If your company owns or occupies an industrial building in Singapore and is planning to upgrade it to support a more land-efficient operation, you may be sitting on a tax incentive most accountants have never claimed. The Land Intensification Allowance (LIA), administered jointly by the Economic Development Board (EDB) and the Inland Revenue Authority of Singapore (IRAS), gives qualifying companies an initial allowance of 25% and an annual allowance of 5% on capital expenditure incurred on qualifying buildings — effectively allowing the full cost to be written off over 16 years.
The headline numbers obscure the real benefit: LIA targets capital expenditure on industrial buildings, which would otherwise be largely non-deductible under the Singapore tax system. Without LIA, the cost of constructing or extending a factory, warehouse or logistics hub generally sits as a capital asset on the balance sheet, depreciated in the accounts but not deductible for tax. With LIA, that capex turns into real tax deductions. This 2026 guide covers eligibility, the gross plot ratio (GPR) test, the application path, and the most common pitfalls.
What LIA Gives You
Under Section 18C of the Income Tax Act 1947 and the Income Tax (Land Intensification Allowance) Regulations, an approved company that incurs qualifying capital expenditure on a qualifying building or structure can claim:
- An initial allowance of 25% in the Year of Assessment (YA) in which the expenditure is incurred (or relevant qualifying date, whichever is later).
- An annual allowance of 5% for each subsequent YA until the expenditure is fully written down.
The deductions are available against the company’s trade income. Unutilised LIA can be carried forward subject to the shareholding continuity test under Section 37, similar to the carry-forward of capital allowances. See our note on Section 37C group relief for how unutilised allowances can be transferred within a group.
Who Qualifies?
Eligibility turns on three pillars: the user industry, the building type, and the gross plot ratio uplift.
1. User industry
LIA targets industries that are land-intensive but for which the Government wants to encourage more intensive use of industrial land. Qualifying industries include manufacturing (with sub-segments — pharmaceuticals, semiconductors, marine and offshore, precision engineering and others), logistics and storage, port and airport ground services, wafer fabrication, and certain industrial-related research and development. The list is reviewed periodically by EDB and JTC Corporation.
Pure office buildings, retail, hospitality, residential and mixed-use developments do not qualify. Data centres are a special case — they only qualify if they form part of a larger industrial operation rather than a pure colocation business.
2. Building type
The building must be a qualifying industrial building or structure, including factories, warehouses, logistics buildings, biomedical R&D buildings, and supporting infrastructure such as raw-material storage tanks and bulk handling structures.
3. Gross plot ratio (GPR) test
The defining requirement of LIA is the GPR uplift. The qualifying building must achieve a gross plot ratio (GPR) at or above the GPR benchmark set by JTC for that industry segment. The benchmark reflects the floor area JTC considers efficient use of the land for that type of activity.
For a new build, this means designing the building to a minimum GPR — often substantially above what existing tenants might consider commercially necessary. For a redevelopment or extension, this means that after the works are completed, the GPR of the redeveloped site must exceed the benchmark. Marginal cosmetic upgrades do not qualify.
What Counts as Qualifying Expenditure?
Qualifying expenditure includes:
- Construction or extension cost of the qualifying building.
- Costs of preparing, cutting, tunnelling or levelling land directly attributable to the building.
- Professional fees (architectural, engineering, project management) that are capitalised as part of the building cost.
- Fixtures, fittings, and certain plant integral to the building, where they form part of the building structure rather than separately deductible plant under Section 19.
Items excluded from LIA include the cost of the land itself, any items that are claimable as plant and machinery under Section 19/19A capital allowances, and any costs already claimed under Section 14Q renovation and refurbishment allowance. Double-claiming the same expenditure under two regimes is not permitted.
How to Apply
The application is made to EDB or JTC, depending on the industry segment, before the construction or redevelopment begins. The typical documentation pack includes:
- Project description: scope of works, expected start and completion dates.
- Architectural plans showing the proposed GPR.
- Confirmation from the planning authority on the existing and proposed GPR.
- Estimated qualifying expenditure broken down by line item.
- Business case: how the redevelopment will intensify the use of land and contribute to the relevant industry segment.
- The company’s audited financial statements for the last three years and its current ACRA records.
EDB or JTC will issue a provisional approval letter, typically within four to six months, setting out the GPR benchmark and any conditions. The company then proceeds with construction. After completion, the company submits the actual capital expenditure to IRAS to compute the LIA, supported by the EDB/JTC approval.
Critical practical point: start the application before you commit capital. LIA is not retrospective. Expenditure incurred before EDB/JTC approval, or before the qualifying date specified in the approval, does not count.
Sale or Lease of an LIA Building
If the LIA building is sold within the 15-year claw-back window, a balancing charge may apply, recapturing some or all of the allowances previously claimed. If the building is leased to a third party, the lessee may be able to step into the LIA position if the lessee is also a qualifying user. The lessor and lessee should negotiate the LIA position in the lease and document it in writing — this is one of the most overlooked aspects in industrial property leasing.
If the building is used partly for non-qualifying purposes (e.g. half factory, half ancillary office), the allowance is apportioned. Keep clean square-metre records of qualifying and non-qualifying use throughout the claim period.
Common Pitfalls
- Application made too late. The single most common reason for LIA refusal — capex committed before EDB/JTC has issued provisional approval.
- GPR test missed at completion. Cost overruns and design changes during construction sometimes push the final GPR below the benchmark. Once below, no allowance is given.
- Double-claiming with Section 19A or 14Q. Items can only be claimed under one regime. Plant fixtures inside the building are often a grey zone.
- Failure to track use over time. If usage changes — e.g. the company moves into a different sub-industry that doesn’t qualify — the allowance is at risk of claw-back.
- Group transfer without EDB consent. Transferring the LIA building to a sister company without informing EDB can trigger claw-back even where the new user qualifies.
When LIA Doesn’t Make Sense
LIA is land-intensification policy first, tax incentive second. If your real plan is to occupy a low-density single-storey factory because that suits your manufacturing process, the GPR benchmark may force you to build vertically when you don’t need to. The cost of the extra floor area can exceed the tax benefit. Always run the after-tax cost of the LIA-optimised design against the cost of the unconstrained design — sometimes the simpler building is cheaper even after losing the allowance.
Companies considering relocation to Singapore should also evaluate LIA alongside the Pioneer Certificate and Development & Expansion Incentive packages, both of which can stack with LIA on the same project.
Statutory References
The headline provision is Section 18C of the Income Tax Act 1947, supported by the Income Tax (Land Intensification Allowance) Regulations 2010. The administering body is EDB (for most sectors) or JTC Corporation (for industrial land). The latest IRAS e-Tax Guide on LIA is published on the IRAS website.
— The Editorial Team, Raffles Corporate Services