The Economic Development Board (EDB) has released an update on Intellectual Property Development Incentive (IDI) which was announced in the Singapore Budget 2017.
As stated by the EDB, the introduction of the IDI has been deferred to a later date and an announcement is expected in late 2017. In the meantime, the scope of the current Development and Expansion Incentive and Pioneer Incentive (DEI/PC) will be amended to exclude IP income, unless the DEI/PC awards are for production and manufacturing activities.
Current "non-manufacturing" DEI/PC incentive holders have up to 30 June 2021 to continue treating IP income as qualifying income for their incentives. However, income from new IP assets owned after a certain "cut-off date" (to be announced) will not enjoy this grandfathering benefit.
It is important that businesses holding the DEI/PC incentive take note of the impending changes and assess if there could be potential impact to their business projections or tax positions from their IP income not qualifying for the incentive tax rate.
The EDB has offered to hold consultation sessions with tax payers who may be affected by the proposed changes. We believe it will be in the interests of the affected tax payers to do so and provide feedback to the EDB as it formulates the implementation details.
Please do not hesitate to contact your PwC tax team or any of the contacts listed below to discuss the potential implications on your current tax incentive as well as the actions that you may want to take.