The Singapore Budget 2018 was delivered by the Finance Minister, Mr Heng Swee Keat, on 19 February 2018.
This article highlights some of the key changes on corporate tax.
Adjustments to Tax Exemption Schemes
For start-ups, with effect from YA 2020, there will be 75% tax exemption on the first $100,000 and 50% tax exemption on the next $100,000 of normal chargeable income (capped at $125,000). For qualifying companies in their first three YAs, if the first YA is 2018, both YA 2018 and YA 2019 will be applying 100% tax exemption on the first $100,000 and 50% tax exemption on the next $200,000 of normal chargeable income (capped at $200,000 each YA).
For all other companies (excluding those that qualify for the above Start-Up Tax Exemption scheme), with effect from YA 2020, there will be 75% tax exemption on the first $10,000 and 50% tax exemption on the next $190,000 of normal chargeable income (capped at $102,500).
All other conditions of the scheme remain unchanged.
Enhancement and Extension of Corporate Income Tax Rebate
Enhance corporate income tax (CIT) rebate for Year of Assessment (YA) 2018 to 40% of CIT payable, capped at $15,000. This is an increase from the previously announced 20% of CIT payable, capped at $10,000.
The CIT rebate will be extended to YA 2019, at 20% of CIT payable, capped at $10,000.
Other Enhancements and Extensions
From YA 2019 to YA 2025, qualifying expenditure on qualifying research and development (R&D) projects performed in Singapore increased from 150% to 250%.
From YA 2019 to YA 2025, there will be 200% tax deduction for the first $100,000 of qualifying intellectual property (IP) registration costs and qualifying IP licensing costs incurred for each YA.
From YA 2019, under the Double Tax Deduction for Internationalisation scheme, there will be an increase from $100,000 to $150,000 per YA in expenditure cap for claims not requiring prior approval from IE Singapore or Singapore Tourism Board.
Extension of the Business and Institutions of Public Characters Partnership Scheme and the 250% tax deduction for qualifying donations to 31 December 2021.
Extension of the Investment Allowance scheme to include qualifying investments in submarine cable systems landing in Singapore incurred between 20 February 2018 and 31 December 2023, both dates inclusive.
Enhancement of initiatives to strengthen the competitiveness of the financial sector, including –
Extension of the Section 13X Enhanced-Tier Fund scheme to all forms of fund vehicles.
Introduction of a tax framework for Singapore Variable Capital Companies.
Extension of the tax transparency treatment currently given to Singapore-listed Real Estate Investment Trusts to Singapore-listed Real Estate Investment Trusts Exchange-Traded Funds.
Extension of tax incentive schemes to 31 December 2023 for Qualifying Debt Securities incentive scheme, Approved Special Purpose Vehicle scheme for asset securitization (with the exception of the stamp duty remission), Financial Sector Incentive scheme, Insurance Business Development-Insurance Broking Business and tax exemption for primary dealers trading in Singapore Government Securities.
Extension of the Section 14I tax deduction for banks and qualifying finance companies to YA 2024 or YA 2025 depending on the entity’s financial year end.
Rationalise withholding tax exemptions for the financial sector.