the Development and Expansion Incentive obtained by Company H! Why do multinational companies choose Singapore as their headquarters?

According to a report by the Singapore’s Economic Development Board (EDB), one-third of the world’s top-500 companies have set up their corporate regional headquarters in Singapore, including well-known tech giants such as Google, Amazon and Facebook.

Why do multinational companies choose to set up headquarters in Singapore? Because the tax incentive that Singapore launched is hard to refuse. Today, Go Global Gem will share the advantages of the Headquarter Development and Expansion Incentive (DEI) Program.

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Headquarter Development and Expansion Incentive

The Development and Expansion Incentive (DEI) is designed to encourage companies to develop capabilities and undertake new or expanded economic activities in Singapore. The tax incentive is administered by the Economic Development Board of Singapore (EDB). It is the responsibility of the company headquarters to manage, coordinate and control business activities.

For companies that have applied for the DEI incentive, their revenue streams from headquarters activities may be eligible for an exemption on tax OR at a concessionary tax rate of 5% or 10%; the first tax relief period is limited to five years and may be eligible for extensions for up 40 years, depending on how well the applicant lives up to their promises. The main factors influencing the preference are the importance of the Singapore headquarters in the group, including the number of employees, the cost of the company and the quality of the employees.

It is important to note that the details of the incentives can be discussed with the EDB, which will customize the preferential package for the applicant according to the company size and its contribution to Singapore. Accordingly, the requirements to be met by the DEI companies to enjoy the tax incentives within the stipulated period may vary depending on the customized packages.

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The venturing story of Company H

H is a company committed to providing high-precision data acquisition and application solutions, specializing in the development, production and sales of high-precision satellite navigation and positioning-related software and hardware technology products.

During her university years, Ms. W. majored in electrical engineering and automation, and has been working as an engineer in Company H since 2018. Throughout her life, Ms. W has devoted herself to technology study and accumulated rich experience. In the following years, with her team, she created achievements for the company that astonished the industry.

Globalization has always been the symbol of Chinese business culture. It highlights the vitality and international competitiveness of Chinese enterprises, and it’s the critical path for Chinese enterprises to become international. Some major brands such as Huawei, Lenovo, Haier and Gree have made plans in venturing abroad, from a Chinese enterprise to a globally competitive multinational enterprise, and becoming well-known to consumers worldwide.

Singapore has world-class ports and international airports. It is a financial and trade center with well-developed tourism, communication, finance, education and free economic system. Singapore has become an international city that investors are keen on. As such, numerous Chinese companies are registering their companies in Singapore, which serves as a powerful springboard for domestic enterprises to enter the world market.

At the same time, Singapore boasts a stable political environment, advantageous geographical location, sound infrastructure and a bilingual Chinese and English language environment, thus making it a superior overall business environment.

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Company H has been considering plans to go abroad. After investigation and comparison, Company H unanimously approved and chose to set up its international headquarters in Singapore. Through the recommendation of industry insiders, Ms. W and Company H executives and Go Global Gem established a deep cooperative relationship.

After the research, Go Global Gem has made a “headquarters plan” for Company H. Currently, relevant work is progressing in an orderly way. Ms. W has already received her Singapore EP and will soon go to Singapore with several executives to explore overseas markets.

 

How to Apply for DEI

The application cycle for DEI takes about 6 months.

Step 1 – Prepare the business plan;

The business plan includes:

1. Corporate profile and industry overview,
2. Strategic Planning for Singapore,
3. Project implementation plan and other information;

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Step 2 – Arrange a discussion with EDB;

1. We will arrange a meeting with EBD at which the applicant company will present its Singapore business plan;
2. We will arrange for rehearsal for parties involved in presenting the business plan to EDB before the actual meeting with EDB;
3. We will assist in queries and follow-up requests from EDB;

Step 3 – Review of the client’s completed tax credit application form;

• Fill in the main application form, which includes:

1. Singapore company information,
2. New project information,
3. Existing operations and other information.

Note: It is necessary to state that the information provided is true and accurate, and that the Company is not subjected to litigation or other legal affairs in Singapore or overseas in relation to the project.

② State the date of application of EDB Core Form, the last financial year, whether the HQ division is a cost centre.

Step 4 – Submit the application form through the EDB Portal;

The Singapore Company’s Corppass admin will need to add the EDB Portal as an e-service and assign our firm one role on Corppass.

Step 5 – Evaluate the tax benefit approval.

1. We will provide comments on the draft incentive offer letter given by the EDB, including the terms and conditions of the incentive offer. We will not act in a legal capacity.
2. We will review the final incentive offer letter given by the EDB and highlight important conditions included in the letter.

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Singapore companies and individuals must comply with relevant Inland Revenue Authority of Singapore (IRAS) regulations and pay taxes regularly to avoid fines or penalties. Due to the complexity of tax-related issues, many taxpayers often need clarification, which makes them make mistakes when sorting out their income or calculating taxes, leading to unnecessary troubles.

If your company plans to go abroad and set up a headquarter in Singapore, or if you have any problems with the DEI, don’t hesitate to get in touch with Go Global Gem. We will provide integrated solutions such as sailing service and tax consultation.

 

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