused companies that conduct research and development in the next cutting-edge technologies. The three main R&D grants are the Initiatives in New Technology grant, Approved Royalty Incentive, and Research Incentive Scheme for Companies (RISC).
- Trading. The Singaporean government stimulates trade within the country through the Global Trader Programme.
- Finance & Treasury. To keep these activities proceeding efficiently, the EDB administers the Finance and Treasury Centre Incentive while MAS is in charge of the Financial Sector Incentive Scheme.
- Internationalisation. These incentives exist to help companies in Singapore expand their operations to other countries. Business owners should keep an eye on the Regional & International Headquarters Awards, Mergers and Acquisitions Scheme, Market Readiness Assistance Grant, and International Growth Scheme. The EDB is in charge of the first two grants.
To help businesses recover from the economic impact of the COVID-19 pandemic, the Singaporean government also provides many business grants specifically to neutralise these negative effects. Here are a few that business owners should know about.
The Business Sustenance Grant, brought to you by The Monetary Authority of Singapore (MAS), provides rent support to businesses for office space and wage support for local employees, founders, directors, and interns.
Given that the pandemic has forced businesses to go digital in order to survive, MAS also provides the Digital Acceleration Grant to help them with this transition.
The Singapore Tourism Board (STB) also recently announced a new five-year Tourism Development Fund, which helps tourism-related businesses recover from the financial downturn of the pandemic.
The Land Transport Authority (LTA) provides financial support for taxi and private-hire car drivers through grants of S$10/day for 60 days (i.e. S$300 per vehicle/month, for two months) and S$5/day for the subsequent 30 days (which equates to S$150 per vehicle/month, for a month).
What about Tax Exemptions?
The government aims to boost entrepreneurship through the Tax Exemption Scheme for New Start-ups, which exempts start-ups from taxes for the first three years of assessment. There’s also the Productivity and Innovation Credit (PIC) Scheme, which provides a tax exemption to businesses that invest in activities that involve innovation. The PIC encourages companies to continually look for breakthrough innovations that boost their operational efficiency and productivity.
The government also supports Singaporean businesses in expanding into other countries. The Double Tax Deduction for International Expansion helps businesses achieve this through a 200% tax deduction on the first S$100,000 in expenses for supported market expansion and investment development activities abroad. If a company spends more than this amount, it will need to seek approval to receive the deduction.
Finally, in partnership with IRAS, the government of Singapore offers companies a 250% tax deduction on salaries and expenses paid to employees when they send them to volunteer and provide services to Institutions of Public Character (IPC).
How Can Sprout Asia Help?
In order to successfully apply for a grant, it is often important to provide accurate and organized financial statements. Sprout Asia offers budget-friendly professional accounting services where our chartered accountant can manage your finances with ease. Feel free to reach out to us with any queries about our services, we’ll respond within 24 hours.