Statute Details
- Title: Income Tax (Refundable Investment Credits) Regulations 2025
- Act Code: ITA1947-S577-2025
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Income Tax Act 1947 (specifically, powers under section 93B(51))
- Commencement: 1 September 2025
- Current Version Status: Current version as at 27 March 2026
- Key Regulations: Regulations 1 to 8 (including prescribed qualifying activities, RIC computation rates, election mechanics, prescribed dates, and reversal of tax treatment)
- Primary Link to Main Act: Section 93B of the Income Tax Act 1947 (Refundable Investment Credits framework)
What Is This Legislation About?
The Income Tax (Refundable Investment Credits) Regulations 2025 (“RIC Regulations”) are subsidiary legislation made under the Income Tax Act 1947. Their purpose is to operationalise the Refundable Investment Credits (“RICs”) regime in section 93B of the Income Tax Act 1947 by specifying (i) which business activities qualify, (ii) the rates used to compute RICs for different categories of qualifying expenditure, and (iii) procedural and tax treatment rules that affect how RICs are paid and later reversed if clawed back.
In plain language, the Regulations help determine when a company can receive a cash-like tax benefit (RICs) for investing in Singapore and for undertaking certain activities that support economic development, innovation, and sustainability. The RICs are computed by applying prescribed rates to specified types of qualifying expenditure. The Regulations also allow an “election” for the timing of RIC payouts, which can be important for cashflow planning.
For practitioners, the key value of the RIC Regulations is that they translate the broad policy in section 93B into concrete legal rules: they define the qualifying activities, set the computation rates (10%, 30%, or 50% depending on expenditure type), and provide mechanisms for payout timing and reversal of tax treatment. These details can materially affect both eligibility and the quantum of credits.
What Are the Key Provisions?
Regulation 1 (Citation and commencement) confirms that the Regulations are the Income Tax (Refundable Investment Credits) Regulations 2025 and that they come into operation on 1 September 2025. This matters for determining whether expenditure and applications fall within the regime’s effective period.
Regulation 2 (Prescribed qualifying activities) is central to eligibility. It provides that each of the listed activities is a “qualifying activity” for the purposes of section 93B. The activities include:
- Productive capacity investment: any investment by a company to increase its productive capacity in any industry, including manufacturing of products relating to any industry.
- Digital and professional services: provision by a company of digital services, professional services, and services relating to supply chain management.
- Headquarters and centres of excellence: establishment or operation of a company’s headquarters or a centre of excellence in Singapore.
- Commodities trading and related functions: physical trading of commodities; trading in commodities derivative instruments; acting as a broker for physical trading or trading in derivatives; and establishing supply chain management and other functions relating to physical trading of commodities.
- Research and development / innovation: any R&D or other activity to promote innovation by a company.
- Energy efficiency and decarbonisation: including improvement in energy efficiency, solar power deployment, reduction of emissions from greenhouse gases (other than carbon dioxide), and carbon capture, utilisation and storage.
From a legal drafting perspective, Regulation 2 is “activity-based” rather than “sector-based”. That means practitioners should focus on mapping the company’s actual operations and investment plans to the enumerated activity categories. For example, a company claiming under the energy efficiency and decarbonisation limb must show that the relevant expenditures relate to the specified decarbonisation measures (and not merely general sustainability initiatives).
Regulation 3 (Rates for computation of RICs for qualifying expenditure) sets the computation rates. It provides that the rate for computing RICs for each type of qualifying expenditure incurred by a company in carrying out one or more qualifying activities is 10%, 30% or 50% of the amount of qualifying expenditure. The Regulation then lists the categories of qualifying expenditure, including:
- Capital expenditure on plant, property or equipment.
- Manpower costs for employees located in Singapore, including wages, salaries and bonuses; CPF or other pension fund contributions; and other employment benefits.
- Training expenditure for employees, including course fees, external provider salaries/allowances and reimbursed travel/transport expenses, and employee allowances and travel/transport for attending training.
- Professional/consultancy/technical testing services.
- Intangibles and innovation-related costs, including intangible asset acquisition, cost-sharing agreements for R&D/innovation, licensing fees and royalty payments.
- Materials and consumables that are consumed or transformed such that they are no longer usable in their original form.
- Freight forwarding and logistics costs for transportation and associated supply chain/logistics process flow.
- Financing costs, including interest payments and related charges.
Although the extract confirms that the rates are 10%, 30% or 50%, it does not show within the provided text which specific expenditure category maps to which exact rate. In practice, this mapping is crucial: the same dollar amount of expenditure can yield materially different RICs depending on the prescribed rate applicable to that expenditure type. Practitioners should therefore obtain the full text of Regulation 3 (including any subparagraphs that assign the specific rate to each category) before advising on quantum.
Regulation 4 (Factors to determine rates) adds an administrative discretion layer. It provides that, in determining the rate for computing RICs for each type of qualifying expenditure mentioned in Regulation 3, the approving authority must consider factors “as applicable”, including:
- Scale and nature of the company’s investment in Singapore.
- Impact on development of the company’s trades and businesses or any industry in Singapore.
- For energy efficiency and decarbonisation activities: impact on resource efficiency and/or environmental sustainability.
This is significant for practitioners because it frames the evidentiary and narrative requirements for applications. It suggests that the approving authority’s assessment is not purely mechanical; it is linked to the investment’s economic and sustainability impact. Accordingly, submissions should be supported with documentation that speaks directly to these factors (e.g., project scope, expected productivity outcomes, industry spillovers, and measurable environmental benefits).
Regulation 5 (Election for payment of RICs to be paid in specified manner) allows an awardee company to elect how RICs will be paid over time. The election must be made at the time of making an application for RICs under section 93B(15), and it is a written election. The election options are:
- 20% of the RICs on or before a specified date within 2 years from the application date;
- 30% on or before a specified date within 3 years;
- 50% on or before a specified date within 4 years.
Key legal consequences follow:
- Irrevocability: an election is irrevocable and applies to all RICs applied for under the application.
- Clawback adjustment ordering: if RICs are reduced (but not to zero) due to debiting under section 93B(40)(a), the reduction is applied so that the later payout is reduced before the earlier payout.
For counsel, this affects both risk management and cashflow modelling. The irrevocability means that companies should carefully consider the likelihood of clawback and the timing of qualifying expenditure and approvals before electing a payout schedule.
Regulations 6 and 7 (Prescribed day for certain payment-related provisions) specify the “prescribed day” for purposes of section 93B(29), (30)(a) and (30)(b). In both cases, the prescribed day is the first day of the period of 3 months before the relevant payout/payment date. These provisions are technical but important for compliance timelines and for determining when certain statutory calculations or procedural steps are triggered.
Regulation 8 (Reversal of tax treatment) addresses what happens when RICs are recoverable from a company due to clawback provisions in section 93B(38) and (39). It provides that:
- The qualifying expenditure for which the recoverable RICs were given is not treated as expenditure subsidised by a Government grant.
- Subject to Parts 5, 6 and 9 of the Act, the expenditure remains allowable as a deduction under Part 5 for the basis period in which incurred.
- Allowances may be made under specified sections (e.g., sections 16, 17, 18C, 19A, 19B, 19D or 20) for the relevant year(s) of assessment.
- Part 9 applies for determining assessable income for the relevant year(s).
In addition, Regulation 8 contains a procedural obligation (the extract truncates the remainder) requiring the company to notify or file something within a specified period after service of a relevant document or event. Practitioners should review the full text of Regulation 8 to confirm the exact filing/notification mechanics, deadlines, and the interaction with the Act’s clawback procedures.
How Is This Legislation Structured?
The Regulations are structured as a short set of eight regulations, each performing a discrete function in the RIC regime:
- Regulation 1: commencement and citation.
- Regulation 2: enumerates qualifying activities.
- Regulation 3: sets the RIC computation rates for categories of qualifying expenditure.
- Regulation 4: prescribes factors the approving authority must consider when determining applicable rates.
- Regulation 5: election mechanism for payout timing; irrevocability; reduction ordering upon debiting.
- Regulations 6 and 7: prescribed days relative to payout/payment dates.
- Regulation 8: reversal of tax treatment where RICs are recoverable.
Who Does This Legislation Apply To?
The Regulations apply to companies seeking RICs under section 93B of the Income Tax Act 1947 and to awardee companies that receive RICs. The qualifying activities are framed in terms of what a company does (e.g., investments, services, R&D, decarbonisation projects), and the qualifying expenditure categories are framed in terms of costs incurred by the company.
In practice, the Regulations are relevant to corporate tax advisers, in-house tax teams, and transaction/strategy counsel advising on whether a company’s Singapore operations and planned expenditures can be structured to qualify. They are also relevant to companies facing clawback risk, because Regulation 8 governs how tax treatment is reversed or maintained when RICs are recoverable.
Why Is This Legislation Important?
First, the Regulations directly affect the quantum of RICs. By prescribing qualifying activities and the categories of qualifying expenditure, they determine whether a company can access the RIC benefit at all, and by prescribing rates (10%, 30%, 50%) they determine how much benefit is computed from each dollar of qualifying spend.
Second, the Regulations influence application strategy and evidence. Regulation 4 requires the approving authority to consider scale, nature, and impact, including resource efficiency and environmental sustainability for decarbonisation activities. This means that successful applications typically require more than accounting classification; they require a project narrative and measurable outcomes aligned to the statutory factors.
Third, the payout election under Regulation 5 is a practical lever for cashflow planning. However, because the election is irrevocable and reductions are applied in a particular order, companies must assess clawback likelihood and timing before electing a schedule. Finally, Regulation 8 is important for tax governance in clawback scenarios, clarifying that the qualifying expenditure is not treated as Government-grant subsidised expenditure and setting the framework for deductions and allowances.
Related Legislation
- Income Tax Act 1947 (in particular, section 93B on Refundable Investment Credits, including provisions on application, debiting, clawback, and recovery)
Source Documents
This article provides an overview of the Income Tax (Refundable Investment Credits) Regulations 2025 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.