Singapore Tax Authority Releases Details Of Tax Changes In Budget

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

27 January 2009

A large number of important tax changes were announced by Singapore's Minister for Finance, Tharman Shanmugaratnam, in his Budget Speech for the Financial Year 2009, which was delivered in Parliament on Thursday, January 22, 2009.

The changes are listed by the Tax Authority as follows:

Individuals

• All resident individual taxpayers will be given a one-off income tax rebate of 20%, up to a cap of SGD2,000, for the tax payable for Year of Assessment (YA) 2009.
• Income tax on net annual value of all residential properties will be removed from YA 2010.
• Tax exemption will be granted to all foreign-sourced income earned/accrued outside Singapore on or before January 21, 2009, to resident non-individuals and resident partners of partnerships in Singapore and received in Singapore during the period from January 22, 2009 to January 21, 2010.
• Tax deduction will be doubled for donations made in 2009 to Institutions of a Public Character and other approved recipients (such as approved museums, prescribed schools etc.) to 2.5 times.

Property

• Owner-occupied residential properties will be granted a rebate of 40% on the property tax payable (after existing rebates) for calendar year 2009.
• Owners of commercial and industrial properties will be granted a rebate of 40% on the property tax payable for calendar year 2009.
• Business owners may apply for property tax deferral for land approved for development if they satisfy the eligibility criteria. The period of the property tax deferral shall be from January 22, 2009 to January 21, 2011.

Businesses

• Corporate income tax rate will be reduced from 18% to 17% to help maintain Singapore's competitiveness. The rate cut will take effect from YA 2010.
• Unutilized trade losses and capital allowance for YA 2009 and YA2010 can be carried back to set off against Assessable Income of three immediately preceding YAs up to a limit of SGD200,000.
• Businesses that incur qualifying Renovation and Refurbishment expenses in the basis periods for YA 2010 and YA 2011 can deduct such expenses in one year instead of over three years, subject to the cap of SGD150,000 for each relevant three-year period.
• Companies Limited by Guarantee (CLGs) will be allowed to qualify for the tax exemption scheme for new start-up companies effective from YA2010.
• A new tax framework for qualifying amalgamations will be introduced.
• An accelerated write-down of capital allowance (CA) will be allowed on plant and machinery acquired in the basis periods for YA 2010 and YA 2011. CA is computed based on 75% of the capital expenditure for the first YA and 25% of the capital expenditure for the second YA.
• Under the Block Transfer Scheme (BTS), withholding tax (WHT) exemption can be granted in respect of interest payable on a loan taken by a shipping enterprise from a lender outside Singapore to acquire a Singapore-flagged ship. This WHT exemption is for ships registered with the Singapore Registry of Ships (SRS) on any date from January 1, 2009 to December 31, 2013.
• The tax exemption schemes for foreign investors and qualifying resident funds, tax incentive schemes for approved trustee companies and financial sector incentive companies will be enhanced by expanding the list of specified income and designated investment.
• The tax deduction for collective impairment provisions made by banks, merchant banks or finance companies under MAS Notices 612, 811 and 1005 will be extended for a further three years, subject to conditions.

Goods & Services Tax

• The following GST changes will take effect from April 1, 2009:
  • Revision to the definition of ‘qualifying aircraft’;
  • Extension of zero-rating relief to cover the sale, maintenance and repair services of aircraft components or systems as long as they form part of a qualifying aircraft;
  • Import GST suspension for approved aerospace players under a new scheme.
• With effect from April 1, 2009, GST will be suspended on the following:
  • Temporary removal of goods stored in a Zero GST or Licensed Warehouse for auctions or exhibitions, provided the goods are returned to the warehouse after the auction or exhibition; and
  • Sale of these goods at the auction or exhibition, provided the goods are returned to the warehouse subsequently.
• Qualifying funds managed by prescribed fund managers will be allowed to recover a substantial portion of the GST incurred on prescribed expenses incurred from January 22, 2009 to March 31, 2014 (both dates inclusive).

Further details of some of these tax changes are expected to be announced in March.

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