Singapore Implements Refundable Investment Credit Framework
Background
On 1 September 2025, the Singapore Ministry of Finance officially gazetted the Income Tax (Refundable Investment Credits) Regulations 2025 (RIC Regulations)[1], a subsidiary legislation which came into immediate effect and provides expanded clarity on the implementation of the Refundable Investment Credit (RIC) scheme.
The RIC Regulations build on the RIC framework introduced in Section 93B of the Income Tax Act 1947[2]. This framework aligns Singapore’s tax incentives with the OECD’s Global Anti-Base Erosion (GloBE) rules for Qualified Refundable Tax Credits, ensuring ongoing international compliance while incentivizing substantive economic activities.
The Economic Development Board (EDB) has also published a fact sheet outlining eligibility and application processes for businesses. The RIC scheme continues to operate on an approval basis by EDB Singapore, granting credits based on qualifying expenses incurred for eligible projects, with support potentially spanning up to 10 years.
Key highlights from the RIC Regulations
We have outlined the key features of the RIC Regulations, which expanded upon and provided greater clarity to the RIC scheme, providing a more comprehensive understanding of the eligibility criteria and compliance requirements.
- RIC Qualifying activities
Qualifying activities must support the proposed project and align with Singapore’s economic priority areas including advanced manufacturing, international trade, supply chain management, mobility, digitalisation, artificial intelligence and green economy. The specified RIC qualifying activities have been expanded as follows:
- Investments to increase productive capacity in any industry, including manufacturing-related investments
- Provision of digital services, professional services and services relating to supply chain management
- Establishment or operation of a company’s headquarters or centre of excellence in Singapore
- Commodity trading and related functions
- Physical trading of commodities
- Trading in commodities derivative instruments
- Acting as a broker for physical trading of commodities or trading in commodities derivatives
- Establishing supply chain management and other functions that relate to the physical trading of commodities
- Research and development (R&D) and other activities that promote innovation
- Energy efficiency and decarbonization initiatives, including:
- Improvements in energy efficiency
- Solar power deployment
- Reduction of greenhouse gas emissions (other than carbon dioxide)
- Carbon capture, utilization, and storage
- RIC Qualifying expenditure
Qualifying expenditures that are eligible for RICs depend upon the type and scale of the proposed project. The RIC Regulations provides expanded guidance on the expenditure types:
- Capital expenditure on plant, property, or equipment
- Manpower costs incurred for Singapore-based employees including wages, salary, bonus, contribution to central provident fund (CPF)/ pension fund or any other employment benefits
- Training expenses including course fees/ salaries/ allowances/ travel reimbursement paid to external training providers. Employee allowances and travelling or transportation expenses for attending trainings.
- Professional, consultancy and technical testing services
- Intangible asset acquisition cost, R&D/ innovation activity cost-sharing, licensing fees and royalty payments
- Materials and consumables used or transformed in such a manner that they are no longer useable in their original form;
- Freight and logistics costs for goods transportation, management of such transportation and associated supply chain and logistics process flow
- Financing costs, including interest payments and related charges
- RIC computation rate and key determining factors
The rate of RIC computation is provided at 10%, 30%, or 50% of qualifying expenditure and is determined by the approving authority based on several qualitative and economic factors, including:
- Scale and nature of the company’s investment in Singapore
- Impact of qualifying activity on business or industry development within Singapore
- For activities involving energy efficiency and decarbonization initiatives, the impact of the qualifying activity on –
- Resource efficiency of the company’s business or industry to which it belongs
- Environmental sustainability of the company’s business
- Payout mechanism
The RIC can be used to offset a company’s Corporate Income Tax, including Domestic Top-up Tax and Multinational Enterprise Top-up Tax, under the Act or the Multinational Enterprise (Minimum Tax) Act 2024.
If the RICs are not fully utilised to offset the aforementioned taxes, the remaining amount will be refunded in cash to the company. The cash refund will be made no later than four years from the date the company submits its claim application for qualifying expenditures.
A company may elect to receive the RICs as a cash payout instead of using them to offset taxes. Upon making this election, the company will receive the cash payout within four years from the claim application date, following a stipulated disbursement schedule. An election under this regulation is irrevocable and applies to all RICs applied for under the application.
The stipulated disbursement schedule of RIC payout was introduced in the RIC regulations as follows:
- 20% within 2 years from application date
- 30% within 3 years from application date
- 50% within 4 years from application date
- Reversal of tax treatment
RICs granted to a company may become recoverable on account of company’s RIC award being amended or revoked.
The qualifying expenditure incurred by the company for which the recoverable RICs were given to the company is not treated as expenditure subsidised by a grant from the Government. While RICs may become recoverable, the qualifying expenditure for such RICs is still eligible for tax deductions/ capital allowances in the relevant basis period in which these are incurred.
The company must submit revised tax computations with supporting documents within 2 months of receiving a notice from the approving authority in this regard.
How can A&M support you
With the RIC framework more clearly defined, businesses are better equipped to assess how the RIC scheme can complement their strategic investment goals. This offers a timely opportunity for companies to revisit their expansion plans and explore how the RIC can enhance their financial and operational outcomes. For MNCs operating in Singapore - whether newly entering the market or already established - aligning future investments with the RIC’s parameters could unlock significant value.
Our team at A&M is dedicated in providing comprehensive support to guide you through in-depth evaluation of project eligibility, qualifying expenditures, aligning investment strategies with Singapore’s priority economic sectors, and related compliance/ reporting. Whether you are planning to expand operations, invest in innovation, or enhance sustainability efforts, we offer tailored advisory, eligibility and feasibility assessment, assistance in engaging with relevant authorities, application and documentation support.
Please contact us if you would like to discuss how you can maximize the benefits under the RIC scheme.
[1]Income Tax (Refundable Investment Credits) Regulations 2025 - Singapore Statutes Online
