30 October 2018
On 2 October 2018, the Income Tax (Amendment) Bill (“Bill”) was passed in Parliament. The Bill covers income tax changes announced in the 2018 Budget Statement as well as tax changes arising from the periodic review of Singapore’s income tax regime. In his second reading speech, the Second Minister for Finance and Minister for National Development, Mr Lawrence Wong, highlighted the key features of the Bill.
Key tax measures announced in Budget Statement 2018
- The existing corporate income tax (“CIT”) rebate for the Year of Assessment (“YA”) 2018 will be enhanced by raising the rebate percentage from 20% to 40% of tax payable, and the rebate cap from S$10,000 to S$15,000. The CIT rebate will also be extended to YA 2019, at 20% of tax payable, capped at S$10,000.
- Adjustments will be made to the Start-Up Tax Exemption (“SUTE”) Scheme and Partial Tax Exemption Scheme from YA 2020. The tax exemption under both schemes will be reduced from the first S$300,000 to S$200,000 of normal chargeable income. Exemption under the SUTE Scheme will also be lowered from 100% to 75% for the first S$100,000 of normal chargeable income. Even with these changes, corporate tax will remain low for start-ups and smaller companies. In addition, start-ups and smaller companies can tap on a wide range of Government support measures to build capabilities and grow their businesses.
- To encourage research and development (“R&D”) to be done in Singapore, the tax deduction for staff costs and consumables incurred on qualifying R&D projects performed in Singapore will be increased from 150% to 250%. This enhanced deduction will be available from YA 2019 to YA 2025.
- To further encourage internationalisation, the expenditure cap for the Double Tax Deduction for Internationalisation claims, without prior approval from Enterprise Singapore or the Singapore Tourism Board, will be raised from S$100,000 to S$150,000 per YA from YA 2019.
Broad changes arising from periodic review of tax regime
The Inland Revenue Authority of Singapore’s (“IRAS”) powers to investigate tax crimes will be enhanced by providing authorised IRAS officers with the power of forced entry, power to arrest without warrant, and power to carry out body search. Safeguards in the way these enhanced investigative powers are implemented will be put in place. The amendments will also expand IRAS’ power to gather all information relevant to its investigations or prosecution of tax offences from any person.
IRAS will be allowed to share with the head of a law enforcement agency information that may be necessary for investigation or prosecution of serious crimes listed in the First and Second Schedules to the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act.