2 December 2014
The Income Tax (Amendment) Act 2015, passed by Parliament on 3 November 2014 and assented to by the President on 19 November 2014, was published in the Government Gazette, Electronic Edition, on 27 November 2014.
The Act amends the Income Tax Act (Cap 134, 2014 Rev Ed) and makes a related amendment to the Economic Expansion Incentives (Relief from Income Tax) Act (Cap 86, 2005 Rev Ed). Amendments to the Income Tax Act include:
- Extension of the Productivity and Innovation Credit or PIC Scheme for three years till the Year of Assessment, or YA 2018 to provide more time for businesses to put in place productivity improvements.
- Introduction of a PIC+ scheme to provide additional support to small and medium enterprises (SMEs) where qualifying SMEs can enjoy a higher expenditure cap of $600,000 for each PIC qualifying activity per YA. Other enhancements have also been made to the PIC scheme.
- From YA 2014, businesses can claim PIC benefits for training of seconded staff from other organisations, or persons working for them under centralised hiring arrangements.
- Additional 50% tax deduction for R&D activities has been extended for ten years till YA 2025, and the scheme to allow writing down allowance for acquisition of Intellectual Property Rights has also been extended for five years till YA 2020.
- The addition of a negative list to exclude items which do not meet the definition used by the World Intellectual Property Organization on intellectual property rights.
- Additional Tier 1 hybrid instruments issued by Singapore-incorporated banks will be treated as debt for tax purposes. Distributions on such instruments will be deductible for issuers, and taxable in the hands of investors unless specifically exempted from tax.
- The increase of the quantum of parent relief, handicapped parent relief and other handicapped dependant-related reliefs from YA 2015 to provide greater recognition to individuals supporting their dependants. Sharing of the parent relief and handicapped parent relief among claimants will be allowed according to a proportion agreed between the claimants.
Key changes arising from MOF’s periodic review of the tax regime include:
- Introduction of anti-abuse measures for the PIC scheme to tighten the qualifying conditions for PIC cash payouts, as well as to target abusive arrangements and the intermediaries who promote or facilitate such arrangements. These measures include:
- Requiring a PIC automation equipment to be in use before an application for PIC cash payout on the equipment can be made;
- Strengthening the Comptroller’s powers to deny PIC benefits arising from PIC abusive arrangements; and
- Imposing penalties on intermediaries who promote or facilitate PIC claims for such abusive arrangements.
- Allowing expenses incurred by a person for the purpose of complying with statutory and regulatory requirements of his business, to be tax deductible with effect from YA 2014.
- Allowing Supplementary Retirement Scheme (SRS) members who have reached the retirement age to withdraw investments from their SRS accounts without the need to liquidate the investments.
- Amendment to enable Singapore to ratify the Convention on Mutual Administrative Assistance in Tax Matter and to be in a position to engage in spontaneous exchange of information (EOI), as well as administer group EOI requests.
Source: Ministry of Finance (MOF) and Government Gazette.