Statute Details
- Title: Income Tax (Refundable Investment Credits) Regulations 2025
- Act Code: ITA1947-S577-2025
- Legislative 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 (including prescribed qualifying activities, RIC computation rates, election mechanics, prescribed days, and 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 (“ITA”). Their purpose is to operationalise the refundable investment credits (“RICs”) regime in section 93B of the ITA by specifying (i) what counts as “qualifying activities”, (ii) how RICs are computed by reference to qualifying expenditure categories and rates, and (iii) procedural and tax-treatment rules that affect how RICs are paid and later reversed if clawed back.
In plain language, the Regulations tell companies what kinds of investments and business activities can qualify for RICs, what portion of qualifying costs may be credited back to them (at different rates), and how they can elect to receive the credit payout over time. They also address what happens for tax purposes if RICs are later recovered from the company.
For practitioners, the key point is that the Regulations are not a standalone incentive scheme. They function as the “plumbing” for section 93B: they define the qualifying activities and the computation mechanics, while the ITA sets out the broader framework for awards, approvals, payout, recovery, and the overall tax treatment.
What Are the Key Provisions?
1. Prescribed qualifying activities (Regulation 2)
Regulation 2 lists the activities that are “qualifying activities” for section 93B. This list is central because a company’s eligibility for RICs depends first on whether its investment or operational activity falls within one of these categories.
The prescribed qualifying activities include:
- Productive capacity investments: any investment by a company to increase productive capacity in any industry, including manufacturing of products relating to an 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.
- Physical trading and related commodity functions: including physical trading of commodities, trading in commodity derivative instruments, acting as broker, 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.
- 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.
2. Rates for computation of RICs (Regulation 3)
Regulation 3 sets the rates for computing RICs for different types of qualifying expenditure incurred by a company in carrying out one or more qualifying activities. The rates are expressed as percentages of the qualifying expenditure: 10%, 30% or 50%.
Importantly, Regulation 3 does not merely list expenditure categories; it also ties the credit rate to each category. The categories include:
- 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, including course fees to external providers, salaries/allowances paid to external training providers, reimbursement of their travel/transport, and allowances and travel/transport for employees attending training.
- Professional services and technical testing costs (including consultancy and 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, including management of transportation and associated supply chain and logistics process flow.
- Financing costs, including interest payments and other related charges.
3. Factors the approving authority must consider (Regulation 4)
Regulation 4 governs how the approving authority determines the applicable RIC rate (10%, 30% or 50%) for each type of qualifying expenditure. It requires consideration of factors “as applicable”, including:
- Scale and nature of the company’s investment in Singapore.
- Impact on development of trades, businesses, or an industry in Singapore.
- For energy efficiency and decarbonisation activities (Regulation 2(f)), the impact on resource efficiency and/or environmental sustainability.
Practically, this means that even if expenditure falls within a prescribed category, the rate may still vary depending on the authority’s assessment of the investment’s significance and impact. For submissions, documentation around scale, measurable outcomes, and industry impact will be important.
4. Election for payment timing (Regulation 5)
Regulation 5 provides a mechanism for an “awardee company” to elect how RICs will be paid over time. The election must be made in writing at the time of making an application under section 93B(15).
The election options are:
- 20% of the RIC amount on or before a date specified by the approving authority within 2 years from the application date.
- 30% on or before a date specified by the approving authority within 3 years from the application date.
- 50% on or before a date specified by the approving authority within 4 years from the application date.
Key legal features:
- Irrevocability: an election is irrevocable and applies to all RICs applied for under the application.
- Clawback interaction: 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.
5. Prescribed days for certain ITA provisions (Regulations 6 and 7)
Regulations 6 and 7 prescribe the “day” used for purposes of section 93B(29), (30)(a), and (30)(b). The Regulations establish a timing rule: the prescribed day is the first day of the period of 3 months before the relevant payout/payment date.
These provisions matter for compliance and for determining when certain statutory computations or administrative steps are triggered under the ITA.
6. Reversal of tax treatment (Regulation 8)
Regulation 8 addresses the scenario where RICs previously given are recoverable from the company as a result of section 93B(38) and (39). This is a critical area for tax accounting and audit readiness.
Regulation 8 provides, among other things, 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 ITA, the qualifying expenditure remains allowable as a deduction under Part 5 for the basis period in which it was incurred.
- Allowances may be made under specified sections (including sections 16, 17, 18C, 19A, 19B, 19D or 20, as applicable) for the relevant year of assessment or other years as provided.
- Part 9 of the ITA applies for determining assessable income for the relevant year(s).
Although the extract provided truncates the remainder of Regulation 8, the thrust is clear: the Regulations seek to preserve the tax deductibility/allowance framework for the underlying expenditure even when RICs are clawed back, while ensuring the tax computation is adjusted consistently with the ITA’s recovery provisions.
How Is This Legislation Structured?
The RIC Regulations are structured as a short set of eight regulations:
- Regulation 1 sets the citation and commencement date (1 September 2025).
- Regulation 2 prescribes qualifying activities for section 93B.
- Regulation 3 sets out the rates for computing RICs for specified categories of qualifying expenditure.
- Regulation 4 lists factors the approving authority must consider when determining the rate for each expenditure type.
- Regulation 5 provides the election mechanism for payout timing and rules for how reductions are applied across instalments.
- Regulation 6 and Regulation 7 prescribe the “day” that is three months before the relevant payout/payment dates for specific ITA subsections.
- Regulation 8 addresses 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 ITA. In practice, eligibility is tied to whether the company undertakes one or more of the prescribed qualifying activities in Singapore and incurs qualifying expenditure that falls within the categories in Regulation 3.
Only companies that are awardees (i.e., those granted RICs following the section 93B application process) can make the payout timing election under Regulation 5. Companies that later face recovery of RICs must also apply the reversal/tax treatment rules in Regulation 8.
Why Is This Legislation Important?
This Regulations set is important because it directly affects both eligibility and quantum of refundable tax credits. For practitioners, the prescribed qualifying activities in Regulation 2 define the boundary of what can be incentivised—particularly for modern categories such as digital services, supply chain management, commodity trading-related functions, and decarbonisation initiatives.
Equally important is the computation framework. Regulation 3 identifies the expenditure categories that can generate RICs, while Regulation 4 introduces a discretionary evaluative layer: the approving authority must consider scale, nature, and impact (including resource efficiency and environmental sustainability for decarbonisation). This means that the quality of the application—business rationale, measurable outcomes, and evidence—can influence the rate applied (10% vs 30% vs 50%).
Finally, Regulation 5 and Regulation 8 have significant cashflow and tax accounting implications. The election mechanism allows companies to manage when they receive refunds, but it is irrevocable and interacts with clawback debiting rules. Regulation 8, meanwhile, is crucial for tax governance: it clarifies how underlying expenditure is treated when RICs are recovered, helping companies avoid inconsistent treatment between incentive accounting and income tax computation.
Related Legislation
- Income Tax Act 1947 (in particular section 93B, including subsections referenced in the Regulations such as 93B(15), 93B(29), 93B(30), 93B(38), 93B(39), 93B(40)(a), and 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.