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Singapore Expands Business Tax Support Schemes In 2021 Budget

by Mary Swire,, Hong Kong

22 February 2021

Singapore announced the extension of a number of support measures for businesses in its 2021 Budget, released on February 16, 2021.

Announcements included that businesses may continue to benefit from the enhanced loss carryback relief scheme for the 2021 year of assessment (YA).

The carry-back relief scheme was enhanced for YA2020. Under the enhanced scheme, current year unabsorbed capital allowances (CA) and trade losses (collectively referred to as qualifying deductions) for YA2020 may be carried back up to three immediate preceding YAs, capped at SGD100,000 of qualifying deductions, subject to conditions.

Taxpayers were allowed to elect to carry back to the relevant preceding YAs an estimated amount of qualifying deductions available for YA2020, before the actual filing of their income tax returns for YA2020.

The Budget announces that the scheme will be extended for a further year with the same parameters.

The Budget further announces the Government's intention to extend for a further year the option to accelerate the write-off of the cost of acquiring plant and machinery, allowing a deduction of 75 percent in the first year, and 25 percent in the next. In addition, the Budget will extend for another year the option for businesses to immediately deduct in a single year expenses incurred on renovation and refurbishment.

The Budget also announces that Singapore intends to enhance the Double Tax Deduction for Internationalisation (DTDi) scheme.

Under the DTDi scheme, businesses are allowed a tax deduction of 200 percent on qualifying market expansion and investment development expenses, subject to approval from Enterprise Singapore or Singapore Tourism Board (STB).

To continue supporting internationalization efforts, the scope of the DTDi scheme will be enhanced to cover the following specified expenses incurred to participate in approved virtual trade fairs:

  • Package fees charged by event organizers for virtual exhibition hall and booth access, collateral creation, business meeting/match sessions, pitches/product launches/speaking slots, webinar/conference, and post event analytics;
  • Third-party costs for design and production of digital collaterals and promotion materials for virtual fairs; and
  • Logistics costs incurred to send materials/samples overseas to potential clients met at virtual trade fairs.

The list of qualifying expenses for overseas investment study trips will also be expanded to include logistics costs to transport materials/samples used during the investment trips.

In addition, the scope of qualifying activities which do not require prior approval from Enterprise Singapore or STB will be enhanced to cover the following additional activities, up to the current annual expense cap of SGD150,000:

  • Product/service certification (primarily to increase buyer's acceptance in overseas markets) approved by Enterprise Singapore;
  • Overseas advertising and promotional campaign;
  • Design of packaging for overseas markets;
  • Advertising in approved local trade publication; and
  • Participation in virtual trade fairs approved by Enterprise Singapore.

The Budget also announces a review of withholding tax exemptions for interbank/ interbranch transactions by banks in Singapore for the purpose of their trade or business, and five-year extensions for the WHT exemption on payments made for structured products and for over-the-counter financial derivatives.

The Budget announces that the Automation Support Package will lapse on March 31, 2021, but Singapore will retain the 100 percent Investment Allowance (IA) scheme to support automation. Further, it will extend and enhance the Investment Allowance (Energy Efficiency) scheme.

Finally, the Budget states that Singapore intends to make a number of changes to the vehicle tax structure and rates.

TAGS: Energy | tax | investment | business | vehicle tax | Singapore | fees | withholding tax | trade | Investment | Invest | Investment | Tax

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