Several existing measures were enhanced or extended in the Singapore Budget Statement for the Financial Year 2021 (“Emerging Stronger Together” Budget) to provide continued support to businesses and workers to mitigate the effects of the COVID-19 pandemic.
To learn more about these measures and other tax changes announced in this year’s Budget, read Crowe Singapore’s Budget 2021 Newsletter that provides a summary of select key measures and tax changes announced in this year’s Budget.
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Category: Latest Tax News
IRAS Publishes Summary of Income Tax Treatment of COVID-19-Related Payouts to Businesses and Individuals
The Inland Revenue Authority of Singapore (IRAS) has published a summary of the income tax treatment of COVID-19 payouts to businesses and individuals, outlining what is taxable and not, as follows:
The following payouts are not taxable either because they are not income in nature or a specific exemption has been granted to exempt the payout from tax:
| No. | Payout | Purpose of Payout | Tax Treatment of Payout |
|---|---|---|---|
| 1 | Self-Employed Person Income Relief Scheme payout | To help eligible self-employed persons (SEPs) tide over this period of economic uncertainty. | Not taxable as the payout is meant to support individuals through the exceptional circumstances arising from the COVID-19 pandemic. |
| 2 | COVID-19 Support Grant | To support individuals who have lost their jobs as a result of the COVID-19 pandemic, while they find a new job or attend training. | Not taxable as the payout is meant to support individuals through the exceptional circumstances arising from the COVID-19 pandemic. |
| 3 | Workfare Special Payment (Under Care and Support package) | To provide support to Singaporeans during this period of economic uncertainty. | Not taxable as the payout is meant to support individuals through the exceptional circumstances arising from the COVID-19 pandemic. |
| 4 | Temporary Relief Fund payout | To support those who require immediate help to cope with basic living expenses as a result of the COVID-19 pandemic. | Not taxable as the payout is meant to support individuals through the exceptional circumstances arising from the COVID-19 pandemic. |
| 5 | NTUC Care Fund (COVID-19) payout | To provide one-off financial assistance to National Trades Union Congress (NTUC) union members who are in financial difficulty or retrenched due to the COVID-19 pandemic. | Not taxable as the payout is meant to support individuals through the exceptional circumstances arising from the COVID-19 pandemic. |
| 6 | Wage support for tourist guides licensed by the Singapore Tourism Board | To provide wage support for licensed tourist guides. | Not taxable as the payout is meant to support individuals through the exceptional circumstances arising from the COVID-19 pandemic. |
| 7 | Payout to Singaporean seafarers funded by the Maritime and Port Authority of Singapore under the Seafarers Relief Package | To assist Singaporean seafarers who are unable to secure shipboard employment. | Not taxable as the payout is meant to support individuals through the exceptional circumstances arising from the COVID-19 pandemic. |
| 8 | Jobs Support Scheme payout | To help enterprises retain local employees (Singapore Citizens and Permanent Residents) during this period of economic uncertainty. | Not taxable as the payout is to help employers retain their local employees by providing cashflow support or mitigate the financial impact of COVID-19 containment measures for employers and SEPs. |
| 9 | COVID-19 Quarantine Order Allowance scheme payout COVID-19 Leave-of-Absence (LOA) scheme payout COVID-19 Stay-Home Notice (SHN) scheme payout | To mitigate the financial impact for those who have been served, or whose workers have been served, a Quarantine Order, LOA or SHN. | Not taxable as the payout is to help employers retain their local employees by providing cashflow support or mitigate the financial impact of COVID-19 containment measures for employers and SEPs. |
| 10 | Courage Fund COVID-19 Relief schemes For more information on the schemes available, please refer to the National Council of Social Service. | To provide relief and support to low-income families, healthcare workers and other specified individuals who have supported the national response to COVID-19 and in doing so, contracted COVID-19. | Not taxable as these are unconditional gifts. |
The following payouts are taxable, being revenue receipts of a business, in accordance with general income tax rules:
| No. | Payout | Purpose of Payout | Tax Treatment of Payout |
|---|---|---|---|
| 1 | Temporary Housing Support for employers affected by Malaysia’s Movement Control Order | To help employers defray the additional costs of providing short-term housing to affected workers. | Taxable as the payout received is to defray the operating costs of a business and is revenue in nature. |
| 2 | Senior Worker Support Package • Senior Employment Credit • CPF Transition Offset Scheme • Senior Worker Early Adopter Grant • Part Time Re-employment Grant | To support employment of senior workers. | Taxable as the payout received is to defray the operating costs of a business and is revenue in nature. |
| 3 | Assistance scheme to defray third-party professional cleaning and disinfection costs for premises with confirmed COVID-19 cases | To provide assistance to defray cleaning costs for premises with confirmed COVID-19 cases. | Taxable as the payout received is to defray the operating costs of a business and is revenue in nature. |
| 4 | Special relief for unhired taxis | To help taxi operators defray the costs of their unhired fleet of taxis. | Taxable as the payout received is to defray the operating costs of a business and is revenue in nature. |
| 5 | Wage Credit Scheme (Including the enhancements made as part of the Stabilisation and Support Package in Budget 2020) | To support wage increases for Singaporeans. | Taxable as the payout received is to defray the operating costs of a business and is revenue in nature. |
Source: IRAS
Singapore-Turkmenistan DTA Agreement Enters into Force
An agreement for the Avoidance of Double Taxation (DTA), signed by Singapore and the Republic of Turkmenistan on 28 August 2019, entered into force on 30 April 2020.
The effective date of the DTA is 1 January 2021.
Some of the withholding tax rates under the DTA are as follows:
- Dividends – 10%. 0% of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly or indirectly at least 25% of the capital of the company paying the dividends.
- Interest – 10%. Exempted from tax if paid between the specified relevant government authorities of the contracting states.
- Royalties – 10%
The full text of the DTA is available on the Inland Revenue Authority of Singapore’s (IRAS) website.
Source: IRAS
Extension of Tax Filing Deadlines by the Inland Revenue Authority of Singapore
The Inland Revenue Authority of Singapore (IRAS) announced on 4 April 2020 that it will be providing an automatic extension of deadlines for tax filing for both individuals and businesses. This extension arrives as part of its support for taxpayers in view of the latest measures introduced by the Singapore Government to manage the COVID-19 situation.
The following tax types have been granted an extension of their filing deadlines:
| No. | Tax Type | Original Filing Deadline | Extended Filing Deadline |
| 1 | Income Tax for individuals (including sole proprietors and partnerships) | 18 April 2020 | 31 May 2020 |
| 2 | Income Tax for Trusts, Clubs and Associations | 15 April 2020 | 30 June 2020 (Updated) |
| 3 | Estimated Chargeable Income (ECI) for companies with Financial Year ending January 2020 | 30 April 2020 | 30 June 2020 (Updated) |
| 4 | ECI for companies with Financial Year ending February 2020 | 31 May 2020 | 30 June 2020 (Updated) |
| 5 | GST Returns for accounting period ending March 2020 | 30 April 2020 | 11 May 2020 |
| 6 | S45 Withholding Tax Forms due in April 2020 | 15 April 2020 | 15 May 2020 |
| 7 | Tax Clearances for foreign employees in April 2020 | – | 30 June 2020 (Updated) |
| 8 | Tax Clearances for foreign employees due in May 2020 | – | 30 June 2020 (Updated) |
Source: IRAS
Support for Businesses – Singapore Resilience and Solidarity Budgets 2020
Various measures were introduced or enhanced in the Resilience and Solidarity Budgets announced by the Deputy Prime Minister and Minister for Finance, Mr Heng Swee Keat, since 26 March 2020 to help businesses address cash flow, cost and credit issues. There are broad-based measures that are available to all businesses to overcome the immediate challenges posed by the COVID-19 outbreak, as well as measures that are specific to certain sectors which are most directly affected by COVID-19.
In this article, we examine some of the key broad-based and sector-specific measures announced in the Resilience and Solidarity Budgets.