Introduction

This tax incentive scheme is provided under the Income Tax Act. The objective of the scheme is to encourage companies to replace old, energy-consuming equipment with more energy efficient ones and to invest in energy-saving equipment. Inefficient equipment not only incur high operating costs as they consume more energy but also have a negative impact on the environment as a result of higher emission of pollutants to the environment.

The National Environment Agency, which administers this scheme, strongly encourages interested parties to apply for this scheme. While you can enjoy the benefit of accelerated depreciation of your capital expenditure, you would also be contributing to a better environment.

What is the Incentive?

Under this scheme, the capital expenditure on the qualifying energy efficient or energy-saving equipment can be written off in 1 year instead of three. Capital expenditure pertains to costs incurred by the investment in or purchase of long-term business assets.

All costs directly related to the project, including the equipment, supplies and installation costs, are eligible for accelerated tax allowance. However, costs incurred for consultancy work relating to the project should not be included as capital expenditure.

Who can Qualify?

Any person carrying on a trade, profession or business in Singapore is eligible for the tax incentive. The applicant must own the equipment and use it for business purposes only.

What Types of Projects would Qualify?

There are two categories of projects that would qualify for this scheme:

Objective

Category A: Replacement Machines and Equipment

To qualify for this category, the project must involve the replacement of old equipments with more energy efficient ones, which would result in significant energy savings. The equipment must be listed as an approved equipment.

Category B: Energy-Saving Equipment and Devices

In this category, the project must involve the installation of energy-saving equipments that would result in significant energy savings. The equipment must be listed as an approved equipment or be part of a qualifying system.

For more information on capital allowance and corporate tax related topics, please visit IRAS.