Singapore Industrial Building Allowance: A Detailed Guide

The Industrial Building Allowance (IBA) was a tax incentive under Singapore’s corporate tax framework encouraging investment in industrial buildings and structures. It has since been phased out and is not available for expenditure incurred on or after 23 February 2010, apart from limited transitional cases. This guide is retained for reference and to explain what still applies to pre-phase-out claims.

What is the Industrial Building Allowance?

The Industrial Building Allowance (IBA) allows businesses to claim tax relief for the construction or purchase of qualifying industrial buildings and structures. This incentive is designed to support companies in developing infrastructure that facilitates economic growth and productivity.

Qualifying Criteria

To qualify for the IBA, the following conditions must be met:

• The building or structure must be used for qualifying purposes, such as manufacturing, research and development, or storage of goods for export.
• The expenditure must be incurred on the construction or purchase of the building or structure.
• The building or structure must be located in Singapore.

Eligible Expenditure

Qualifying expenditure includes costs directly incurred in the construction or purchase of the industrial building or structure. This may include:

• Cost of construction
• Purchase price of the building or structure
• Professional fees, such as architect and surveyor fees

Rates of Industrial Building Allowance

The IBA is granted at the following rates:

• Initial Allowance (IA): 25% of qualifying expenditure is claimed in the year the expenditure is incurred.
• Annual Allowance (AA): 3% of qualifying expenditure is claimed annually on a straight-line basis until the total qualifying expenditure is fully written off.

Non-Qualifying Expenditures

The IBA does not apply to the following types of expenditure:

• Costs related to the purchase of land
• Demolition costs
• Maintenance and repair costs

Documentation Requirements

To support your IBA claim, businesses must maintain accurate records and provide the following documentation:

• Construction contracts and invoices
• Purchase agreements for the building or structure
• Proof of use of the building or structure for qualifying purposes
• Professional fee receipts

How Apexia Corporate Advisory Can Help

At Apexia, we specialize in helping businesses leverage tax incentives like the Industrial Building Allowance. Our services include:

• Assessing the eligibility of your buildings and structures for IBA
• Preparing and submitting accurate claims to IRAS
• Ensuring compliance with documentation requirements
• Providing guidance on tax planning and optimization

With Apexia's expertise, your business can focus on its growth while we handle the complexities of tax compliance.