Singapore Offers Tax Deductions for Angle Investors

July 1, 2010 Taxation in Singapore

We are the law!The Government of Singapore has announced its latest initiative to draw potential invest to national small businesses and start-up firms.

On June 28th SPRING Singapore, a national enterprise development agency, revealed details of the long-awaited Angel Investors Tax Deduction Scheme (AITD), which was first announced in the national 2010 Budget. The new scheme offers angel investors the opportunity to offset 50 percent of their cash investment against their personal taxable income. The program is especially aimed at increasing investment into start-up firms in the high-tech and biotech industries.

Under the AITD program, angel investors are required to make a minimum personal deposit of SGD 100 000 (approx. USD 71 541) before March 15th 2015 to qualify for this tax deduction. Upon the completion of a 2 year holding period, investors will be eligible for the tax relief. Additionally, the investor is required to serve on the firm’s board of directors for the entire holding period of the investment. According to Spring Singapore, the condition will ensure that small businesses and start-up firms will benefit from the experience of its investors, thereby aiding their growth. To be eligible for the program, investors are also required to be approved by Spring Singapore. Under the AITD, angel investors must be either experienced angel investors, serial entrepreneurs, or experienced senior management executives.

The AITD also speculates that the investment-receiving firm will not undertake illegal or undesirable activities, speculative activities, hold investment assets, invest in real estate or carry out property development. The Government of Singapore has reserved the right to deem further activities unsuitable for the AITD program.

Explaining the economic benefits of the scheme at the 44th Action Community for Entrepreneurship, Tan Kai Hoe, Deputy Chief Executive of Spring Singapore, said, “…angel investors bring along their business skills, industry expertise and business contacts that are invaluable to help in the start-ups’ growth… this is what we want to achieve with the scheme – for innovative start-ups to tap the expertise and networks of the angel investors.”

Photo by Balaji Dutt