21. The principal Act is amended by inserting, immediately after section 14D, the following section:
—(1) Subject to this section, for the purpose of ascertaining the income of any person carrying on any trade or business during the basis period for any year of assessment between the year of assessment 2009 and the year of assessment 2013 (both years inclusive), the following amounts shall be allowed as a deduction in addition to the deduction allowed under section 14D:
50% of the qualifying expenditure incurred during the basis period on research and development undertaken in Singapore directly by him (except to the extent that it is capital expenditure on plant, machinery, land or buildings or on alterations, additions or extensions to buildings or in the acquisition of rights in or arising out of research and development); and
a specified percentage of all payments made during the basis period by that person to a research and development organisation for undertaking research and development in Singapore on his behalf.
(2) Section 14D(4) and (5) shall apply in relation to the deduction of the expenditure and payments referred to in subsection (1)(a) and (b) for research and development that is not related to the trade or business carried on by the person, as they apply in relation to the deduction of the expenditure and payments referred to in section 14D(1)(aa) and (c), subject to the following modifications:
a reference to the amount of the expenditure or payments is a reference to the percentage of the expenditure or payments referred to in subsection (1)(a) or (b) (as the case may be); and
a reference to a specified amount of the expenditure or payments in section 14D(4) is a reference to an amount computed in accordance with the following formula:
is the percentage of the expenditure or payments referred to in subsection (1)(a) or (b) (as the case may be);
is the rate of tax specified in section 43(1)(a); and
(i) in a case where the concessionary income (as defined in section 14D(5)) derived by the person from the trade or business carried on by him is subject to tax at a single concessionary rate of tax, that rate; or
(ii) in a case where the concessionary income derived by the person from the trade or business carried on by him is subject to tax at 2 or more concessionary rates of tax, the higher or highest of those rates.
(3) In this section —
“consumables” means any materials or items used in the research and development which, upon such use, are consumed or transformed in such a manner that they are no longer useable in their original form, but does not include utilities;
“qualifying expenditure” means any expenditure attributable to the research and development that is incurred on —
such other matter as the Minister may prescribe by regulations,
but does not include any expenditure to the extent it is subsidised by Government grants or subsidies;
“specified percentage”, in relation to all payments made during the basis period by any person to a research and development organisation for undertaking research and development in Singapore on his behalf, means —
where more than 60% of all such payments made are qualifying expenditure, a percentage ascertained in accordance with the formula
0.5 x D,
is the percentage of all such payments made which are qualifying expenditures; or
in all other cases, 30%;
“staff costs” means any salary, wages and other benefits paid or granted in respect of employment (excluding director’s fees), whether in money or otherwise, to any employee for carrying out the research and development, and includes ––
expenses incurred for training or certifying the employee for the purpose of carrying out the research and development; and
such other expenses as may be prescribed.”.