Refundable Investment Credit Aims to Foster Innovation, Manufacturing, and Green Initiatives
The Singapore government has introduced a Refundable Investment Credit (RIC) scheme in Budget 2024, designed to support high-impact economic activities crucial for the nation’s long-term growth. The scheme will focus on supporting the establishment or expansion of manufacturing facilities, research and development (R&D), and activities aligned with the green transition.
Finance Minister Lawrence Wong emphasized that the new tax credit would make Singapore more attractive to global companies by bolstering its competitiveness. The RIC will be awarded based on qualifying expenditures incurred by companies in eligible projects within a specified period, which could span up to 10 years. The credit can offset corporate income taxes, with the amount varying based on predetermined categories of qualifying expenditure, including capital costs, training, manpower, and materials.
Experts from PwC, Deloitte, and KPMG have praised the new initiative, noting its potential to ease the financial burden on companies investing in essential but costly sectors like green technologies and R&D. The refundable cash feature of the RIC is seen as a crucial incentive, encouraging businesses to engage in long-term projects with uncertain immediate returns. This move also aligns with global tax reforms, including the BEPS 2.0 framework, which addresses multinational enterprises’ concerns about minimum tax rates.
Overall, the RIC is seen as an essential tool for Singapore’s strategy to maintain its status as a competitive hub for international investment while fostering sustainable economic development.
