27 February 2016

On 23 February 2015, the Deputy Prime Minister and Minister for Finance, Tharman Shanmugaratnam delivered the Budget Statement for Financial Year 2015. The tax changes announced include:

For individuals

1. Changes to individual income tax rate structure to take effect from Year of Assessment (YA) 2017

From YA 2017 onwards:

Chargeable Income	Rate (%)	Gross Tax Payable ($)
On the first     20,000 On the next    10,000	0 2	0 200
On the first     30,000 On the next    10,000	– 3.50	200 350
On the first     40,000 On the next    40,000	– 7	550 2,800
On the first     80,000 On the next    40,000	– 11.5	3,350 4,600
On the first   120,000 On the next    40,000	– 15	7,950 6,000
On the first   160,000 On the next    40,000	– 18	13,950 7,200
On the first   200,000 On the next    40,000	– 19	21,150 7,600
On the first   240,000 On the next    40,000	– 19.5	28,750 7,800
On the first   280,000 On the next    40,000	– 20	36,550 8,000
On the first   320,000 In excess of  320,000	– 22	44,550

2. In YA 2015, all individual resident taxpayers will be given a personal income tax rebate of 50%, capped at $1,000 per taxpayer

The 50% tax rebate is calculated based on the tax payable after double taxation relief (DTR) and other credits but before set-off of the Parenthood Tax Rebate. IRAS will compute the rebate automatically for tax residents.

3. Claims for rental expenses to be simplified

To simplify the tax filing, tax payers may opt to claim rental expenses based on 15% of the gross rental income in lieu of the actual amount of deductible expenses (excluding interest expense) may be claimed. In addition to the 15%, interest paid on the loan taken to purchase the let-out property may be claimed. This takes effect from YA 2016.

Further details will be released by IRAS by May 2015.

4. Income of non-tax resident mediators who carry out mediation work in Singapore from 1 April 2015 to 31 March 2020 will be exempt from tax

More details will be provided by March 2015.

5. Tax exemption for non-tax resident arbitrators

To ensure that the relevance of the scheme is periodically reviewed, a review date of 31 March 2020 will be legislated for the tax exemption for non-tax-resident arbitrators.

6. Tax deduction for donations to be increased

Tax deduction will be increased from 2.5 times to 3 times for qualifying donations made from 1 January to 31 December 2015 to Institutions of a Public Character (IPC) and other approved recipients. The 2.5 times tax deduction for qualifying donations will be extended for another 3 years from 1 January 2016 to 31 December 2018.

7. The tax incentive for royalties derived from an approved intellectual property or approved innovation will be removed from YA 2017

8. Angel Investors Tax Deduction (AITD) Scheme enchanced and extended to 31 March 2020

Investments made on or after 24 February 2015 and supported by SPRING Start-up Enterprise Development Scheme (SEEDS) and Business Angel Scheme (BAS) can also qualify for the scheme.

9. From 1 January 2015, the CPF monthly salary ceiling is raised from $5,000 to $6,000

The self-employed tax relief cap will be raised to $37,740 from YA 2017.

10. Supplementary Retirement Scheme (SRS) contribution cap to be increased

From 1 January 2016, the annual SRS contribution cap will be increased to:

• $15,300 (15% x $102,000) for an SRS member who is a citizen of Singapore or a Singapore permanent resident; and
• $35,700 (35% x $102,000) for an SRS member who is not a citizen of Singapore or a Singapore permanent resident.

For businesses

1. Corporate Income Tax rebate (YA 2016 and 2017)

A 30% corporate income tax rebate will be provided for YA 2016 and YA 2017 at a reduced cap of $20,000 per company per YA.

2. Productivity and Innovation Credit (PIC) Bonus to expire in YA 2015

3. Wage credit scheme (WCS) to be extended for another two years

The Government will co-fund 20% instead of 40% of wage increases given to Singaporean employees earning a gross monthly wage of $4,000 and below. In addition, employers will continue to receive co-funding at 20% for wage increases given in 2015 which are sustained in 2016 and 2017.

4. Mergers & Acquisition (M&A) scheme to be extended and enhanced

M&A scheme will be extended till 31 March 2020 with the following changes:

• Revised tax benefits under the M&A scheme:

• Revised shareholding eligibility tiers

• Removal of the “12-month look-back period” for step acquisitions that straddle across FYs

5. Double Tax Deduction (DTD) for Internationalisation scheme to be enhanced

The amount of qualifying manpower expenses to be allowed DTD under the scheme will be capped at $1 million per approved entity per year, subject to conditions. This change will apply to qualifying manpower expenses incurred from 1 July 2015 to 31 March 2020. Further details will be released by May 2015.

6. Tax deduction for donations to be increased

Tax deduction will be increased from 2.5 times to 3 times for qualifying donations made from 1 January to 31 December 2015 to Institutions of a Public Character (IPC) and other approved recipients. The 2.5 times tax deduction for qualifying donations will be extended for another three years from 1 January 2016 to 31 December 2018.

7. Introduction of a review date of 31 March 2020 for the Writing Down Allowance (WDA) scheme on capital expenditure incurred on the acquisition of an indefeasible right to use (IRU) of any international telecommunications submarine cable system under s 19D of the ITA

8. International Growth Scheme (IGS) to be introduced

Under the IGS, qualifying Singapore companies will enjoy a concessionary tax rate of 10% for a period not exceeding five years on their incremental income from qualifying activities. Such companies will be expected to engage in internationalisation activities and provide opportunities for Singaporeans to gain greater international exposure. The approval window for the new scheme will be from 1 April 2015 to 31 March 2020.  IE will release further details by May 2015.

9. Tax incentives for venture capital funds and venture capital fund management companies

A 5% concessionary tax rate will be accorded to approved venture capital fund management companies managing section 13H funds on their specified income. With the introduction of this new incentive, the Pioneer Service incentive for venture capital fund management companies will be withdrawn from 1 April 2015 given that venture capital is no longer a pioneering activity in Singapore. Pioneer certificates already issued will not be affected by this change. A review date of 31 March 2020 will be legislated for section 13H to ensure that the relevance of the scheme is periodically reviewed.

10. Investment Allowance – Energy Efficiency (“IA-EE”) schemes to be extended

The IA-EE scheme and the IA-EE for Green Data Centres will be combined into one scheme known as the “Investment Allowance – Energy Efficiency scheme” from 1 March 2015 and the scheme will be extended till 31 March 2021. EDB will release more details by March 2015.

11. Development and Expansion Incentive for International Legal Services (DEI-Legal) scheme to be extended till 31 March 2020

12. Tax concessions for listed Real Estate Investment Trusts (REITs) to be extended till 31 March 2020

13. Review date of 31 March 2023 introduced for the Approved Foreign Loan (AFL) incentive

In addition, the minimum loan quantum under the AFL incentive will be increased from $200,000 to $20 million from 24 February 2015. The Minister for Trade and Industry may approve an AFL application on a foreign loan lower than the legislated minimum loan quantum of $20 million.

14. Review date of 31 March 2023 introduced for the Approved Royalties Incentive (ARI)

15. Withdrawal of the concessionary tax rate on income derived from offshore leasing of machinery and plant (section 43I, Income Tax Act) from 1 January 2016

16. Withdrawal of the Approved Headquarters incentive (section 43E, Income Tax Act) from 1 October 2015

Companies performing qualifying headquarters activities or services in Singapore to network companies may qualify for the Development and Expansion Incentive, subject to meeting of conditions.

17. Withdrawal of the tax concession on royalties and other payments from approved intellectual property or innovation under section 10(16) of the Income Tax Act from YA 2017.

For financial sector

1. Tax deductions for collective impairment provisions made under the Monetary Authority of Singapore (MAS) Notices extended till YA 2019 or YA 2020, depending on the financial year end of the bank or finance company

2. Enhanced-Tier Fund tax incentive scheme to be improved

For insurance sector

1. Tax incentive scheme for insurance businesses extended and refined

For maritime sector

1. The Maritime Sector Incentive (MSI) to be enhanced and extended

Goods and Services Tax

1. Pre-registration GST claim rules for GST-registered businesses to be simplified

2. GST concession for listed Real Estate Investment Trusts (REITs), and listed Registered Business Trusts (RBTs) in the infrastructure business, ship leasing and aircraft leasing sectors extended till 31 March 2020

Source: IRAS and Excerpts from Budget Speech.