SINGAPORE BUDGET 2018 Together, A Better Future

Transcription

1 SINGAPORE BUDGET 2018 Together, A Better Future Your Trusted Partner for Excellence

2 CONTENTS FOREWORD... 2 BUSINESS TAX... 4 PERSONAL INCOME TAX GOOD AND SERVICES TAX STAMP DUTY FOREIGN WORKER LEVY OTHERS GLOSSARY CONTACTS

3 FOREWORD Minister for Finance Mr Heng Swee Keat delivered the Singapore s Budget Statement for the Financial Year 2018 in Parliament on 19 February Mr Heng announced that Singapore s Gross Domestic Products expanded by 3.6% in Coming as a surprise, he announced a budget surplus of S$9.6 billion, far exceeded the expected surplus of S$1.9 billion. The Budget comes amidst a backdrop of the three broad shifts, namely, the shift in global economic weight towards Asia, the emergence of new technologies and an ageing population in Singapore. Budget 2018 will address these shifts through four strategies: 1. Developing a more vibrant and innovative economy. 2. Building a smart, green and liveable city. 3. Fostering a caring and cohesive society 4. Preserving a fiscally sustainable and secure future. 2

4 Budget 2018 anchors and strengthens the foundation for Singapore s development into the next decade. It serves as a strategic and integrated financial plan to position Singapore for the future. The government expects increase in spending needs, such as on healthcare, infrastructure, security and education, there is a need to have sustainable revenue streams to fund these expenditures. As widely expected, Mr Heng confirmed that the GST rate will be increased by two percentage points from 7% to 9% to be implemented sometime in the period from 2021 to Offset packages will be implemented to help Singaporeans to adjust to the increase. From 01 Jan 2020, digital services imported from overseas will be subjected to GST. Other measures to boost revenues include the raising of tobacco excise duty by 10 per cent, the introduction of carbon tax, the increase in top marginal buyer s stamp duty from 3% to 4% on value of residential property in excess of S$1 million. The Government will support businesses to innovate and build capabilities through grants and help firms grow and internationalize. The Pioneer Generation Office (PGO) will be renamed to Silver Generation Office (SGO) to reflect its enhanced role. Singaporean citizens aged 21 years and above will be able to share the fruits of Singapore s prosperity through an SG Bonus of between $100 and $300 depending on income. Mr Heng also outlined several measures to build a caring and cohesive society. There will be an increase in the annual Edusave Contributions by the Government and more support for financial planning for citizens. The government will strengthen the partnership between the government and the community to support our seniors and those in need. Measures will be taken to upgrade the skills of workforce. Capability Transfer Programme will support the transfer of skills from foreign specialists to Singaporean workers. The Wage Credit Scheme will be extended for three more years to help local companies cope with near term cost pressures. We now summarise below the tax changes and some of the new initiatives unveiled in the Budget Statement. 3

5 BUSINESS TAX BUSINESS TAX Enhancing and extending the Corporate Income Tax ( CIT ) Rebate Effective YAs 2018 & 2019 The CIT rate remains at 17%. The CIT rebate for YA2018 will be enhanced and the rebate will be extended to YA2019 as follow: YA2018 CIT rebate rate will be enhanced to 40% of tax payable with an enhanced cap of $15,000. YA2019 CIT rebate rate of 20% of tax payable, capped at $10,000. 4

6 Adjustment to the Start-Up Tax Exemption ( SUTE ) scheme Adjustment to the Partial Tax Exemption ( PTE ) scheme YA2020 The scheme will be adjusted as follows: Tax exemption First $100,000 of normal 75% chargeable income Next $100,000 of normal 50% chargeable income This change will take effect in or after YA2020. YA2020 The scheme will be adjusted as follows: Tax exemption First $10,000 of normal 75% chargeable income Nest $190,000 of normal 50% chargeable income This change will take effect in or after YA2020 for all companies (excluding those that qualify for SUTE scheme) and bodies of persons. Enhance the tax deduction for qualifying expenditure on qualifying Research and Development ( R&D ) projects performed in Singapore YA2019 to YA2025 Tax deduction for staff costs and consumables incurred on qualifying R&D projects performed in Singapore will be increased from 150% to 250%. This change will take effect from YA2019 to YA2025. Enhance the tax deduction for costs on protecting Intellectual Property ( IP ) YA2019 to YA2025 The scheme will be extended till YA2025; Enhance the deduction to 200% for the first $100,000 of qualifying IP registration costs incurred for each YA. The change will take effect from YA2019 to YA2025. Enhance the tax deduction for costs on IP in-licensing YA2019 to YA2025 The tax deduction for the first $100,000 of qualifying IP in-licensing costs incurred for each YA will be enhanced from 100% to 200%. Qualifying IP in-licensing costs exclude related party licensing payments, or payments for IP where any allowance was previously made to that person. 5

7 Enhance the Double Tax Deduction for Internationalisation ( DTDi ) scheme Extend the 250% Tax Deduction for Qualifying Donations On or after YA2019 The $100,000 expenditure cap for claims without prior approval from IE Singapore or STB will be raised to $150,000 per YA incurred on the following activities: o Overseas business development trips/missions; o Overseas investment study trips/missions; o Participation in overseas trade fairs; and o Participation in approved local trade fairs. Businesses can continue to apply to IE Singapore or STB on qualifying expenses exceeding $150,000 or expenses incurred on other qualifying activities. This change will apply to qualifying expenses incurred in or after YA2019. IE and STB will release further details by April Extended to The 250% tax deduction for qualifying donations will be extended for donations made on or before Extend the Business and IPC Partnership Scheme ( BIPS ) Extended to The Scheme was originally for qualifying expenditure incurred from It will be extended to The Scheme allowed a total of 250% tax deduction to a qualifying person on qualifying expenditure, such as wages incurred in respect of: o The provision of services by his qualifying employee to an IPC; or o The secondment of his qualifying employee to an IPC. The qualifying expenditure is subject to a cap of S$250,000 per business per YA and S$50,000 per IPC per calendar year. MOF and IRAS will review the administrative process. Details of changes will be announced in the second half of

8 Introduce a tax framework for Singapore Variable Capital Companies ( S-VACCs ) A tax framework will be introduced: a. A S-VACC will be treated as a company and a single entity for tax purpose; b. Tax exemption under Sections 13R and 13X of the ITA will be extended to S-VACCs; c. 10% concessionary tax rate under the FSI-FM scheme will be extended to approved fund managers managing an incentivised S-VACC; and d. The existing GST remission for funds will be extended to incentivise S- VACCs. MAS will release further details of the tax framework for S-VACCs by October Extend the Enhanced-Tier Fund Scheme under Section 13X of the ITA to all fund vehicles Wef The enhanced-tier Fund Scheme will be extended to all fund vehicles constituted in all forms. Besides companies, trusts and limited partnerships, all fund vehicles will be able to qualify for the scheme. The change will take effect for new awards approved on or after MAS will release further details by May Extend the tax transparency treatment for Singapore-listed Real Estate Investment Trusts ( S-REITS ) to Singapore-listed Real Estate Investment Trusts Exchange-Traded Funds ( REITs ETFs ) On or after The following tax treatments will be accorded to REITs ETFs: a. Tax transparency treatment on the distribution received by REITs ETFs from S-REITs which are made out of the latter s specified income; b. Tax exemption on such REITs ETFs distributions received by individuals, excluding individuals who derive any distribution: i. through a partnership in Singapore; or ii. from the carrying on of a trade, business or profession; and c. 10% concessionary tax rate on such REITs ETFs distribution received by qualifying non-resident non-individuals. Subject to conditions, the tax concessions for REITs ETFs will take effect on or after

9 Review date is on Application for the tax transparency treatment can be submitted to IRAS on or after MAS and IRAS will release further details by March Extend and enhance the Financial Sector Incentive ( FSI ) scheme On or after The FSI scheme will be extended till The scope of trading in loans and their related collaterals is expanded to include collaterals that are prescribed infrastructure assets or projects. The change will apply to income derived on or after in respect of new and renewal awards approved on or after MAS will release further details by May Extend the Insurance Business Development Insurance Broking Business ( IBD-IBB ) scheme Allow the Insurance Business Development-Specialised Insurance Broking Business ( IBD-SIBB ) scheme to lapse The IBD-IBB scheme will be extended till The IBD_SIBB scheme will be allowed to lapse after Specialty insurance broking and advisory services will be incentivised under the IBD- IBB scheme at a concessionary tax rate of 10%. MAS will release further details by May2018. Extend the tax deduction for banks (including merchant banks) and qualifying finance companies for impairment and loss allowances made in respect of non-creditimpaired financial instruments. Extended to YA2024 and 2025 The tax deduction under Section 14I of the ITA will be extended till: YA2024- for banks and qualifying finance companies with December FYE; or YA2025 for banks and qualifying finance companies with non-december FYE. MAS will release further details by May

10 Rationalize the withholding tax ( WHT ) exemptions for the financial sector Review date A review date of will be introduced for WHT exemptions for the following payments: i. Payments made under cross currency swap transactions made by Singapore swap counterparties to issuers of Singapore dollar debt securities; ii. Payments made under interest rate or currency swap transactions by financial institutions; iii. Payments made under interest rate or currency swap transactions by MAS; and iv. Specified payments made under securities lending or repurchase agreements by specified institutions; The following WHT exemptions will be legislated, along with a review date of : i. Interest on margin deposits paid by members of approved exchanges for transactions in futures; and ii. Interest on margin deposits paid by members of approved exchanges for spot foreign exchange transactions (other than those involving Singapore dollar). The change will take effect for payments under agreements entered into on or after The WHT exemptions for the following payments will be withdrawn: i. Interest from approved Asian Dollar Bonds; and ii. Payments made under over-the-counter financial derivative transactions by companies with FSI-Derivatives market awards that were approved on or before The change will take effect for payments under agreements entered into on or after MAS will release further details by May

11 Extend the tax incentive scheme for Approved Special Purpose Vehicle ( ASPV ) engaged in asset securitization transactions ( ASPV Scheme ) Extend the Qualifying Debt Securities ( QDS ) incentive scheme Allow the Qualifying Debt Securities Plus ( QDS+ ) incentive scheme to lapse Extend the tax exemption on income derived by primary dealers from trading in Singapore Government Securities ( SGS ) Extended to The ASPV scheme will be extended till , with the exception of stamp duty remission on the instrument relating to transfer of assets to the ASPV for approved asset securitization transactions. The stamp duty remission will be allowed to lapse after MAS will release further details by May Extended to The QDS scheme will be extended till The QDS+ scheme will be allowed to lapse after Debt securities with tenure beyond 10 years and Islamic debt securities that are issued: a. After can enjoy tax concessions under the QDS scheme if the conditions of the QDS scheme are satisfied; b. On or before can continue to enjoy the tax concessions under the QDS+ scheme if the conditions of the QDS+ scheme are satisfied. MAS will release further details b May 2018 Extended till The tax exemption on income derived by primary dealers from trading in SGS will be extended till MAS will release further details by May Extend the Investment Allowance ( IA ) scheme to include qualifying investment in submarine cable systems landing in Singapore The qualifying expenditure will be extended to capital expenditure incurred on newlyconstructed strategic submarine cables systems landing in Singapore, subject to qualifying conditions. All other conditions of the IA scheme apply except for the following which will be permitted: a. The submarine cable system can be used outside Singapore; and b. The submarine cable systems, on which IA has been granted, can be leased out under the indefeasible rights of use arrangements. This change will take effect for capital expenditure incurred between and , inclusive of both dates. 10

12 Introduce a review date for the WHT exemption on container lease payments made to non-resident lessors Review date A review date of will be introduced. Unless the scheme is extended, such payments accruing to a non-resident lessor under any lease or agreement entered into on or after in respect of the use of a qualifying container for the carriage of goods by seas will be subject to WHT. Streamlining of different grants Enterprise Development Grant (EDG) To combine the following grants: a. Capability Development Grant (CDG) b. Global Company Partnership (GCP) The grant will provide support for up to 70% of qualifying costs from FY2018 to FY2019. It will be administered by Enterprise Singapore (ESG). Productivity Solution Grant (PSG) The existing grant schemes that support pre-scoped, off-the-shelf productivity solutions will be streamlined into on PSG. The PSG will provide funding support for up to 70% of qualifying costs. Partnerships for Capability Transformation Programme (PACT) The existing PACT (Spring and EDB) and Collaborative Industry Projects (CIP) will be combined into a PACT scheme. PACT will provide support of up to 70% of qualifying costs. PACT will be administered by EDB and ESG. Spring and IE Singapore will be merged into Enterprise Singapore in April

13 PERSONAL INCOME TAX PERSONAL INCOME TAX Effective Personal Income Tax No change to the personal income tax rates. There will be no tax rebate for YA2018. As announced in the previous Budget, the total personal income tax reliefs will be capped at S$80,000 wef YA

14 GOOD AND SERVICES TAX GOODS AND SERVICES TAX Effective Introduce GST on imported services On and from GST on imported services will be introduced with effect from Business-to-Business (B2B) imported services will be taxed via a reverse charge mechanism. Only the following businesses need to apply reverse charge: o Businesses making exempt supply; or o Businesses that do not make any taxable supplies. Business-to-Consumers (B2C) imported services will take effect through an Overseas Vendor Registration (OVR) mode. This requires overseas suppliers and electronic marketplace operators which make significant supplies of digital services to local customers to register with IRAS for GST. IRAS will release details by end Feb

15 Impending GST rate increase In the period from 2021 to 2025 The Government will raise GST rate from 7% to 9% sometime in the period from 2021 to The GST increase will be implemented in a progressive manner and the Government will: o Continue to absorb GST on publiclysubsidised education and healthcare. o Enhance the permanent GST voucher scheme. o Implement an offset package for a period. 14

16 STAMP DUTY STAMP DUTY Raising of Buyer s Stamp Duty on the value of Residential Property in Excess of S$1 million Effective The top marginal Buyer s Stamp Duty rate will be raised from 3% to 4%. It applies on the value of residential property in excess of S$1 million. The revised rates will apply to all residential properties acquired on or after Tiers Rate First $180,000 1% Next $180,000 2% Next $640,000 3% Amount exceeding 4% (New) $1,000,000 (for residential properties only) If the Option to Purchase has been granted on or before and is exercised within three weeks of the proposed change (i.e. on or before ) or the Option validity period, whichever is the earlier, buyer may apply to IRAS for a remission to apply the current rate. The Buyer s Stamp Duty rates for nonresidential properties remain 15 unchanged.

17 FOREIGN WORKER LEVY FOREIGN WORKER LEVY Deferring foreign worker levy ( FWL ) changes Effective Deferred till The planned increase in foreign worker levy for the Marine Shipyard and Process sectors will be further deferred for one more year from to Foreign domestic worker (FDW) levy framework Family with young children and elderly will continue to enjoy the concessionary levy of $60. The qualifying age for the levy concession under the aged person scheme will be raised from 65 to 67 from Households with persons aged 65 and 66, which are enjoying or have enjoyed the aged person concession before will continue to pay the monthly levy rate of $60 on and after

18 For employers who do not qualify for the levy concession, the monthly levy will be raised. For the first and second FDW, the levy will be raised from $265 today to $300 and $450 respectively. This change will take effect from

19 OTHERS OTHERS Effective Carbon tax 2019 A carbon tax will be applied on facilities that produce 25,000 tonnes or more of greenhouse gas emissions a year. The carbon tax rate will be set at S$5 per tonne of greenhouse gas emissions from 2019 to The tax will apply uniformly to all sectors without exemption. The rate will be reviewed in 2023 and may be increased to between S$10 S$15 per tonne of emissions by More details will be announced by the Ministry of Environment and Water Resources (MEWR) Committee of Supply. 18

20 Excise Duties for Tobacco Products The excise duty will be increased by 10% across all tobacco products. Extension of the Wage Credit Scheme (WCS) Extended to 2020 The Scheme is extended for another three years ( ). Under the scheme, the Government will cofund the following percentage of wage increases of Singaporean employees earning a gross monthly wage of up to S$4,000, subject to a minimum gross monthly wage increase of S$50: Qualifying wage increase in Percentage of co-funding % % % Only wage increase given in 2017, 2018 and 2019 and sustained in subsequent years will be supported. One-off SG bonus for adult Singaporean Singaporeans aged 21 years and above in 2018 will receive a one-off SG Bonus this year, ranging from $100 to $300, depending on their income. Assessable income in YA2017 S$ SG Bonus S$ 28,000 and below 300 From 28,001 to ,000 Above 100, Adult Singaporeans who own more than one property are only eligible for SG Bonus of $100. Increased support for education Increase the annual Edusave contributions: Primary School: From $200 to $230. Secondary School: From $240 to $290. This will take effect from January Update the income eligibility criteria for the Edusave Merit Bursary and the Independent School Bursary. 19

21 Increase the support to students from lowerincome families. Will enhance the MOE Financial Assistance Scheme by raising the annual bursary quantum for pre-university students, from $750 to $900, and update the income eligibility criteria. Support for Financial Planning The Government will pilot a new financial education curriculum at polytechnics and ITE. The Government will enhance existing services to Singaporeans at HDB, when they buy a flat, and at CPF Board, when they approach retirement, to enable them to make better-informed decisions at these major milestones. Review of Eldershield The ElderShield, an insurance scheme that helps those with severe disabilities cope with the financial demands of their daily care, will be reviewed. Enhanced Proximity Housing Grant ( PHG ) PHG for families buying a resale flat to live with their parents or children will be increased to $30,000. Those buying a resale flat near their parents or children will continue to receive a PHG of $20,000. PHG for singles, who are often a key source of caregiving support within their families will be enhanced: a. Singles who buy a resale flat to live with their parents will now receive an enhanced PHG of $15,000. b. Those who buy a resale flat near their parents will also now receive a PHG of $10,000. Simplify the criterion for determining what is near. Currently, it is defined as living in the same town or within 2km. This criterion will be simplified to within 4km. 20

22 Extension of Service and Conservancy Charges Rebate The rebate will be extended for another year. In year 2018, eligible HDB households will receive 1.5 to 3.5 months of rebate on their Service and Conservancy Charges. 21

23 GLOSSARY ABP ADA-EEET ACRA AFL AITD ALS ARI ASEC BEPS BIPS CAS CEVS CPF DTD DUT EDB EIPIC FIs FTC GLS GST GSTV GTP GVR HDB HQ IArb ICT IEFS IE Singapore IGS IIA ITA IRU LIA Approved Building Project Accelerated Depreciation Allowance for Energy Efficient Equipment and Technology Accounting and Corporate Regulatory Authority Approved Foreign Loan Angel Investor Tax Deduction Scheme Aircraft Leasing Scheme Approved Royalties Incentive Additional Special Employment Credit Base Erosion and Profit Shifting Business and IPC Partnership Scheme Cost Sharing Agreement Carbon Emission-Based Vehicles Scheme Central Provident Fund Double Tax Deduction Designated Unit Trust Scheme Economic Development Board Early Intervention Programme for Infants and Children Financial Institutions Finance and Treasury Centre Government Land Sales Goods and Services Tax GST Voucher Global Trader Programme Green Vehicle Rebate Housing and Development Board Head Quarters International Arbitration Information and Communications Technology Industrial Exemption Factory Scheme International Enterprise Singapore International Growth Scheme Integrated Investment Allowance Income Tax Act Indefeasible Right to use Land Intensification Allowance 22

24 LTA M&A MAS MDE MOF MOM MSI MYE PE PIC PTE R&D R&R RBTs REITs S&CC SEC SME SPRING SUTE TEC TRS WCS WDA WHT WPHs YA Land Transport Authority Mergers & Acquisitions Scheme Monetary Authority of Singapore Media and Digital Entertainment Ministry of Finance Ministry of Manpower Maritime Sector Incentive Man-Year-Entitlement Permanent Establishment Productivity and Innovation Credit Partial Exemption Scheme Research and Development Renovation and Refurbishment Registered Business Trusts Real Estate Investment Trusts Service and Conservancy Charges Special Employment Credit Small and Medium Enterprise SPRING Singapore Start-up Tax Exemption Scheme Temporary Employment Credit Tourist Refund Scheme Wage Credit Scheme Writing Down Allowance Withholding Tax Work Permit Holders Year of Assessment 23

25 CONTACTS Tax Services Lee Seng Suan Gan Hoe Kwang Ho Hai Cheong Luo Jun This Budget Summary is prepared for the information of clients and is intended for general reference only. No liability can be accepted for any actions taken or for any loss caused by reliance on it without prior consultation with an appropriate professional. 24

26 6001 Beach Road #14-01 Golden Mile Tower, Singapore Tel Fax UHY Lee Tax Services Pte Ltd (the Firm ) is a member of Urbach Hacker Young International Limited, a UK company, and forms part of the international UHY network of legally independent accounting and consulting firms. UHY is the brand name for the UHY International network. The services described herein are provided by the Firm and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members UHY Lee Tax Services Pte Ltd An independent member of UHY International Your Trusted Partner for Excellence 25