Singapore Budget 2016 Shanker Iyer 30 March 2016 SINGAPORE HONGKONG 20 YEARS IN PRACTICE
AGENDA Budget Position Tax Changes for Businesses Changes to Tax incentives Tax Changes for Individuals Other changes Winners and Losers Questions SINGAPORE HONGKONG 20 YEARS IN PRACTICE
BUDGET POSITION
REVISED FY15 VS. ESTIMATED FY15 Revised FY15 vs. Estimated FY15 Revised FY2014 Estimated FY2015 Revised FY2015 Revised FY2015 Compared to Actual FY2014 Estimated FY2015 $billion $billion $billion % change % change OPERATING REVENUE 61.35 64.27 64.16 4.6 (0.2) Corporate Income Tax 13.46 13.48 13.85 2.9 2.7 Personal Income Tax 8.94 8.91 9.13 2.1 2.5 Withholding Tax 1.12 1.14 1.31 17.0 14.9 Statutory Boards Contributions 0.52 0.82 0.43 (17.3) (47.6) Assets Taxes 4.41 4.41 4.39 (0.5) (0.5) Customs and Excise Taxes 2.45 2.96 2.56 4.5 (13.5) Goods and Services Tax 10.11 10.48 10.33 2.2 (1.4) Motor Vehicle Taxes 1.81 2.12 1.80 (0.6) (15.1) Vehicle Quota Premiums 3.67 5.08 5.41 47.4 6.5 Betting Taxes 2.62 2.71 2.71 3.4 0.0 Stamp Duty 2.79 2.60 2.73 (2.2) 5.0 Other Taxes 6.14 6.11 5.88 (4.2) (3.8) Other Fees and Charges 3.01 3.11 3.29 9.3 5.8 Others 0.33 0.33 0.35 6.1 6.1 Less: TOTAL EXPENDITURE 57.20 68.22 68.41 19.6 0.3 Operating Expenditure 43.31 48.71 48.73 12.5 0.0 Development Expenditure 13.89 19.51 19.68 41.7 0.9 PRIMARY SURPLUS / (DEFICIT) 1 4.15 (3.95) (4.25) 1 Before investment return, special transfers and top-ups 4
ESTIMATED FY16 VS. REVISED FY15 Estimated FY16 vs. Revised FY15 Revised Estimated Change over FY2015 FY2016 Revised FY2015 $billion $billion $billion % change OPERATING REVENUE 64.16 68.44 4.28 6.7 Corporate Income Tax 13.85 13.41 (0.44) (3.2) Personal Income Tax 9.13 10.13 1.00 11.0 Withholding Tax 1.31 1.33 0.02 1.5 Statutory Boards Contributions 0.43 1.88 1.45 337.2 Assets Taxes 4.39 4.40 0.01 0.2 Customs and Excise Taxes 2.56 2.91 0.35 13.7 Goods and Services Tax 10.33 10.62 0.29 2.8 Motor Vehicle Taxes 1.80 2.93 1.13 62.8 Vehicle Quota Premiums 5.41 5.65 0.24 4.4 Betting Taxes 2.71 2.72 0.01 0.4 Stamp Duty 2.73 2.52 (0.21) (7.7) Other Taxes 5.88 6.33 0.45 7.7 Other Fees and Charges 3.29 3.32 0.03 0.9 Others 0.35 0.30 (0.05) (14.3) Less: TOTAL EXPENDITURE 68.41 73.43 5.02 7.3 Operating Expenditure 48.73 54.43 5.70 11.7 Development Expenditure 19.68 19.00 (0.68) (3.5) PRIMARY SURPLUS / (DEFICIT) 1 (4.25) (4.99) 1 Before investment return, special transfers and top-ups 5
OVERALL POSITION TREND Overall Position Trend Surplus / Deficit Investment Return Special Transfers Top Ups Overall Surplus / (Deficit) FY08 3.0 4.3 (3.0) (4.1) 0.2 FY09 (2.3) 7.0 (1.4) (4.1) (0.8) FY10 0.7 7.4 (1.5) (5.6) 0.9 FY11 4.5 7.9 (2.9) (5.5) 4.0 FY12 6.8 7.9 (1.5) (7.4) 5.8 FY13 4.8 7.9 (3.2) (5.6) 3.9 FY14 4.2 8.6 (4.3) (8.5) (0.1) FY15 (4.3) 9.9 (4.5) (6.0) (4.9) FY16 (estimated) (5.0) 14.7 (2.7) (3.6) 3.5 Top Ups (mainly to Changi Airport Dev. Fund) Special Transfers (Mainly to Wage Credit Scheme, Temporary Employment Credit and PIC) 6
REVENUE CHANGES Revenue changes (Estimated 2016 vs. Revised 2015) Statutory Boards' Contributions Personal Income Tax Corporate Income Tax Motor Vehicle Taxes Goods and Services Tax Customs and Excise Tax Stamp duty Others Change ($ billion) * Others includes asset taxes, betting taxes, vehicle quota premiums, withholding taxes, other taxes, other fees and charges 7
EXPENDITURE CHANGES Expenditure changes (Estimated 2016 vs. Revised 2015) CHANGE (S$ BILLION) Transport (-1.04 bn) -9% Health (1.75 bn) +19% National Development (1.06 bn) +39% Culture, community & youth (-0.59 bn) -23% Manpower (Fin security program) (0.41 bn) +56% Trade & industry (0.48 bn) +14% Social & family development (0.26 bn) +12% Finance (admin) (0.21 bn) +26% Law (admin) (0.06 bn) +13% 8
TAX CHANGES FOR BUSINESSES
PRODUCTIVITY AND INNOVATION CREDIT Productivity and Innovation Credit Termination of PIC Scheme PIC Scheme shall expire in YA 2018 60% 40% PIC Cash payout reduced Cash payout rate lowered from 60% to 40% Applicable for qualifying expenditure incurred from 1 August 2016 NOW 1 Aug 16 E-filing Mandatory Electronic filing (Cash Payout) Mandatory e-filing for PIC cash payout application Applicable from 1 August 2016 0% YA 2018 10
OTHER BUSINESS CHANGES Other Business Changes Corporate Income Tax Rebate Rebate raised from 30% to 50% Cap retained: S$20,000 Applicable for YA 2016 and YA 2017 30% 50% BEFORE: YA16 & YA 17 NOW: YA16 & YA 17 CAP REMAINS: S$20,000 11
OTHER BUSINESS CHANGES Other Business Changes Pilot Business and IPC Partnership Scheme Additional 150% deduction on wages and incidental expenses for sending employees to volunteer and provide services to IPCs (including secondments) Cap of S$250,000 per year per business and S$50,000 per IPC Applicable from 1 July 2016 to 31 December 2018 MOF and the IRAS will release further details by June 2016. 12
OTHER BUSINESS CHANGES Other Business Changes Automation Support Package Support firms to automate, drive productivity and scale up Capability Development Grant expanded for roll-out or scaling up of automation projects up to 50% of the qualifying cost capped at S$1 million Investment allowance of 100% of approved capital expenditure, capped by S$10m. Government to co-share risk on loans guaranteed by local banks MTI will announce more details of the Automation Support Package at the Committee of Supply. 13
OTHER BUSINESS CHANGES Other Business Changes Electronic filing (Form C) Mandatory electronic filing phased over YA 2018 to YA 2020 14
OTHER BUSINESS CHANGES Other Business Changes Pre-commencement expenses Ensuring fair allocation of pre-commencement and postcommencement expenses to pre-incentive and incentive income Expense incurred directly to derive any income to be allocated accordingly Other expenses to be allocated based on income proportion Applicable for expenses incurred from 25 March 2016 More details of the change will be released by the IRAS by June 2016. 15
OTHER BUSINESS CHANGES Other Business Changes IPR related claims Writing down allowance for IPR Right to elect period for writingdown 5, 10 or 15 years Election once made is irrevocable Applicable for qualifying IPR acquired within YA 2017 to YA 2020 Anti Avoidance Mechanism for IPR Introduction of the anti-avoidance mechanism for IPR to empower CIT to analyse appropriateness of transaction price Applicable for transactions entered from 25 March 2016 Further details will be released by 30 April 2016 by IRAS. 16
OTHER BUSINESS CHANGES Other Business Changes Land Intensification Allowance LIA extended to buildings used by a user or multiple users for one or multiple qualifying trades Applicable for LIA applications made from 25 March 2016 More details will be released by EDB by July 2016. 17
CHANGES TO TAX INCENTIVES
TAX INCENTIVES FOR INSURANCE COMPANIES Tax Incentives for Insurance companies Incentive schemes for Marine Hull and Liability Insurance, Specialised insurance Business and Captive Insurance to be included in Insurance Business Development Scheme Marine Hull and Liability Insurance Concessionary tax rate of 10% (earlier 5%) applicable for new and renewal awards from 1 April 2016 Captive Insurance Specialised Insurance Business Revised concessionary tax rates (currently exempted) 5% for new awards from 1 September 2016 to 31 August 2019 8% for new awards from 1 September 2019 Concessionary tax rate of 10% (currently exempted) for new and renewal awards from 1 April 2018 10% for renewal awards from 1 September 2016 Scope expanded to cover business of underwriting onshore and offshore specialised risk from 1 September 2016 MAS will release further details of the change by June 2016. 19
SINGAPORE MARITIME SECTOR INCENTIVES Maritime Sector Incentives (MSI) Extensions to qualifying income MSI-SRS/MSI-AIS: Extension to cover income derived from operation of ships or leasing of ships used for exploration or exploitation of offshore energy or offshore mineral or ancillary activity MSI ML Ship award Expansion to cover income derived from leasing of ships for qualifying activities to any counterparties for use outside the Singapore port limit Applicable from 25 March 2016. Further details will be released by the MPA by June 2016. 20
OTHER INCENTIVE SCHEMES Other Incentive Schemes Finance and Treasury Centre (FTC) Scheme Scheme extended till 31 March 2021 Enhancement in the FTC Scheme Reduction in concessionary tax rate from 10% to 8% Substantive requirement to be increased FTC permitted to obtain funds indirectly from network companies Exemption expanded to cover interest payment on deposits placed with FTC by its non-resident approved offices and associated companies Applicable from 25 March 2016 10% 8% More details will be announced by the EDB in June 2016. 21
OTHER INCENTIVE SCHEMES Other Incentive Schemes Global Trader Programme (Structured Commodity Financing) Scheme Addition in qualifying activities Consolidation, management and distribution of funds for designated investments M&A advisory services Streaming financing Applicable from 25 March 2016 IE Singapore will release further details of the change by June 2016. 22
OTHER INCENTIVE SCHEMES Other Incentive Schemes Tax incentive for Trustee Companies To be subsumed in Financial Sector Incentive (FSI) Scheme Scope of qualifying activities to be expanded to align with trustee activities under FST-ST scheme Awards granted from 1 April 2016 - concessionary tax rate of 12% (currently 10%) Transition - continuation of the existing benefits till the expiry of award Applicable from 1 April 2016 onwards. 10% 12% Further details will be released by the MAS by June 2016. 23
OTHER INCENTIVE SCHEMES Other Incentive Schemes Business Grants Portal To be launched in Q4 2016. Grants from IE Singapore, Spring, STB and Design Singapore, and progressively include grants from other government agencies. 24
OTHER CHANGES Other Changes Mergers & Acquisitions Scheme Cap for qualifying M&A deals increased from $ 20 million to $ 40 million M&A allowance continues 25% Allowance cap of S$10 million per year Stamp duty relief will also be granted up to $ 40 million of consideration Applicable from 1 April 2016 to 31 March 2020 Further details of the scheme will be issued by the IRAS by June 2016. 25
OTHER CHANGES EXTENSIONS Other Changes Extensions Extensions Exemption of companies gains on disposal of certain equity investments extended till 31 May 2022 Not-for-Profit Organisation tax incentive to be extended till 31 March 2022 Double Tax Deduction ( DTD ) Scheme extended till 31 March 2020 26
OTHER CHANGES PHASING-OUT Other Changes - Phasing-out Phasing-out Approved investment company scheme to be withdrawn from YA 2018 Withdrawal of the tax exemption on income derived by non-residents trading in Singapore in specified commodities via consignment arrangement 27
TAX CHANGES FOR INDIVIDUALS
PERSONAL TAX CHANGES Personal Tax Changes Cap on personal income tax relief Capped to $ 80,000 Applicable form YA 2018 29
PERSONAL TAX CHANGES Personal Tax Changes Removal of home leave passage Tax concession of taxing only 20% of home leave passage to be removed Applicable from YA 2018 30
OTHER CHANGES
OTHER CHANGES Other Changes Special Employment Credit Extended to 31 December 2019 >55 and up to S$4,000 per month 3% to 8% of monthly wage (age) Foreign worker levies Deferring levies in Work Permit holders in the Marine and Process sectors for one year Proceeding with rest of sectors 32
WINNERS AND LOSERS
WINNERS AND LOSERS Winners and Losers Winners SMEs Education Public Infrastructure Charities Marine & Process Sectors PMETs who want to learn Companies that automate Companies that consolidate, acquire Trade Associations & Chambers Losers Real Estate Services & Construction Sectors The 1 percent Pessimists Most companies employing work permit and S-pass holders Companies that rely on the PIC Scheme 34
SICC BUDGET WISHLIST
SICCC BUDGET WISHLIST SICC Budget Wishlist Out of 81 suggestions that were submitted by SICC, only 5 topics were touched on in. Foreign Worker Levy Cost of Hiring Older Employees (versus efficiency to be reaped) Safe-Harbour Rule Equity Investment Finance and Treasury Centre (FTC) Extension of Marine Hull & Liability (MHL) Incentive Scheme 36
Q&A
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