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The support that businesses in Singapore get from the government isn’t limited to domestic markets. As it turns out, the government of Singapore encourages even international growth through programs such as the famous Double Tax Deduction Internationalisation Scheme.
This article explains what it’s all about, its accompanying eligibility requirements, and the benefits it offers. You also get to find out how you can apply for the scheme plus the limits it comes with.
So, without further ado...
Understanding Double Tax Deduction Scheme for Internationalisation (DTDi)
The Double Tax Deduction Scheme for Internalisation - or DTDi, in short - is yet another tax benefit that allows companies to reduce their taxable income. Unlike the rest of the schemes, though, this is only open to companies that are expanding their businesses internationally.
In essence, companies get as much as a 200% tax deduction on eligible expenses that they incur through overseas market expansion and investment activities. We’re talking about activities like:
- Advertising in an approved local trade publication.
- Design of packaging for overseas markets.
- Overseas advertising and promotional campaigns.
- Product/ service certification approved by ESG.
- Virtual trade fairs approved by ESG.
- Local trade fairs approved by ESG or STB.
- Overseas trade fairs.
- Overseas investment study trips and missions.
- Overseas business development trips and missions.
Now, for the sake of clarity, STB, in this case, refers to the Singapore Tourism Board - while ESG stands for Enterprise Singapore, a government body under the Ministry of Trade and Industry that’s mandated to champion enterprise development. These are the agencies that review your DTDi application and then approve eligible expenses for a tax deduction.
Not always, though. You see, before you even start applying to the ESG, the Internal Revenue Authority of Singapore (IRAS) automatically applies Double Tax Deduction benefits on the first $150,000 of eligible expenses. That means you get a deduction of 200% on $150,000 worth of overseas costs, without seeking prior approval from ESG.
ESG and STB approvals are only required when you exceed the specified expenditure cap (S$150,000) in the nine activity areas we’ve identified. What’s more, you should also seek ESG clearance if your company happens to incur expenses from other types of overseas development activities.
Benefits of DTDi
The Double Tax Deduction for Internalisation scheme (DTDi) is basically intended to offer support to businesses in four key stages of their overseas growth journey:
1. Market Preparation: Companies are encouraged to conduct overseas market preparation through tax deductions for expenses related to;
- Market surveys and feasibility studies.
- Product and service certification.
- Design of packaging for overseas markets.
2. Market Exploration: Businesses are motivated to explore overseas markets through tax deductions for expenses related to:
- Virtual trade fairs.
- Local trade fairs
- Overseas trade fairs.
- Overseas market development trips and missions.
3. Market Promotion: You also get to reduce your company’s taxable income through market promotion activities like:
- Overseas business development.
- Advertising in approved local trade publications.
- Production of corporate brochures for overseas distribution.
- Overseas advertising and promotional campaigns.
4. Market Presence: Then after everything, the Double Tax Deduction Scheme still helps your company secure an overseas market presence by offering deductions on expenses related to:
- Investment feasibility and due diligence studies.
- Overseas investment study trips and missions.
- Employee overseas posting.
- Master licensing and franchising.
- Overseas trade offices.
Eligibility Requirements of DTDi
To qualify for the Double Tax Deduction for Internalisation scheme, your company should meet the following conditions:
- The business should reside in Singapore while principally focusing on promoting service provision or trade of goods.
- If your company is already enjoying discretionary incentives, it could still qualify for the Double Tax Deduction for Internationalisation scheme - but only after receiving approval from the Singapore Tourism Board or Enterprise Singapore.
Then the projects whose expenses you seek deductions on should:
- Promote the company’s existing services and products within existing markets.
- Promote the company’s new services and products to existing buyers.
- Establish new buyers in target markets for the company’s existing services and products.
- Promote the company’s new offerings to new target markets.
How to Apply and Register for DTDi
To apply for the Double Tax Deduction for Internationalisation scheme, go to ESG’s incentive portal via https://incentives.enterprisesg.gov.sg/ and follow these steps. This should be done before commencing the project.
- Log in to the system using your company’s CorpPass credentials.
- Proceed to the “Forms” option on the menu tab, and then click on it to access various application forms.
- At this stage, you should select a form based on the specific activity you intend to cover with the scheme.
- Click on the form to open it, and then fill in all the required fields. This is where you enter your company information, project details, plus the accompanying expenses that you intend to incur.
- Finally, complete the Declaration and submit the form.
- Once ESG reviews your application, you’ll receive approval in the form of an “Approval-in-Principal” email.
With that, you can go ahead with the project as planned. Then when you’re done, go back to ESG’s incentive portal and fill in an Evaluation Form for the project.
If everything checks out, ESG will issue you a “Letter of Support”, which you should ultimately present to the Inland Revenue Authority of Singapore when filing the company’s annual income tax return.
But Then Get This…
The good thing is, you don’t have to bug yourself with all these cumbersome tax procedures. You can count on us to handle everything for you. All it takes to get started is booking a free consultation.