NAVIGATION

  1. Corporate Income Tax (CIT) Rate
  2. Corporate Income Tax (CIT) Rebate
  3. Property Tax (PT) Rebate
  4. Automatic Extension Of Interest-Free Instalments For Payment Of Estimated Tax Payable
  5. Enhancement Of Carry-Back Relief Scheme
  6. Option To Accelerate Eligible Claim On Cost Of Plant And Machinery (P&M)
  7. Option To Accelerate Eligible Deduction On Renovation And Refurbishment (R&R) Expenses – Section 14Q
  8. Extension And Enhancement Of Double Tax Deduction For Internationalisation (DTDi) Scheme
  9. Extension Of Mergers & Acquisitions (M&A) Scheme
  10. Extending And Refining Upfront Certainty Of Non-Taxation Of Companies’ Gains On Disposal Of Ordinary Shares
  11. Extension Of Insurance Business Tax Incentive Schemes
  12. Extension And Enhancement Of Maritime Sector Incentive (MSI)
  13. Enhancement Of Withholding Tax (WHT) Exemption For Interest On Margin Deposits
  14. Extension And Enhancement Of Finance And Treasury Centre (FTC) Scheme
  15. Extending And Refining Of Global Trader programme (GTP)
  16. Extending And Refining Venture Capital Funds And Venture Capital Fund Management Companies Incentives
  17. Extension Of Land Intensification Allowance (LIA) Scheme
  18. Extension Of Writing-Down Allowance (WDA) Scheme For Acquisition Of Right To Use An International Submarine Cable System – Section 19D
  19. Further Tax Deduction Scheme For Research And Development (R&D) – Section 14E
  20. Streamline Working Life Of Plant And Machinery (P&M) Claim – Section 19
  21. Refining Tax Treatment Of Expenditures Funded By Capital Grants
  22. Jobs Support Scheme
  23. Reduction In S Pass Sub-Dependency Ratio Ceiling (DRC)
  24. Senior Worker Support Package

1. CORPORATE INCOME TAX (CIT) RATE

Singapore CIT rate has been maintained at 17% for the past decade (from YA 2010 to
2019). As expected, there is no rate change in this year’s budget as it is still very
competitive by international standards.

2. CORPORATE INCOME TAX (CIT) REBATE

To ease business with cash flow, the Finance Minister will grant a CIT rebate of 25% of tax payable, capped at S$15,000/- to all companies, for Year of Assessment (YA) 2020.

3. PROPERTY TAX (PT) REBATE

In view of the current COVID-19 outbreak that impacted on most businesses, the government has set out a stabilisation and support package for the period 1 January 2020 to 31 December 2020 to licensed hotels, serviced apartments, prescribed Meetings, Incentive, Conferences and Events (MICE) venues, and other qualifying commercial properties.

    1. Rebate of 30% of PT payable for:-
      1. Accommodation and function room components of hotel buildings;
      2. Accommodation and function room components of serviced apartment buildings; and
      3. MICE space components of 3 prescribed MICE venues – Suntec Singapore Convention & Exhibition Centre, Singapore EXPO, and Changi Exhibition Centre.
    2. Rebate of 15% of PT payable for other qualifying commercial properties such as:-
      1. Premises of an international airport;
      2. Premises of an international cruise or regional ferry terminal;
      3. Shops (e.g. retail and F&B), including those within hotel buildings, serviced
        apartment buildings, and the prescribed MICE venues; and
      4. Premises of tourist attractions.
    3. Rebate of 10% of PT payable for Marina Bay Sands and Resorts World Sentosa. The above rebates will not apply to any premises or a part of any premises used for a residential, industrial or agricultural purpose, or as an office, a business or science park, or a petrol station.

Further details will be provided by IRAS by end-February 2020.

4. AUTOMATIC EXTENSION OF INTEREST-FREE INSTALMENTS FOR PAYMENT OF ESTIMATED TAX PAYABLE

Companies paying their CIT by GIRO will automatically enjoy an additional 2 months of interest-free instalments if they e-filed their ECI (Estimated Chargeable Income) on or before 19 February 2020.

5. ENHANCEMENT OF CARRY-BACK RELIEF SCHEME

Current year’s unabsorbed tax loss and current year’s unutilized wear and tear allowances will, with effect from YA 2020, be allowed to carry back up to 3 immediate preceding YAs, capped at S$100,000/- of qualifying deductions but subject to conditions.

Further details will be provided by IRAS by end-March 2020.

6. OPTION TO ACCELERATE ELIGIBLE CLAIM ON COST OF PLANT AND MACHINERY (P&M)

Businesses incurred capital expenditure on acquisition of P&M in basis period for YA 2021 (FY 2020) may opt to accelerate the claim of the cost over 2 years of assessment. However, once exercised, it is irrevocable and no deferment of claim is allowed. The accelerated allowance claimable rates are:-

1st year of assessment: 75% of cost incurred.
2nd year of assessment: 25% of cost incurred.

7 . OPTION TO ACCELERATE ELIGIBLE DEDUCTION ON RENOVATION AND REFURBISHMENT (R&R) EXPENSES – SECTION 14Q

Business incurred qualifying expenditure on R&R during basis period for YA 2021 (FY 2020) may opt to claim the full deduction in one year i.e. in the YA the expenses incurred instead of over a period of 3 years of assessment. However, the existing cap of S$300,000/- for every relevant period of 3 consecutive YAs will still apply. This option, if exercised, is irrevocable.

8. EXTENSION AND ENHANCEMENT OF DOUBLE TAX DEDUCTION FOR INTERNATIONALISATION (DTDi) SCHEME

Under the existing DTDi scheme, which will lapse after 31 March 2020, businesses are allowed a tax deduction of 200% on qualifying market expansion and investment development expenses, subject to approval from Enterprise Singapore or the Singapore Tourism Board (STB).

No prior approval is required from Enterprise Singapore or STB for tax deduction on the first S$150,000/- of qualifying expenses incurred on the following activities for each YA:-

  1. Overseas business development trips/missions;
  2. Overseas investment study trips/missions;
  3. Participation in overseas trade fairs; and
  4. Participation in approved local trade fairs.

To continue encouraging internationalization, the DTDi scheme will be extended till 31 December 2025.

In addition, the scope of the DTDi scheme will be enhanced from 1 April 2020 to cover the following:-

  1. Third-party consultancy costs relating to new overseas business development to identify suitable talent and build up business network; and
  2. conferences, transporting materials/samples used during the business missions, and third-party consultancy costs to arrange business networking events to promote products/services).

Further details will be provided by Enterprise Singapore by end-March 2020.

9. EXTENSION OF MERGERS & ACQUISITIONS (M&A) SCHEME

The M&A scheme was introduced in 2010, and schedule to lapse after 31 March 2020. The aim is to support companies, especially small and medium enterprises, to grow via strategic acquisitions.

The M&A scheme allow taxpayers to claim the following tax benefits:-

  1. An M&A allowance (to be written down over 5 years) that is based on 25% of the value of a qualifying acquisition, subject to a cap of S$40 million on the value of all qualifying acquisitions per YA;
  2. Stamp duty relief on the instruments for the acquisition of the ordinary shares under an M&A deal, capped at S$80,000/- of stamp duty per FY; and
  3. 200% tax deduction on transaction costs incurred on qualifying M&A deals, subject to an expenditure cap of S$100,000/- per

In addition, from year 2012, this scheme also allowed, on a case-by-case basis, the waiver of the condition that acquiring companies must be held by an ultimate holding company that was incorporated in and a tax resident of Singapore.

In Budget 2020, the Minister has decided to extend this scheme further for acquisitions made on or after 1 April 2020, except for the following:-

  1. Stamp duty relief will lapse for instruments executed on or after 1 April 2020; and
  2. No waiver will be granted for the condition that the acquiring company must be held by an ultimate holding company that is incorporated in and is a tax resident of Singapore. This will apply for acquisitions made on or after 1 April 2020.

10. EXTENDING AND REFINING UPFRONT CERTAINTY OF NON-TAXATION OF COMPANIES’ GAINS ON DISPOSAL OF ORDINARY SHARES

To provide upfront certainty to companies in their corporate restructuring, the scheme under Section 13Z will be extended to cover disposals of ordinary shares by companies from 1 June 2022 to 31 December 2027.

Further details will be provided by IRAS by end-June 2020.

11. EXTENSION OF INSURANCE BUSINESS TAX INCENTIVE SCHEMES

To support Singapore’s value proposition as an Asian insurance and reinsurance centre, the Insurance Business Development (IBD) and IBD-Captive Insurance (IBD-CI) schemes will be extended till 31 December 2025. The concessionary tax rate remains at 10%.

To streamline and simplify the IBD umbrella scheme, the IBD-Marine Hull and Liability (IBD-MHL) scheme will lapse after 31 March 2020. With the lapsing of the IBD-MHL, insurers engaged in the MHL insurance and reinsurance business will be incentivised under the IBD scheme.

To align the tenure of all awards under the IBD umbrella scheme, all new and renewal IBD scheme awards approved on or after 1 April 2020 will be granted for a period of 5 years.

Further details will be provided by MAS by May 2020.

12. EXTENSION AND ENHANCEMENT OF MARITIME SECTOR INCENTIVE (MSI)

Under the existing MSI, ship operators, maritime lessors and providers of certain shipping-related support services enjoyed tax benefits such as income tax exemptions, income tax concessions and withholding tax exemptions. These will lapse after 31 May 2021.

To continue developing Singapore as an international maritime centre, the MSI scheme will be extended till 31 December 2026. Similarly, withholding tax (WHT) exemption will be extended for qualifying payments made on qualifying financing arrangements entered into on or before 31 December 2026.

In addition, the following changes will be made to the MSI scheme:-

  1. Expand the scope of in-house ship management income exemption under the MSI- AIS Award to include such income derived by MSI-AIS Sister Company and MSI-AIS Local Subsidiary;
  2. Allow income derived from operating a ship that is provisionally registered with the SRS to qualify for tax exemption under the MSI-SRS scheme, regardless of whether a permanent certificate is subsequently obtained. Where a permanent certificate is not obtained, the tax exemption is only allowed up to 1 year from the date of issue of the provisional certificate; and
  3. Allow the stamp duty remission to lapse for instruments executed on or after 1 June 2021.

The enhancements in (a) and (b) will apply to existing and new award recipients for qualifying income derived on or after 19 February 2020.

Further details will be provided by MPA by May 2020.

13. ENHANCEMENT OF WITHHOLDING TAX (WHT) EXEMPTION FOR INTEREST ON MARGIN DEPOSITS

The enhancement will apply for agreements entered into on or before 19 February 2020 and will cover the following:-
Entities:-

  • Members of approved clearing houses;
  • Approved exchanges; and
  • Approved clearing houses.

Products:-

  • All other derivative contracts traded or cleared on approved exchanges and approved clearing houses.

Further details will be provided by MAS by May 2020.

14. EXTENSION AND ENHANCEMENT OF FINANCE AND TREASURY CENTRE (FTC) SCHEME

This scheme is scheduled to lapse after 31 March 2021. To continue encouraging finance and treasury activities in Singapore, the scheme will be extended till 31 December 2026, with the following enhancements from 19 February 2020:-

  1. List of existing qualifying sources of funds will be expanded to include funds raised via convertible debt issued on or after 19 February 2020; and
  2. List of existing qualifying FTC activities will be expanded to include transacting or investing into private equity or venture capital funds that are not structured as Income derived on or after 19 February 2020 by approved FTCs from this activity will qualify for the concessionary tax rate.

15. EXTENDING AND REFINING OF GLOBAL TRADER PROGRAMME (GTP)

To further strengthen Singapore’s position as a global trading hub, the GTP will be extended till 31 December 2026.

The following changes to the GTP are as follows:-

  1. The qualifying activities of GTP (Structured Commodity Financing) (GTP (SCF)) will be subsumed under GTP with effect from 19 February 2020;
  2. The GTP (SCF) will lapse after 31 March 2021; and
  3. The concessionary tax rate of 5% on income from qualifying transactions in Liquefied Natural Gas (LNG) will lapse after 31 March With the lapsing of this concession, LNG will be treated no differently from other GTP qualifying commodities under the GTP.

Both (b) and (c) can continue to enjoy the tax concession of 5%/10% under the GTP (SCF) till the expiry of their awards, if the conditions for approval of their awards continue to be met.

Further details will be provided by Enterprise Singapore by May 2020.

16. EXTENDING AND REFINING VENTURE CAPITAL FUNDS AND VENTURE CAPITAL FUND MANAGEMENT COMPANIES INCENTIVES

To continue encouraging venture capital funding for Singapore-based companies, the Section 13H scheme and Fund Management Incentive will be extended from 1 April 2020 till 31 December 2025.

The key enhancements to the incentives are as follows:-

  1. Section 13H scheme
    1. The list of investments and income incentivised under the Section 13H scheme will be expanded to include relevant items of the Specified Income – Designated Investments list applicable for fund incentives;
    2. Apart from companies incorporated in Singapore and partnerships, the Section 13H incentive may be granted to venture capital funds which are constituted as foreign incorporated companies or Singapore Variable Capital Companies;
    3. The statutory sub-limit imposing a maximum tenure of 10 years for the first tranche of the tax exemption will be removed, while the 15-year cap on the overall tenure of the tax exemption status This means that the tax exemption may be awarded for the fund life of the venture capital fund, up to a total tenure of 15 years; an
    4. Approved venture capital funds will be allowed, by way of remission, to claim GST incurred on their expenses at a fixed recovery rate to be determined for the
  1. Fund Management Incentive
    Statutory limitations on the total incentive tenure allowed for each venture capital fund management company will be removed. Instead, each Fund Management Incentive award for the fund manager will be set at a maximum tenure of 5 years, and can be renewed subject to conditions.

Further details will be provided by Enterprise Singapore by May 2020.

17. EXTENSION OF LAND INTENSIFICATION ALLOWANCE (LIA) SCHEME

Given the scarcity of land in Singapore, this scheme remains relevant and will be extended till 31 December 2025 i.e. last date a building or structure is approved for LIA.

18. EXTENSION OF WRITING-DOWN ALLOWANCE (WDA) SCHEME FOR ACQUISITION OF RIGHT TO USE AN INTERNATIONAL SUBMARINE CABLE SYSTEM – SECTION 19D

This scheme will be extended till 31 December 2025, i.e. WDA will be allowed on qualifying capital expenditure incurred on or before 31 December 2025 for the acquisition of an IRU.

19. FURTHER TAX DEDUCTION SCHEME FOR RESEARCH AND DEVELOPMENT (R&D)
– SECTION 14E

With the previous enhancement in Budget 2018, businesses conducting qualifying R&D projects in Singapore can enjoy up to 250% tax deduction on qualifying expenses from YA 2019 to YA 2025. Businesses can also benefit from various non-tax schemes for R&D and innovation. These broad-based tax deductions are available for all businesses without a need for approval.

20. STREAMLINE WORKING LIFE OF PLANT AND MACHINERY (P&M) CLAIM – SECTION 19

To simplify wear and tear claims under Section 19 of the SITA, the prescribed working life of P&M will be streamlined. Businesses claiming annual allowance may make an irrevocable election to claim accordingly as shown below for their P&M acquired in or after FY 2022 as well as for cases where total cost of P&M’s initial and annual allowances deferred previously.

  1. If the current prescribed working life of the P&M is 12 years or less, businesses may choose to claim annual allowance over 6 or 12 years; or
  2. If the current prescribed working life of the P&M is 16 years, businesses may choose to claim annual allowance over 6, 12 or 16 years.

21. REFINING TAX TREATMENT OF EXPENDITURES FUNDED BY CAPITAL GRANTS

With effect from 1 January 2021, approved capital grants will not be allowed to claim tax deductions or allowances on that part of the expenditures that are funded by such grants from the Government or statutory boards.

22. JOBS SUPPORT SCHEME

This scheme was introduced to help enterprises retain their Singaporean workers.

Employers will automatically receive 8% cash grant on the gross monthly wages of each Singaporean or permanent resident employee, who is on Central Provident Fund (CPF) payroll for October to December 2019, up to a monthly cap of S3,600/-. The payment will be made to employers by end of July 2020.

23. REDUCTION IN S PASS SUB-DEPENDENCY RATIO CEILING (DRC)

The S Pass sub-DRC will be reduced from 20% to 15% for Construction, Marine Shipyard and Process sectors, as shown below:-

Sector Current Changes
DRC
Services 38% Reduced to 35% on 1 January 2021 as announced at Budget 2019
Manufacturing 60%

No change

Construction 87.5%

No change

Process 87.5%

No change

Marine Shipyard 77.8%

No change

S Pass sub-DRC
Services 13% Reduced to 10% on 1 January 2021 as announced at Budget 2019
Manufacturing 20% Will be considered for reduction in future
Construction 20% Reduced to 18% on 1 January 2021, and to 15% on 1 January 2023
Process 20% Reduced to 18% on 1 January 2021, and to 15% on 1 January 2023
Marine Shipyard 20% Reduced to 18% on 1 January 2021, and to 15% on 1 January 2023

24. SENIOR WORKER SUPPORT PACKAGE

To support older workers to continue working longer and be more financially secure in retirement, as announced at National Day Rally 2019:

  1. The Retirement Age (RA) and Re-Employment Age (REA) will be raised gradually as shown below:-
Increase in RA and REA
Current From 1 Jul 2022 By 2030
RA 62

63

65
REA 67

63

70
  1. The Retirement Age (RA) and Re-Employment Age (REA) will be raised gradually as shown below:-
Current and New CPF Contribution Rates
Age Current From 1 Jul 2022 By 2030
≤55 37.0%

No Change

>55 – 60 26.0%

28.0%

37.0%
>60 – 64 16.5%

18.5%

26.0%
>64 – 70 12.5%

14.0%

16.5%
>70 12.5%

No Change

The following four measures were introduced by the Government to help businesses adjust to the above increase in RA and REA from year 2022 and the CPF contribution rates from year 2021:-

a) Senior Employment Credit (SEC)

This will replace the existing Special Employment Credit and Additional Special Employment Credit schemes after these expired on 31 December 2020. This scheme will provide employers with wage offsets when they hire older Singaporean workers aged 55 and above, earning up to S$4,000/- a month, from 1 January 2021 to 31 December 2022 as shown below:-

Maximum Wage Offset Under the SEC
Age of employee (as of 1 Jan 2021) Maximum wage offset for employers of Singaporean employees aged 55 and above, and earning up to S$4,000/- per month
2021 2022
55 – 59 2% 1%
60 – 64 3%
65 – REA-1 5%
REA & above 8%

b) CPF Transition Offset

To offset half the increase in employer CPF contribution rates in 2021, up to the CPF salary ceiling of S$6,000/-, as shown below:-

CPF Contribution Rates and CPF Transition Offset from 1 January 2021
Employee age (as of 1 Jan 2021) >55 – 60 >60 – 65 >65 – 70
Total CPF Contribution 28% (+2%) 18.5% (+2%) 14% (+1.5%)
Employee 14% (+1%) 8.5% (+1%) 6% (+1%)
Employer 14% (+1%) 10% (+1%) 8% (+0.5%)
CPF Transition Offset (equivalent to half of the increase in employer CPF rates) 0.5% 0.5% 0.25%

c) Senior Worker Early Adopter Grant

From 1 July 2020 to 30 June 2023, companies which increase their own RA and REA above the statutory minimum, will receive a Senior Worker Early Adopter Grant. To qualify for the grant, companies must formalise the changes in their HR policies and employment contracts, and communicate the changes to their employees.

More details will be provided at the Ministry of Manpower at the COS.

d) Part-Time Re-Employment Grant

From 1 July 2020 to 30 June 2023, companies that commit to offering part-time re- employment to eligible older workers who request for it, will receive a Part-Time Re- employment Grant (PTRG).

More details will be provided at the Ministry of Manpower at the COS.

Esther Mok
Tax Principal , Paul Wan & Co.
Esther Mok is a Fellow member of The Association of International Accountants, UK and an Approved Accredited Tax Advisor specializing in both Income Tax and GST with Singapore Institute of Accredited Tax Professionals (SIATP). She has behind her more than 20 years of tax experience dealing with international and local clients.
em@pwco.com.sg
×
Esther Mok
Tax Principal , Paul Wan & Co.
Esther Mok is a Fellow member of The Association of International Accountants, UK and an Approved Accredited Tax Advisor specializing in both Income Tax and GST with Singapore Institute of Accredited Tax Professionals (SIATP). She has behind her more than 20 years of tax experience dealing with international and local clients.
em@pwco.com.sg
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