Organization : Ministry Of Finance
Scheme Name : Business and IPC Partnership Scheme BIPS
Country : Singapore
Website : https://www.mof.gov.sg/home
MOF BIP Scheme
1. From 1 July 2016 to 31 December 2018, businesses will enjoy a total of 250% tax deduction on wages and related expenses when they send their employees to volunteer and provide services,
Related : MOF SRS Supplementary Retirement Scheme Singapore : www.statusin.org/41302.html
Including secondments, to Institutions of a Public Character (IPCs) under the Business and IPC Partnership Scheme (BIPS), subject to receiving IPCs’ agreements.
These services include :
a. Professional services in various areas, such as legal, human resources, and accounting; or
b. General voluntary services for IPCs.
2. The BIPS was introduced in Budget 2016 to encourage employee volunteerism through businesses, and forms part of the Government’s efforts to promote philanthropy and volunteerism.
3. The scheme aims to spur more businesses to provide services to IPCs, as it will defray the cost of doing so. Through volunteering activities or secondments, businesses and IPCs can build enduring and sustained partnerships, benefiting both parties.
Employees will also have more opportunities to use their skills to give back to the community. In the long run, the Government hopes to foster a widespread culture of caring in Singapore, where businesses and employees can play a greater role in meeting social needs and building a caring and cohesive society.
What is BIPS
1. The pilot BIPS was introduced at Budget 2016 to encourage employee volunteerism through businesses for the period of 1 Jul 2016 to 31 Dec 2018.
Under this scheme, businesses will enjoy 250% tax deduction on wages and related expenses when they send their employees to volunteer and provide services to IPCs, including secondments. This will be subject to the receiving IPCs’ agreement.
There will be a qualifying expenditure cap of $250,000 per business per Year of Assessment (YA) and $50,000 per IPC per Calendar Year (CY).
2. The BIPS incentivises businesses to support their employees in sustained volunteerism. The tax deduction from BIPS will help businesses defray some cost incurred in providing the voluntary services, and encourage businesses to do more.
The tax deduction may also attract new businesses to provide valuable and useful services to IPCs. Through volunteering activities or secondments that provide services that IPCs need, both businesses and IPCs can build enduring and sustained partnerships.
IPC’s 5-Step Guide to BIPS
IPCs play an important role in administering BIPS. Below is a 5-step summary of IPCs’ involvement with regard to BIPS :
1) Identify areas of needs and priorities
2) Select businesses to partner and keep track
3) Reach an agreement, before business’s provision of services
4) Evaluate business’s provision of services
5) Submit BIPS data to IRAS
Frequently Asked Questions
1. Do non-resident businesses qualify for BIPS?
Given that BIPS is to encourage employers to give back to society, there is no requirement that the qualifying business mustbe a tax resident in Singapore. However, the qualifying business must be carrying on a trade or business in Singapore.
Non-resident businesses which are subject to final withholding tax will not qualify for BIPS as they are currently taxed at reduced final withholding tax rates on gross income, and not on net income
2. Do investment holding companies qualify for BIPS?
Investment holding companies do not qualify for BIPS as they derive only passive income such as dividend, interest or rental and not regarded to be carrying on a trade or business for tax purposes.
3. Do trusts qualify for BIPS?
Generally, trusts are used as passive investment vehicles, and do not conduct active business operations. Hence, trusts do not qualify for BIPS. However, a Registered Business Trust, which is treated as a company for tax purposes, qualifies for BIPS.