Statute Details
- Title: Income Tax (Refundable Investment Credits) Regulations 2025
- Act Code: ITA1947-S577-2025
- Type: Subsidiary legislation (SL)
- Authorising Act: Income Tax Act 1947 (specifically section 93B(51))
- Commencement: 1 September 2025
- Legislation Number: S 577/2025
- Status: Current version as at 27 March 2026
- Key Regulations: Regulations 1 to 8
- Key Topics: Prescribed qualifying activities; RIC computation rates; factors for approving authority; election on payout schedule; prescribed dates; reversal of tax treatment
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 central purpose is to operationalise the refundable investment credits (RICs) framework in section 93B of the Income Tax Act. In practical terms, the Regulations tell companies what kinds of activities qualify for RICs, how the credit is computed for different categories of qualifying expenditure, and how the payout timing can be elected.
RICs are designed to encourage investment and specific economic activities in Singapore by allowing eligible companies to receive a tax credit that is “refundable” (subject to the broader mechanics in section 93B). The Regulations therefore sit at the intersection of (i) investment incentives and (ii) tax computation rules. They also include provisions dealing with what happens if RICs previously granted are later recoverable—ensuring that the tax treatment of the underlying expenditure is appropriately “reversed” or adjusted.
Although the Regulations are relatively short, they are highly consequential for practitioners because they define the boundaries of eligibility (through “qualifying activities”), the financial value of the incentive (through prescribed rates), and the administrative process (through election and prescribed dates). For companies seeking approval under section 93B, these Regulations are often the difference between an application being treated as qualifying or not, and between a lower or higher RIC outcome.
What Are the Key Provisions?
1. Prescribed qualifying activities (Regulation 2)
Regulation 2 lists the activities that are “qualifying activities” for the purposes of section 93B. The list is broad and sectorally targeted. It includes: (a) investments by a company to increase productive capacity in any industry, including manufacturing; (b) provision by a company of digital services, professional services, and services relating to supply chain management; and (c) establishment or operation of a company’s headquarters or a centre of excellence in Singapore.
Regulation 2 also contains specific qualifying activities for (d) physical trading of commodities, trading in commodities derivative instruments, acting as a broker for physical trading or trading in commodities derivatives, and establishing supply chain management and other functions relating to physical trading of commodities. Further, it covers (e) research and development or other innovation-promoting activities, and (f) activities relating to energy efficiency and decarbonisation, including energy efficiency improvements, solar power deployment, reduction of emissions from greenhouse gases (other than carbon dioxide), and carbon capture, utilisation and storage.
2. Rates for computation of RICs (Regulation 3)
Regulation 3 prescribes the rates used to compute RICs for different types of qualifying expenditure incurred in carrying out qualifying activities. The rate is expressed as a percentage of the amount of qualifying expenditure and can be 10%, 30%, or 50% depending on the expenditure category.
The Regulations allocate these rates across a detailed taxonomy of costs. For example, capital expenditure on plant, property or equipment falls within the 10%/30%/50% framework (the Regulation groups categories rather than stating a single rate per category in the extract; in practice, the approving authority and the overall RIC scheme determine which rate applies to which category). Manpower costs are included, but with a Singapore nexus: wages, salaries and bonuses paid to employees located in Singapore; contributions to Central Provident Fund or other pension funds in respect of those employees; and other employment benefits for those employees. Training costs are also included, including course fees to external providers, salaries/allowances paid to external training providers, reimbursement of travel/transportation expenses for external providers, and allowances and travel/transportation expenses for employees attending training.
Other included expenditure categories are professional services, consultancy services and technical testing services; costs relating to 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; and financing costs, including interest payments and other related charges. For practitioners, the key is to map actual project costs to these categories and to ensure the expenditure is incurred “in carrying out” one or more qualifying activities.
3. Factors for determining the rate (Regulation 4)
Regulation 4 is critical because it introduces discretion and evaluative criteria. In determining the rate for computing RICs for each type of qualifying expenditure mentioned in Regulation 3, the approving authority must consider specified factors “as applicable”. These include: (a) the scale and nature of the company’s investment in Singapore; (b) the impact of the qualifying activity on the development of the company’s trades and businesses or on any industry in Singapore; and (c) for energy efficiency and decarbonisation activities (Regulation 2(f)), the impact on resource efficiency and/or environmental sustainability.
This means that even if a cost falls within a prescribed expenditure category, the rate (10%/30%/50%) may depend on the approving authority’s assessment of the project’s economic and policy impact. Practitioners should therefore treat the application narrative and supporting evidence as part of the “rate computation” strategy, not merely as background.
4. Election for payment schedule (Regulation 5)
Regulation 5 allows an awardee company to elect how the RICs will be paid over time. The election is made at the time of making an application under section 93B(15). The company can elect one of three payout schedules: 20% of the RIC amount on or before a date specified by the approving authority within 2 years from the application date; 30% within 3 years; or 50% within 4 years.
Key features for counsel include: (i) the election is irrevocable and applies to all RICs applied for under the application; and (ii) if the RICs are later reduced (but not to zero) due to debiting under section 93B(40)(a), the reduction is applied in a particular order—reducing later payments before earlier payments. This ordering rule matters for cashflow planning and for how adjustments are reflected across the payout timeline.
5. Prescribed days for payment-related provisions (Regulations 6 and 7)
Regulations 6 and 7 prescribe “days” for the purposes of section 93B(29), (30)(a) and section 93B(30)(b). In both cases, the prescribed day is the first day of the period of 3 months before the relevant payout/payment date. While these provisions are technical, they can affect compliance timing, administrative deadlines, and the calculation of periods used in the RIC mechanism.
6. Reversal of tax treatment where RICs are recoverable (Regulation 8)
Regulation 8 addresses a scenario where RICs previously given become recoverable from the company as a result of section 93B(38) and (39). The Regulation provides that the qualifying expenditure for which the recoverable RICs were given is not treated as expenditure subsidised by a grant from the Government. Instead, subject to Parts 5, 6 and 9 of the Income Tax Act, the qualifying expenditure remains allowable as a deduction under Part 5 for the basis period in which it was incurred, and allowances may be made under specified sections (including sections 16, 17, 18C, 19A, 19B, 19D or 20, as applicable). Part 9 then applies for determining assessable income.
Practically, Regulation 8 is designed to prevent a “double adjustment” or an unintended recharacterisation of the expenditure as government-grant subsidised expenditure. It also includes an administrative obligation (the extract is truncated) requiring the company to notify or file something within a specified timeframe after service of a document (likely a notice of recovery or assessment). Practitioners should therefore review the full text of Regulation 8 in the official publication to capture the exact procedural steps and deadlines.
How Is This Legislation Structured?
The Regulations are structured as a short set of eight regulations, each performing a distinct function:
Regulation 1 sets out the citation and commencement date (1 September 2025).
Regulation 2 prescribes the qualifying activities that trigger eligibility under section 93B.
Regulation 3 prescribes the rates used to compute RICs for specified categories of qualifying expenditure.
Regulation 4 sets out the factors the approving authority must consider when determining the rate for each expenditure type.
Regulation 5 provides for an irrevocable election by the awardee company regarding the payout schedule.
Regulation 6 and Regulation 7 prescribe the relevant “days” for payment/payout timing mechanics tied to section 93B.
Regulation 8 provides for reversal of tax treatment where RICs are recoverable, including how the underlying expenditure is treated for deduction and allowances purposes.
Who Does This Legislation Apply To?
The Regulations apply to companies that apply for, are awarded, and potentially receive refundable investment credits under section 93B of the Income Tax Act 1947. In other words, the Regulations are not a general tax rule for all taxpayers; they operate within the RIC incentive regime and therefore primarily affect corporate applicants and awardees.
Eligibility is tied to (i) carrying out one or more qualifying activities as prescribed in Regulation 2 and (ii) incurring qualifying expenditure that falls within the categories in Regulation 3. The Regulations also affect companies after award, because Regulation 8 addresses the tax consequences where RICs are later recoverable under section 93B(38) and (39). Accordingly, corporate tax teams, investment incentive consultants, and legal counsel advising on applications and compliance should treat these Regulations as part of the lifecycle of the incentive—from application to payout to potential recovery.
Why Is This Legislation Important?
For practitioners, the RIC Regulations are important because they convert the broad policy intent of section 93B into concrete, administrable rules. Regulation 2 defines the activity universe. Without a qualifying activity, qualifying expenditure cannot be properly linked to the incentive. Regulation 3 then defines the cost universe and the rate framework, which directly affects the quantum of RICs.
Regulation 4 introduces a “rate determination” layer that depends on scale, nature, and impact—meaning that legal and commercial submissions should be aligned with the statutory factors. For example, for energy efficiency and decarbonisation projects, evidence of resource efficiency and environmental sustainability impact will be particularly relevant. This is a common area where applications succeed or fail, not because costs are absent, but because the impact narrative is insufficiently supported.
Finally, Regulation 5’s election mechanism is a cashflow and risk-management tool. Because the election is irrevocable and affects the timing of payments, counsel should coordinate the election with the company’s expected financial planning and with the possibility of later adjustments. Regulation 8 further matters because recovery events can occur due to non-compliance, clawback triggers, or other statutory reasons under section 93B. The Regulation’s approach to maintaining deductibility and allowances helps manage the tax consequences of recovery and reduces uncertainty about whether the expenditure must be treated as a government-subsidised grant.
Related Legislation
- Income Tax Act 1947 — section 93B (Refundable Investment Credits), including subsections referenced in the Regulations (e.g., 93B(15), 93B(29), 93B(30), 93B(38), 93B(39), 93B(40), 93B(51)).
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.