28 October 2022
On 3 October 2022, the Income Tax (Amendment) Bill (“Bill”) was passed in Parliament. The Bill seeks to make changes to the Income Tax Act 1947 (“ITA”) to implement tax changes announced in the 2022 Budget Statement and other changes.
Tax changes announced in Budget 2022
- Personal income tax of tax-resident and non tax-resident individual taxpayers: The top marginal personal income tax (“PIT”) rate of tax-resident individuals will be increased from the Year of Assessment (“YA”) 2024. The portion of chargeable income in excess of S$500,000 up to S$1 million will be taxed at 23%, while that in excess of S$1 million will be taxed at 24%;
both up from 22% today. The PIT rates for certain income by non-tax-resident individuals that are pegged to the top marginal tax rate of tax-resident individuals will also be revised to 24%.
- Facilitate disclosure of company-related information for official duties: To support data-driven policymaking, operations and integrated service delivery, amendments will be made to the ITA and Goods and Services Tax Act 1993 (“GST Act”) to facilitate the disclosure of information by the Inland Revenue Authority of Singapore (“IRAS”) for official duties.
- Where taxpayers have provided consent for IRAS to disclose their information to a public officer, or an authorised person outside the public sector who is engaged by the Government or a statutory board, the proposed amendment in the Bill will enable such disclosure by IRAS for the performance of official duties.
- To enable public sector agencies to carry out their official duties more effectively, IRAS will be allowed to disclose a prescribed list of identifiable company-related information to other public sector agencies, for the performance of official duties, without requiring the taxpayer’s consent. This list of company-related information will be prescribed in the ITA and GST Act. This will apply only to company-related information and does not include data of individuals. To strike a balance between improving service efficiency and convenience, and protecting data confidentiality, there will be two safeguards: (i) information in the prescribed list will be provided in a less granular form. For instance, the company’s sales revenue will be shared in ranges, rather than the exact value, (ii) such information will not be disclosed to any person outside the public sector, even if the person is engaged by the Government or a statutory board. It will only be disclosed to public officers.
- Definition of “local employee” updated: The definition of “local employee” for the Mergers and Acquisitions Scheme will be updated to recognise individuals hired under central hiring and secondment arrangements as employees of the acquiring company. Currently, only individuals that are directly hired by the acquiring company are taken into account for assessing whether the three local employee condition is met. As businesses may have different hiring practices, the change provides greater flexibility to recognise an equivalent material outcome of local workers being hired, be it through direct hiring, central hiring, or secondment arrangements.
- Update of provisions relating to the Board of Review: The provisions relating to the Board of Review (“BOR”), which is a tribunal set up under the ITA to hear and adjudicate tax disputes between the Comptroller and taxpayers, will be amended. The BOR provisions will be updated and streamlined by:
- removing outdated references such as the requirement for lodgement of the notice of appeal in “duplicate” and the petition of appeal in “quadruplicate”, which are no longer relevant where documents are sent digitally,
- clarifying the Minister’s regulation-making powers regarding tax appeals, as well as the case management powers of the BOR and Chairperson, and
- moving BOR provisions on procedures to subsidiary legislation.
In addition, the Chairperson will be allowed to have the option to convene a one-member coram where appropriate. Currently, each hearing committee comprises at least three BOR members. In deciding whether or not to convene a one-member coram, the Chairperson will consider the parties’ submissions, as well as the facts and circumstances of the case.
Taken together, these changes will allow greater flexibility and ensure that BOR cases are resolved in a more timely and efficient manner.