Intellectual Property (IP) Development Incentive (IDI)
The IDI was introduced in the Singapore Budget 2017 to encourage the use and commercialisation of intellectual property (IP) rights arising from research and development (R&D) activities.
The IP Development Incentive (IDI) aims to encourage the use and commercialisation of intellectual property rights arising from research and development (R&D) activities.
An approved IDI company is eligible for a reduced corporate tax rate of either 5% or 10% on a percentage of qualifying IP income derived by it during the incentive period, which shall be no earlier than 1 July 2018. The percentage is determined by the modified nexus approach. The concessionary tax rate will also increase by 0.5% at regular intervals as prescribed in the Income Tax Act.
Qualifying IP income refers to royalties or other income receivable by the approved IDI company as consideration for the commercial exploitation of qualifying IP rights (IPR) (i.e. patents and copyrights subsisting in software) elected into the IDI (referred to as elected qualifying IPR). Election of qualifying IPR into the IDI is irrevocable.
The incentive period is limited to an initial period not exceeding ten years, and may be further extended for a period or periods not exceeding ten years each.
The company is required to maintain a separate account in respect of any non-qualifying income. Non-qualifying income is not eligible for the incentive.
No IDI award may be approved after 31 December 2023.
The Pioneer Certificate Incentive (PC) and the Development and Expansion Incentive (DEI) aim to encourage companies to grow capabilities and conduct new or expanded economic activities in Singapore.
Companies that carry out global or regional headquarters (HQ) activities of managing, coordinating and controlling business activities for a group of companies may also apply for the PC or DEI for the HQ activities.