Tax incentive for headquarters activities: What’s in it for businesses?

Considering moving your regional or global hub to Singapore? Singapore continues to be an attractive location for many companies looking to springboard into new markets in the region and across the world. The city-state is known for its strategic location, business friendly legislation and significant tax incentives.

The Singapore government has two specific tax schemes in order to encourage companies to use Singapore as their regional or global headquarters base.

Regional Headquarters Award (RHA): Under the (RHQ) Award, qualifying companies can enjoy a concessionary tax rate of 15% for five (3+2) years on incremental qualifying income from abroad, instead of the regular Singapore corporate tax rate of 17%.
International Headquarters Award (IHA): Qualifying companies that commit to exceed the minimum requirements of the Regional Headquarters Award can enjoy an even lower concessionary tax rate ranging from 5% to 15% on incremental income from qualifying activities.

Headquarters tax incentive

Generally, the applicant company must satisfy all of the following minimum requirements by the milestones indicated and maintain these until the end of the incentive period and any other conditions required by the Singapore Economic Development Board (EDB):

A paid-up capital of $0.2m and $0.5m by the end of Year 1 and Year 3 of the incentive period respectively.
Three headquarters services to network entities in three countries outside Singapore by the end of Year 1.
75% skilled staff throughout the incentive period.
An additional 10 professionals in Singapore by the end of Year 3.
An additional $2m in annual total business spending in Singapore.

An application must be submitted to the Singapore Government for an assessment and is subject to approval and/or additional specific requirements if imposed by the Government.

How can we help

Mazars can assist you in applying for the incentive. We offer the following services:

Efficient structuring of new investments and setting up of the regional/international headquarters in Singapore.
Setting up the regional service fees to be compliant with the Singapore tax regulations.
Reviewing your applications, business plans and projections.
Follow-up with local authority.

Once the structuring is done and incentives obtained, Mazars can assist you with the actual set up of the entity and its corresponding outsourcing services in the areas of accounting, corporate secretarial, payroll and human resources.

Elaine Chow, Director, Tax says: “We provide bespoke advice in all areas of taxation, helping corporates and private clients at both national and international levels. We can help international organisations tap into various investment opportunities and reap the full benefits of the tax incentives on offer in Singapore.”

Justin Lim, Director, Outsourcing adds: “We can be your choice of strategic business partner and in view of our coordinated approach and comprehensive outsourcing offerings, we are confident of delivering a high service offering and standards.”