Singapore Budget 2021 - Corporate and Business

NAVIGATION

Corporate Income Tax (CIT) Rate
Extension and Enhancement of the Carry-Back Relief Scheme
Extension of Option to Accelerate Eligible Claim on Cost of Plant and Machinery (P&M)
Withdrawal of Accelerated Depreciation Allowances for Highly Efficient Pollution Control Equipment (ADA PCE) Scheme
Extension of Option to Accelerate Eligible Deduction on Renovation and Refurbishment (R&R) Expenses – Section 14Q
Extension of Jobs Support Scheme (JSS)
Extension of Wage Credit Scheme (WCS)
Extension of Jobs Growth Incentive (JGI)
Extension of SGUNITED Traineeships Programme (SGUT)
Extension of SGUINITED Mid-Career Pathways Programme – Company Attachment (SGUP – CA)
Extension of Deductible Donations
Extension of Business and IPC Partnership Scheme (BIPS)
Extension of S’pore Tote Board’s Enhanced Fund-Raising Programme (EFR)
Extension of Community Chest (ComChest)’s SHARE AS ONE PROGRAMME
ComChest’s CHANGE FOR CHARITY GRANT
Enhancement of Double Tax Deduction for Internationalisation (DTDi) Scheme
Extending and Refining Double Tax Deduction (DTD) for Upfront Cost Attributable to Retail Bonds and Exempt Bond Issuer
Extending and Rationalising Withholding Tax (WHT) Exemptions for Financial Sector
Extending WHT Exemption on Payments Made for Structured Products
Extending WHT Exemption on Payments for Over-the-Counter (OTC) Financial Derivatives
Extension of Not-for-Profit Organisation (NPO) Tax Incentive
Allowing Automation Support Package (ASP) to Lapse, But Retain 100% Investment Allowance (IA) Scheme to Support Automation
Extending and Enhancing Investment Allowance (Energy Efficiency) (IA-EE) Scheme
Allowing Insurance Business Development-Specialised Insurance (IBD-SI) Scheme to Lapse After 31 August 2021
Accelerating Digital Transformation to Emerge Stronger

1. CORPORATE INCOME TAX (CIT) RATE

Singapore CIT rate has been maintained at 17% for the past decade (from YA 2010 to 2020). As expected, there is no rate change in this year’s budget as it is still very competitive with international standards.

2. EXTENSION AND ENHANCEMENT OF THE 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 to YA 2021, be allowed to elect to carry back up to 3 immediate preceding YAs, capped at S$100,000/- of qualifying deductions but subject to conditions.

3. EXTENSION OF 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 2022 (FY 2021) 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.

4. WITHDRAWAL OF ACCELERATED DEPRECIATION ALLOWANCES FOR HIGHLY EFFICIENT POLLUTION CONTROL EQUIPMENT (ADA PCE) SCHEME

The ADA-PCE scheme will be withdrawn from 17 February 2021.

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

To continue providing support to businesses, qualifying expenditure incurred on R&R during basis period for YA 2022 (FY 2021) 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.

6. EXTENSION OF JOBS SUPPORT SCHEME (JSS) JSS was first introduced in the Unity Budget in 2020 provides wage support for employers to retain their local employees (Singapore Citizens and Permanent Residents) during this period of economic uncertainty. All active employers, except for Government organisations (local and foreign) and representative offices, are eligible for the JSS. In this Budget 2021, JSS will be extended for companies in certain sectors listed below by up to six months, covering wages paid up to September 2021. This will provide continued support for businesses and workers these sectors that continue to be hard-hit amidst the protracted economic downturn.

Tier 1 sectors (Aviation, Aerospace, Tourism, Hospitality, Conventions, Exhibitions and Built Environment) that are currently receiving 50% JSS support, will receive 30% JSS support for wages paid from April to June 2021 and 10% JSS support for wages paid from July to September 2021.
Tier 2 sectors (Food Services, Retail, Marine & Offshore, Land Transport and Arts and Entertainment) that are currently receiving 30% JSS support, will receive 10% JSS support for wages paid from April to June 2021.
Tier 3A sectors currently receive 10% JSS support for wages paid from September 2020 to March 2021. JSS support will cease thereafter.
Employers that are not allowed to resume on-site operations currently receive Tier 1 JSS support for wages paid up to March 2021. For wages paid from April 2021 onwards, JSS support will revert to the firms’ base JSS tier.

Month of Payout	Payout based on wages paid in	Tier 1	Tier 2	Tier 3A
Apr 2020	Oct-Dec 2019	75%	50%	25%
Jul 2020	Feb – Apr 2020	75%	50%	25%
Oct 2020	May – Aug 2020	75%	50%	25%
Mar 2021	Sep – Dec 2020	50%	30%	10%
Jun 2021	Jan – Mar 2021	50%	30%	10%
Sep 2021[Extended]	Apr – Jun 2021	30%	10%	0%
Dec 2021[Extended]	Jul – Sep 2021	10%	0%	0%

Notes:-

Firms in the Built Environment sector received Tier 1 JSS support for June to October 2020 wages, and would receive Tier 2 support for November 2020 to March 2021 wages.
All employers receive Tier 1 JSS support during the Circuit Breaker (i.e. April and May 2020 wages).

7. EXTENSION OF WAGE CREDIT SCHEME (WCS)

The Scheme is extended by one year to 2021, with the government co-funding ratio at 15% and the qualifying gross wage ceiling at S$5,000/-.

Gross monthly wage increases (at least S$50/-) previously given in 2019 and 2020 by the same employer will continue to be co-funded if they are sustained in 2020 and 2021.

8. EXTENSION OF JOBS GROWTH INCENTIVE (JGI)

JGI was introduced from September 2020 to supports employers to accelerate hiring local workers so as to create good, long-term jobs for locals. This incentive will be extended by seven months to end-September 2021.

With this extension, eligible companies that hire locals between March 2021 and end- September 2021 will receive wage support as follows:-

For non-mature locals, up to 12 months based on 25% of the first S$5,000/- of gross monthly income, from the month of hire.
For mature workers (aged 40 & above), persons with disabilities and ex-offenders, up to 18 months (12 months previously) based on 50% of the first S$6,000/- (S$5,000/- previously) of gross monthly income. Eligible companies that had hired such locals between September 2020 and February 2021 will enjoy the enhanced support from March 2021.

9. EXTENSION OF SGUNITED TRAINEESHIPS PROGRAMME (SGUT)

SGUT programme provides recent graduates or graduating soon with opportunities to gain industry relevant work experience and build professional networks, amidst weaker hiring sentiments during the COVID-19 pandemic. Workforce Singapore co-funds 80% of the qualifying training allowance for host companies offering traineeship opportunities targeted at recent graduates, with the remaining being funded by the employer.

SGUT will be extended for one year until 31 March 2022 to continue supporting fresh jobseekers from the 2021 graduating cohort, in addition to those who have graduated in 2020 and 2019, with the following adjustments:-

Starting from 1 April 2021, the stipend for ITE and diploma SGUT positions will be increased from S$1,100/- – S$1,500/- to S$1,600/- – S$1,800/- and from S$1,300/- – S$1,800/- to S$1,700/- – S$2,100/- respectively to encourage take-up. The stipend for university SGUT positions will remain unchanged.
The maximum duration of each traineeship will be reduced from nine to six months from 1 April 2021 onwards, in line with the economic recovery and to encourage employers to offer trainees full-time jobs.

10. EXTENSION OF SGUNITED MID-CAREER PATHWAYS PROGRAMME – COMPANY ATTACHMENT (SGUP-CA)

SGUP-CA programme is a full-time attachment programme with approved host organisations for mid-career individuals to gain industry-relevant experience, develop new skills and boost employability.

Trainees currently receive a training allowance of up to S$3,000/- per month for the duration of the programme. The Government funds 80% of the training allowance, while the host organisation funds the remaining.

SGUP-CA will be extended for one year until 31 March 2022 to continue supporting midcareer jobseekers with the following adjustments to encourage take-up:-

The maximum training allowance for mature trainees3 will be increased to up to S$3,800/- per month.
The minimum training allowance for non-mature trainees will be increased to S$1,600/- per month.
The Government co-funding rate for mature trainees will be increased to 90%.
The maximum training duration of each company attachment will be reduced from nine to six months from 1 April 2021 onwards, in line with the economic recovery and to encourage employers to offer trainees full-time jobs.

11. EXTENSION OF TAX DEDUCTIBLE DONATIONS

To continue encouraging Singaporeans to give back to the community, the Government has decided to extend the 250% tax deduction for qualifying donations made to Institutions of a Public Character (IPC) and other qualifying recipients for another two years, i.e. for donations made during the period 1 January 2022 to 31 December 2023 (both dates inclusive).

Eligible Donations	Eligible Recipient	Eligible Donor
Cash donations	Any IPC and the Singapore Government	All donors
Gift of shares listed on S’pore Exchange (SGX) or of units in unit trusts traded in S’pore or listed on SGX	Any IPC	Individual donors only
Gifts of artefacts	Approved museums (approval by the National Heritage Board (NHB)	All donors
Donation of public sculptures	Approved recipients (approval by the NHB)	All donors
Gifts of parcels of land or buildings	Any IPC All	All donors

12. EXTENSION OF BUSINESS AND IPC PARTNERSHIP SCHEME (BIPS)

Currently, businesses enjoy a 250% tax deduction on wages and qualifying expenses when their staff volunteer or provide services to IPCs, which includes secondments.

To continue supporting corporate volunteerism, the Government will extend BIPS for qualifying expenditure incurred for services or corporate volunteering up to 31 December 2023. Volunteering projects have to be mutually agreed between the business and the IPC. These projects can include general activities and skills-based activities. Qualifying expenditure is subject to a cap of S$250,000/- per business per year of assessment and a cap of S$50,000/- per IPC per calendar year.

13. EXTENSION OF S’PORE TOTE BOARD’s ENHANCED FUND-RAISING PROGRAMME (EFR)

To continue to support their beneficiaries amidst the weak economic climate, EFR will be extended by providing dollar-for-dollar matching, capped at S$250,000/- per applicant in FY2021 for eligible local charitable causes. This applies to donations raised on physical event platforms, approved digital platforms such as Giving.sg, and websites of individual charities.

To be eligible, the charity must be registered with the Commissioner of Charities. Qualifying donations are those raised through approved fund-raising time-bound projects commencing from 1 April 2021 to 31 March 2022 (both dates inclusive). In addition, the fund-raising project should not have benefited from other Government matching funds, such as (but not limited to) the Cultural Matching Fund or the Bicentennial Community Fund.

14. EXTENSION OF COMMUNITY CHEST (ComChest)’s SHARE AS ONE PROGRAMME

ComChest introduced the SHARE as One programme in FY 2016 and extended till FY 2021 to continue encouraging individual giving in a sustainable manner, and create volunteering opportunities as part of corporate social responsibility (CSR) efforts.

In view of the adverse impact of COVID-19 on the donation landscape, ComChest will extend the SHARE as One programme for a further two years till FY2023, and the Government will continue to match additional donations made through SHARE. Under the extension, dollar-for-dollar matching will be given for new and incremental donations through SHARE over and above donation levels of the preceding year. For companies, 50% of the matching grant can be used to offset the costs incurred in advancing their CSR initiatives. This is capped at S$10,000/- per company per year.

15. ComChest’s CHANGE FOR CHARITY GRANT

To encourage individuals to give as part of their daily lives, by incorporating giving opportunities into customer transactions, a new Change for Charity Grant was introduced and will run for five years, from FY 2021 to FY 2025.

Under the Change for Charity Grant, the Government will match donations made by consumers through businesses’ payment platforms, and provide additional matching if businesses match their customers’ donations. Donations and matching grant proceeds will go toward ComChest to support critical social service programmes and services. In addition, businesses can receive a one-off enabler grant to cover a portion of the costs incurred when they enable giving capabilities through their payment platforms.

Further details will be provided by Ministry of Social and Family Development in due
course.

16. ENHANCMENT OF DOUBLE TAX DEDUCTION FOR INTERNATIONALISATION (DTDi) SCHEME

Under the existing DTDi scheme, which will lapse after 31 December 2025, 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:-

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

To continue supporting internationalization, the scope of the DTDi scheme will be enhanced effective from 17 February 2021 to cover the following specified qualifying expenses incurred to participate in approved virtual trade fairs:-

Package fees charged by event organisers for virtual exhibition hall and booth access, collateral creation, business meeting/match sessions, pitches/product launches/speaking slots, webinar/conference, and post event analytics;
Third-party costs for design and production of digital collaterals and promotion
materials for virtual fairs; and
Logistics costs incurred to send materials/samples overseas to potential clients met at virtual trade fairs (also applicable to overseas investment study trips/missions).

In addition, the scope of qualifying activities which do not require prior approval from Enterprise Singapore or STB will be enhance to cover the following additional activities, up to the current annual expense cap of S$150,000/-:-

Product/service certification (primarily to increase buyer’s acceptance in overseas markets) approved by Enterprise Singapore;
Overseas advertising and promotional campaign;
Design of packaging for overseas markets;
Advertising in approved local trade publication; and
Participation in virtual trade fairs approved by Enterprise Signapore.

Further details will be provided by Enterprise Singapore by 28 Februrary 2021.

17. EXTENDING AND REFINING DOUBLE TAX DEDUCTION (DTD) FOR UPFRONT COST ATTRIBUTABLE TO RETAIL BONDS AND EXEMPT BOND ISSUER

Under the existing DTD scheme, which will lapse after 18 May 2021, bond issuers who carry on trade or business in Singapore, are allowed to claim tax deduction of up to 200% on qualifying upfront cost incurred on or after 19 May 2016 that is attributable to retail bonds issued from 19 May 2016 to 18 May 2021 under the Seasoning Framework and Exempt Bond Issuer Framework.

To promote rated retail bond issuances, the DTD scheme will be extended for qualifying upfront cost incurred on or after 19 May 2021 that is attributable to rated retail bonds (instead of all retail bonds) issued from 19 May 2021 to 21 December 2026 under the Seasoning Framework and Exempt Bond Issuer Framework.

Further details will be provided by MAS by 31 May 2021.

18. EXTENDING AND RATIONALISING WITHHOLDING TAX (WHT) EXEMPTIONS FOR FINANCIAL SECTOR

There is a range of WHT exemptions or remission for the financial sector for all interest and other payments falling within Section 12(6) of the ITA (Section 12(6) payments).

To support Singapore’s value proposition and competitiveness of our financial sector, the following changes will be made:-

The existing WHT remission for interbank/interbranch transactions will be legislated as a WHT exemption with effect from 1 April 2021, along with a review date of 31 December 2031.Under this WHT exemption, all Section 12(6) payments made by banks in Singapore, for the purpose of their trade or business, to their branches/head offices outside Singapore or other banks outside Singapore will be exempt from tax where such payments:-
1. made during the period from 1 April 2021 to 31 December 2031 under a contract that takes effect before 1 April 2021; or
2. are under a contract that takes effect during the period from 1 April 2021 to 31 December 2031. In such cases, the WHT exemption will apply to the entire duration of the contract, including payments that are made beyond 31 December 2031 under the contract.
The WHT exemption will be extended till 31 December 2026. All other conditions of the WHT exemption remain no change.All Section 12(6) payments made to any non-resident person (excluding any permanent establishments (PEs) in Singapore) by the specified entities, for the purpose of the specified entities’ trade or business, are exempt from tax where such payments:-
1. made during the period from 1 April 2011 to 31 December 2026 under a contract that took effect before 1 April 2011; or
2. are under a contract that takes effect during the period from 1 April 2011 to 31 December 2026. In such cases, the WHT exemption applies to the entire duration of the contract, including payments that are made beyond 31 December 2026 under the contract.
The WHT exemption will be extended till 31 December 2026. All other conditions of the WHT exemption remain no change.
Specified entities are not required to withhold tax on all Section 12(6) payments
made to any PE in Singapore if the payments:-
1. made during the period from 17 February 2012 to 31 December 2026 under a contract that took effect before 17 February 2012; or
2. are under a contract that takes effect during the period from 17 February 2012 to
  31 December 2026. In such cases, the specified entities do not need to withhold
  tax on all Section 12(6) payments that are made for the entire duration of the contract, including payments that are made beyond 31 December 2026 under that contract.

As per the existing tax treatment, the PEs in Singapore are required to declare the Section 12(6) payments that they received in their annual income tax returns and are assessed to tax on such payments (unless the payments are specifically exempt from tax).

Further details will be provided by MAS by 31 May 2021.

19. EXTENDING WHT EXEMPTION ON PAYMENTS MADE FOR STRUCTURED PRODUCTS

The WHT exemption is scheduled to lapse after 31 March 2021. In order to support Singapore’s value proposition and competitiveness of our financial sector, the WHT exemption will be extended for another five years and will cover payments made under a contract that takes effect during the period from 1 January 2007 to 31 December 2026 (both dates inclusive). Other conditions of the WHT exemption remain the same.

Further details will be released by MAS by 31 May 2021.

20. EXTENDING WHT EXEMPTION ON PAYMENTS FOR OVER-THE-COUNTER (OTC) FINANCIAL DERIVATIVES

The WHT exemption will be extended for another five years till 31 December 2026. Other conditions of the WHT exemption remain the same. All payments on OTC financial derivatives made by a financial institution in Singapore to any non-resident person (excluding any PE in Singapore) are exempt from WHT, where such payments:

made during the period from 20 May 2007 to 31 December 2026 (both dates inclusive) under a contract that took effect before 15 February 2007; or
are under a contract that takes effect during the period from 15 February 2007 to 31 December 2026 (both dates inclusive). In such cases, the WHT exemption applies to the entire duration of the OTC financial derivatives contract, including payments that are made beyond 31 December 2026 under that contract.

Further details will be released by MAS by 31 May 2021.

21. EXTENSION OF NOT-FOR-PROFIT ORGANISATION (NPO) TAX INCENTIVE

This incentive provides tax exemption on income derived by an approved NPO, subject to conditions, will be extended till 31 December 2027 to continue attracting NPOs to Singapore.

22.ALLOWING AUTOMATION SUPPORT PACKAGE (ASP) TO LAPSE, BUT RETAIN 100% INVESTMENT ALLOWANCE (IA) SCHEME TO SUPPORT AUTOMATION

The ASP will lapse after 31 March 2021.

However, the Enterprise Development Grant, IA scheme, and the Enterprise Financing Scheme will continue to be available to support businesses in their automation, productivity, and scale-up efforts. Specifically, the 100% IA scheme to support automation will be extended by two years, for automation projects approved by Enterprise Singapore from 1 April 2021 to 31 March 2023.

All other conditions of the scheme remain no change.

23.EXTENDING AND ENHANCING INVESTMENT ALLOWANCE (ENERGY EFFICIENCY) (IA-EE) SCHEME

Expansion in the scope of qualifying projects to include projects involving a reduction of greenhouse gas emissions; and
Streamlined and updated eligibility conditions. These will apply to all projects (i.e. there will no longer be a distinction between data centres and non-data centres).

The revised conditions will apply to projects approved by EDB from 1 April 2021 to 31 December 2026 (both dates inclusive).

Further details will be released by EDB by 30 June 2021.

24. ALLOWING INSURANCE BUSINESS DEVELOPMENT -SPECIALISED INSURANCE (IBD-SI) SCHEME TO LAPSE AFTER 31 AUGUST 2021

The IBD-SI scheme will lapse after 31 August 2021. Insurers engaged in the specialised insurance and reinsurance business can apply for the IBD scheme.

25. ACCELERATING DIGITAL TRANSFORMATION TO EMERGE STRONGER

To continue to seize the momentum brought about by COVID-19 and double down the efforts to accelerate the growth of new digital capabilities for Singapore’s enterprises and workers to emerge stronger, the Government will introduce the following new/enhanced digital transformation scheme:-

SCALE BROAD-BASED DIGITALISATION
– CHIEF-TECHNOLOGY-OFFICER-AS-A-SERVICE (CTOaaS)
The CTOaaS will help SMEs to uncover their digitalisation needs and transform their business operations. It provides a single touchpoint for both digital consultancy and project management services by consolidating existing digitalisation advisory services. SMEs will be able to tap on professional IT consultancies to receive end-to-end digital advice, from digital consultancy tailored to business needs, to downstream project implementation. Further details will be provided by MCI’s COS in due course.
DEVELOP DIGITAL LEADERS
– DIGITAL LEADERS PROGRAMME (DLP)
The DLP seeks to enable promising, high-potential local companies to become digital leaders by equipping them with digital capabilities and talent to transform their
business models and capture new growth opportunities. The DLP will support companies to:

Build technology leadership and expertise in the firm, including support for hiring
of digital talent.
Develop and implement Digital Transformation Roadmaps, including support for consultancy and implementation costs.

Further details will be provided by MCI’s COS in due course.

CATALYSE NEW PRODUCTS AND BUSINESS MODELS

1. Enhanced Open Innovation Platform (OIP)
  
  The OIP was launched by IMDA in 2018 to support companies in getting quality and multi-disciplinary ideas, talent, resources to meet their innovation and business needs effectively. The OIP will be enhanced to increase the scale and speed of digital innovation and will also enable better matching, testing, and development through two new features:-
  - A Discovery Engine that facilitates the search and matching of technology solutions to challenges through automated recommendations; and virtual POC sandbox and testing environment.
  - A Digital Bench that aids quicker Proof-of-Concept (POC) testing through a virtual POC sandbox and testing environment.
2. Emerging Technology Programme
  
  The new Emerging Technology Programme will co-fund the costs of trials and
  adoption of frontier technologies like 5G, artificial intelligence, and trust
  technologies to support commercialisation of innovations and diffusion of technology. This will continue helping SMEs and Large Local Enterprises sharpen their competitiveness. Further details will be provided in due course.