On 29 January 2021, the Inland Revenue Authority of Singapore (IRAS) issued an updated e-Tax Guide on Research and Development (R&D) Tax Measures (6^th Edition).

The Guide sets out the relevant R&D tax measures as announced in Budgets 2008 to 2020. It clarifies the existing definition of R&D and its qualifying criteria. The guide helps taxpayers self-assess if their R&D activities are qualifying R&D activities for tax purpose.

The R&D tax measures are targeted at encouraging businesses to build up R&D capabilities in Singapore. A taxpayer who undertakes qualifying R&D activities may benefit from the R&D tax measures. The taxpayer need not apply to any government agency for these R&D tax measures. The taxpayer must self-assess if his R&D activities are qualifying R&D activities for tax purpose and if so, make the relevant claims in the annual tax return.

The Guide provides guidance in the following areas:

(a) Part A: Qualifying R&D project;

(b) Part B: R&D Tax Deductions; and

(c) Part C: Administrative Procedures.

Furthermore, a taxpayer may undertake R&D work directly, outsource it to an R&D service provider, or participate in an R&D cost-sharing agreement. Such R&D work may be carried out wholly in Singapore, or wholly outside Singapore. It may also be carried out partly in Singapore and partly outside Singapore. Tax deductions on qualifying R&D expenditure are provided for under sections 14D(1) (i.e. 100% deduction), 14DA(1) (i.e. additional 50% deduction from Years of Assessment 2009 to 2018; additional 150% deduction from YAs 2019 to 2025), and 14DA(2) (i.e. PIC deduction 16) of the ITA.