Deloitte Singapore CFO Forum - Update on Singapore's investment and incentives landscape
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Deloitte Singapore CFO Forum Update on Singapore’s investment and incentives landscape Thursday, 29 July 2021 | 10.00am – 11.00am
Welcome address
Timothy Ho
SEA CFO Program Leader
Executive Director, Finance Transformation
Deloitte Southeast Asia
© 2021 Deloitte & Touche LLP 2
Update on Singapore’s investment and incentives
landscape
Yvaine Gan
Partner, Tax & Legal
Deputy Leader, Global Investment and Innovation Incentives (Gi3)
Deloitte Southeast Asia
© 2021 Deloitte & Touche LLP 3
Agenda 1.Recent investment trends in Singapore 2.Singapore’s latest economic priorities and key incentive opportunities 3.Global tax developments and the impact on Singapore’s tax incentive regime © 2021 Deloitte & Touche LLP 4
Recent investment trends in Singapore © 2021 Deloitte & Touche LLP 5
Recent investment trends in Singapore
Manufacturing, Digital/Technology, Headquarter and R&D activities are the top investments
Digital/Technology
Manufacturing • Digital jobs accounted for 24% of the 19,350 jobs created in
2020. The second largest job distribution after Production
• Manufacturing continues to be one of the key drivers of jobs.
investments in Singapore. 5.0% Digital
7.0%
24.0%
• Despite the pandemic, Singapore attracted a record Business and Commercial
S$17.2bn of Fixed Asset Investments (“FAI”) in 2020, a Services
growth of 13.2% from 2019. 19,350 Jobs Production
19.0% Innovation
• The largest investors in FAI were from the Electronics sector 45.0%
(38%) and the Chemicals sector at (24%). Recent investors Others
include GlobalFoundries and Arkema.
• Singapore has been investing significantly in building a tech
ecosystem; attracting tech giants such as Google, Facebook,
Electronics Amazon, Stripe, and Salesforce. Recent investors include
20.9%
Chemicals
Tencent, ByteDance, Zoom and Dell Technologies.
3.7% 37.7% R&D
6.0%
S$17.2B FAI Headquarter and R&D Activities
Logistics
7.7% Biomedical • Singapore attracted S$1.2b of Total Business Expenditure (“TBE”) for Headquarters & Professional
24.0%
Others Services and S$1.1b of TBE for R&D activities in 2020, accounting for 34% of the total TBE
attracted in 2020.
• Biomedical sector is the fastest growing manufacturing • Jobs in Business & Commercial Services and R&D make up 19% and 7% of all jobs created in 2020
sector in Singapore, growing by almost 180% compared to respectively.
2019.
• Zebra Technologies is an example of a company that had recently set-up its Regional Headquarters
• Production jobs accounted for 45% of all jobs created in with an R&D centre in Singapore.
2020.
• The Singapore government estimates that 46% of all Asia Regional Headquarters (“RHQs”) are
© 2021 Deloitte & Touche LLP based in Singapore, while 59% of all Tech MNCs have their Asia RHQ in Singapore. 61Institute for Management Development (IMD); IMD World Talent Ranking
2INSEAD Global Innovation Index
Why Singapore as an investment destination 3Economist
4World
Intelligence Unit Business Environment Rankings
Economic Forum Global Competitiveness Report
Singapore’s key value propositions that attract investors 5Deutsche Post DHL Group, DHL Global Connectedness Index
• 1st in Asia and 9th in the world for talent competitiveness1, and ranked 10th in the world for university/industry research
collaboration2.
Talent Pool • >S$1b per year on continuous education and training, through initiatives such as Skillsfuture and TechSkills Accelerator.
• Deep skills of local workforce remain key to multiple investors in Singapore, such as GlobalFoundries, Illumina and
Micron, who continue to hire across multiple disciplines and invest in talent despite the pandemic.
Business • 1st in the world for doing business3 and 1st in the world in political and operational stability1
Friendly • Singapore viewed as a safe bet and neutral country to leverage as a gateway to fast-growing Southeast Asia, as seen
in the surge of tech giant investments such as Tencent and ByteDance.
• 1st in Asia Pacific and 8th most innovative country in the world2. 2nd in the world for IP protection4. S$25 billion in
investment for R&D planned from 2021 to 2025.
Innovation • BioNTech quoted need for strong R&D as key to locating its regional HQ and Manufacturing site in Singapore. Other
MNCs, such as Dyson, continue to expand their R&D centres in Singapore aggressively.
• 2nd most globally connected country in the world 5
Global • 25 Free Trade Agreements globally - tax savings, zero tariffs and special rates with major economies in the world
Connectivity • Multiple leading international logistics firms, such as DHL, UPS and DB Schenker, have made Singapore their
regional HQ. MNCs such as GlaxoSmithKline and Unilever have located their regional supply chain management
© 2021 Deloitte & Touche LLP teams in Singapore. 7Singapore’s latest economic development priorities and key incentive opportunities © 2021 Deloitte & Touche LLP 8
Singapore’s latest economic development priorities and key incentive
opportunities
Incentive
Summary/Overview Benefits
Opportunities
• Singapore established the Southeast Asia Manufacturing • Up to S$1m grant in support for eligible innovation
Alliance in 2021 to help investors expand manufacturing SEA Manufacturing activities undertaken in Singapore.
footprint in Southeast Asia. Alliance (SMA)
Incentive • Differentiated tier of logistics prices across land and sea
• The government encourages and support businesses to transport, complimentary business services, etc.
SG+ Twinning Strategy establish manufacturing presence in regional industrial
parks, e.g. in Johor Malaysia and Batam, Bintan & Karimun
(“BBK”) in Indonesia, while locating its business activities Integrated Investment • Allowance of up to 100% of productive equipment
in Singapore. Allowance (IIA) placed with the overseas entity.
Development & • Preferential corporate tax rate of 5% or 10% on
• As global supply chain leaders are re-evaluating strategies,
Expansion Incentive incremental qualifying income, including manufacturing,
Singapore is positioning itself to become Asia’s Supply
(DEI) services and headquarter activities.
Chain Management hub.
• Priority areas: digital transformation, greater collaboration
Supply Chain with industry players, growth of local ecosystem solution
Research &
• Co-funding of up to 30% of qualifying costs on research
Critical Node Innovation Scheme
providers and supply chain talent development. and innovation projects.
for Companies (RISC)
Investment Allowance • Additional allowance of up to 100% of qualifying fixed
• Decarbonization – co-creation or pilot projects with for Emissions capital expenditure for projects with the goal of
industry players in Singapore to reduce emissions or Reduction (IA-ER) reduction in energy use or greenhouse gas emissions.
development of carbon capture capabilities.
• Sustainability services – Smart Sustainable City,
Sustainability Resource Efficiency • Co-funding of up to 50% of qualifying costs for industrial
Infrastructure, Built Environment, Clean Energy, Waste &
Grant for Energy facilities to improve energy efficiency or reduce
Environment and Urban Mobility.
© 2021 Deloitte & Touche LLP
(REG-E) greenhouse gas emissions. 9Global tax developments and the impact on Singapore’s incentive regime © 2021 Deloitte & Touche LLP 10
Global tax developments and the impact on Singapore’s incentive regime
Brief recap of BEPS 1.0 and BEPS 2.0
• 15 Actions Plans, one of them being Action 5, Countering Harmful
Tax Practices More Effectively, Taking into Account Transparency
and Substance (one of the four BEPS minimum standards)
BEPS 1.0
• One key area concerns the assessment of preferential tax regimes. What does this
Progress reports are issued periodically with the latest being mean for the
November 2020. current incentive
regime in
Singapore?
• Two Pillars: Pillar One – reallocation of taxing rights and Pillar Two Could tax incentives
– global anti-base erosion mechanism continue to play a
• Pillar Two explores the design of a system to ensure that part in the future
multinational enterprises pay a minimum level of tax. This pillar and continue
would provide countries with a new tool to protect their tax base attracting
BEPS 2.0
from profit shifting to low/no-tax jurisdictions, and is intended to investments?
address remaining issues identified by the BEPS Project.
• 130 countries and jurisdictions including Singapore have joined in
support of the minimum level of tax of at least 15%.
© 2021 Deloitte & Touche LLP 11Global tax developments and the impact on Singapore’s incentive regime
What does this mean for tax incentives in Singapore?
• While 130 countries and jurisdictions
including Singapore have agreed to support • Too early to work out impact of agreement on
the global minimum tax rate, holdouts persist Singapore’s existing tax incentives, as
including Ireland and Hungary. implementation details are still being
• International consensus needs to be fully negotiated.
reached before the changes can be What does • Singapore will need to consider if its incentives
implemented. this mean for are compliant and if there will be any increase in
• Singapore will continue to voice its opinions What will foreign tax liability by the awardee.
Singapore?
and concerns on the international platform. happen to my • Any changes to Singapore’s tax system will be in
incentives? close consultation with industry players in
How will
Singapore and tax professionals.
Singapore
• Singapore is committed to ensuring its business
continue to Is it still worth
environment, including incentives remain competitive
to attract investors, while remaining compliant to attract applying for tax
international standards. investors? incentives?
• Singapore adopting a wait-and-see approach before • Companies who are awarded tax incentives
deciding how its tax system and incentives will change. will continue to enjoy the benefits until any
changes are announced in Singapore – it is
• Singapore does offer other forms of incentives, such as anticipated that this may take some time.
grants, loans and withholding tax incentives. We
anticipate that Singapore will consider expanding its • Any benefits enjoyed prior to these changes
non-tax tools and new incentives as BEPS 2.0 will be retained by the awardee.
develops.
© 2021 Deloitte & Touche LLP 12Contact Us cfoprogramsea@deloitte.com
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