Singapore Consults On Income Tax Act Changes

by Mary Swire, Tax-News.com, Hong Kong

01 July 2010

Singapore’s Ministry of Finance will be conducting a public consultation, until July 19, 2010, on proposed legislative amendments to the Income Tax Act (ITA).

The proposed amendments to the ITA principally relate to the changes announced in the 2010 budget, but also provide for refinements to existing tax policies and tax administration arising from on-going reviews of the income tax system.

The key changes arising out of the 2010 budget include measures to introduce the productivity and innovation credit scheme to promote investments. The scheme is being introduced to encourage businesses to make investments, and to enhance productivity and innovation.

The ITA is therefore being amended to provide for tax deductions and allowances for expenditure incurred in research and development, the registration and acquisition of intellectual property, industrial and product design, automation and the training of employees. Certain qualifying persons may also convert their tax deduction or allowance into a cash payout.

Other changes will: modify the tax allowance and stamp duty relief to defray the cost of mergers & acquisitions; introduce the tax deduction scheme for angel investors to claim deductions for their investments in start-ups and young companies; and enhance various personal income tax reliefs.

The ITA’s automation equipment rules will also be updated to include a wider range of qualifying equipment and software for automating processes. Taxpayers will be able to claim an accelerated capital allowance over one year for this equipment and software, instead of three years for capital allowances in general.

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