Be informed of the various tax measures and grants available to assist your business in managing its cash flow, amidst the disruptions brought about by the COVID-19 outbreak, and whether you would need to apply for them. To learn more, download this factsheet.
In the Budget 2020 Statement on 18 February 2020, it was announced that property tax rebate will be granted to owners of qualifying non-residential properties to ease the cost pressure of certain industries which are more badly affected by the COVID-19 outbreak. As part of the Resilience Budget announced on 26 March 2020, the property tax rebate previously announced is now enhanced, by increasing the amount of rebate and covering more types of properties. With the enhancement, owners of qualifying properties will be granted rebates of up to 100% on their property tax payable for the period of 1 January 2020 to 31 December 2020.
The Government introduced new legislation on 7 April 2020. Under the new legislation, property owners are obliged to pass on to their tenants the full amount of property tax rebate received for each property tax account that is attributable to the tenanted property. Further details will be made known on the Inland Revenue Authority of Singapore’s (IRAS) website in mid-April 2020.
The table below shows the property tax rebate announced in Budget 2020 as well as the enhanced property tax rebate announced in the Resilience Budget.
|Property Tax Payable for||Property Tax Rebate as Announced in Budget 2020||Enhanced Property Tax Rebate|
|A.||Hotel room or function room of a hotel registered under the Hotels Act||30%||100%|
|B.||Serviced apartment or serviced apartment function room|
|C.||Premises of the following that are used or intended to be used for Meetings, Incentive Travel, Conventions and Exhibitions (MICE):
|D.||All the premises of the following:
|E.||Premises that are used or intended to be used as:
|F.||All the premises of the following:
The above rates in (A) – (E) do not apply to Marina Bay Sands and Resorts World Sentosa.
|G.||Other non-residential properties. Some examples are:
|The above property Tax Rebate does not apply to any other premises or part of any premises used or intended to be used for any residential purpose or as a facility for the exclusive use of residents of residential premises.
No property tax rebate shall be given to vacant land or land under redevelopment.
IRAS will send out the rebate notices by 31 May 2020. Owners of qualifying properties can expect to receive their refunds by 30 June 2020.
The Deputy Prime Minister and Minister for Finance, Mr Heng Swee Keat, unveiled additional support measures to ease cash flow for taxpayers in the Resilience Budget announced on 26 March 2020. One of the measures is the automatic deferment of income tax payments as explained below.
For companies, the Corporate Income Tax (CIT) payments that are due in the months of April, May, and June 2020 will be deferred for three months and collected in July, August, and September 2020 respectively. It is crucial to note that the automatic deferment of CIT payments will complement the automatic extension of additional two months interest-free instalments on ECI as announced in the Unity Budget 2020 on 18 February 2020. An example to illustrate the deferment of CIT payments is provided below:
Company A’s financial year-end is in December and had e-filed its Estimated Chargeable Income (ECI) for the Year of Assessment (YA) 2020 on 15 January 2020 with a CIT payable of S$9,000. Accordingly, the number of instalment plans availed to Company A for its ECI is twelve and the revised instalment plan for Company A’s ECI tax payable for YA 2020 is as follows:
Note: The example illustrated above has taken into account the two relief measures (i.e. automatic extension of interest-free instalment of 2 months for payment of CIT on ECI and CIT rebate of 25% of the CIT payable (capped at S$15,000) for YA 2020) as announced in the Unity Budget on 18 February 2020.
By examining the figures in the table above, it is evident that Company A’s CIT payable on its ECI is deferred for three months to ease the cash flow needs for April, May and June 2020 as a relief measure to help Company A tide through the challenges brought by the COVID-19 outbreak in these months.
Companies can expect to receive a letter from the IRAS by 15 April 2020 on the deferred CIT payments. Companies who are on the GIRO will be able to view their revised instalment plans at IRAS’ myTax Portal from 1 May 2020.
Self-Employed Persons (SEPs)
The tax filing deadline for SEPs to e-file their Personal Income Tax (PIT) returns via the IRAS tax portal for YA 2020 is by 18 April 2020. Accordingly, the PIT payments for SEPs that are due in the months of May, June, and July 2020 will be deferred for three months and collected in August, September, and October 2020 respectively. An example to illustrate the deferment of PIT payments for SEPs is provided below:
SEP B files his PIT returns for YA2020 by 18 April 2020 with a PIT payable of S$1,200. SEP B has an existing GIRO instalment arrangement with the IRAS and his PIT is payable in 12 months of equal instalments. The revised instalment plan for SEP’s PIT payable for his YA 2020 tax assessment is as follows:
Individual Taxpayers (Employees)
Individual taxpayers can opt to defer their income tax payments due in May, June and July 2020 by signing up for the deferment option by 31 July 2020. The application can be made online here: https://form.gov.sg/5d5ce149c0a8230012d27118.
This deferment does not apply to non-Singapore citizen employees who have sought tax clearance and employees of foreign employers.
Once the request to defer the payment is approved, the new arrangement shall supersede any due date indicated on the Notice of Assessment.
If the taxpayer is paying his or her income tax by GIRO, there will be no GIRO deduction in May, June and July 2020. The income tax deduction will resume in August, September or October 2020 and the end-date of the instalment plan will be extended by 3 months.
For taxpayers settling their income tax liabilities in one lump sum payment, the payment will be deferred by three months.
In a strong response to the adverse impact on the Singapore economy due to the COVID-19 outbreak, a $4 billion relief package was unveiled in the Budget announced on 18 February 2020.
Dubbed as the “Stabilisation and Support Package”, the relief package includes measures targeted at specific sectors hit by the COVID-19 and broad-based support for businesses to retain their employees and alleviate their cash flow problems.
A quick summary of some of the broad-based measures under the relief package is provided below:
- Companies will receive a 25% corporate tax rebate for the year of assessment 2020. The rebate will be capped at $15,000.
- Companies that file their estimated chargeable income (ECI) from 19 February 2020 to 31 December 2020 and companies that have filed their ECI before 19 February 2020 and have ongoing instalment payments to be made in March 2020 will be automatically granted an additional two months of interest-free instalments if they are paying their corporate income tax via GIRO.
- The existing carry-back relief scheme will be enhanced for the year of assessment 2020. Under the enhanced scheme, unabsorbed capital allowances and trade losses for the year of assessment 2020, subject to conditions, may be carried back up to three immediate preceding years of assessment. Businesses will be allowed to carry back an estimated amount of qualifying deductions available for the year of assessment 2020 before the actual filing of their income tax returns. The amount of carry-back allowed will be capped at $100,000.
- Qualifying capital expenditure incurred on the acquisition of plant and machinery in the financial year 2020 (i.e. year of assessment 2021) will qualify for accelerated write-off over two years.
- Currently, under Section 14Q of the Income Tax Act, a tax deduction can be claimed over three consecutive years of assessment on qualifying expenditure incurred by a taxpayer on renovation and refurbishment (R&R) for the purposes of its trade, profession or business. This will be temporarily enhanced to allow qualifying R&R expenses incurred in the financial year 2020 (i.e. year of assessment 2021) to be claimed over one year of assessment.
- The Wage Credit Scheme (WCS), that was first introduced in Budget 2013, encourages employers to share productivity gains with workers by co-funding wage increases of at least $50 given by the employers to Singapore citizen employees who earned a gross monthly wage of up to $4,000. The WCS has been enhanced in 2 ways in this year’s Budget. Firstly, the wage ceiling for co-funding will be raised from $4,000 to $5,000 for the years 2019 and 2020. Secondly, the co-funding ratios will be increased from 15% to 20% for the year 2019 and from 10% to 15% for 2020.
- A new jobs support scheme will offset 8% of the gross monthly wages of every employee who is a Singapore citizen or permanent resident. The grant will be subject to a monthly wage cap of $3,600 per worker. This is extended to all employers with the exception of Government organisations and representative offices. This is a one-off scheme for 2020 only.
- The enterprise financing scheme which is available to SME’s across all industries will be enhanced for one year to help SMEs with their working capital needs. The government will raise the maximum loan quantum from $300,000 to $600,000 and enhance the Government’s risk share to up to 80% (from the current 50% to 70%) for SMEs borrowing from Participating Financial Institutions under the scheme.
In addition to the broad-based measures under the relief package, some of the key schemes under the Singapore tax regime that are due to lapse have been extended. This includes the Double Tax Deduction for Internationalisation scheme, Mergers & Acquisitions scheme, Upfront Certainty of Non-Taxation of Companies’ Gains on Disposal of Ordinary Shares and the Global Trader Programme.
To learn more about the key tax changes announced in this year’s Budget, read Crowe Singapore’s Budget 2020 Newsletter available here.
The Inland Revenue Authority of Singapore (IRAS) has updated its webpage on the Tax Treatment of Business Expenses to reflect the change in the tax treatment of withholding tax (WHT) on the interest payments borne by companies on behalf of non-residents, taking effect from Year of Assessment 2020.
In general, a company (“payer”) will be required to withhold tax on interest paid to a non-resident. In certain instances, the withholding tax on the interest may be borne by the payer on behalf of a non-resident.
Contractual Obligation to bear the WHT
Where the payer is contractually obligated to bear the tax for the non-resident, the withholding tax borne will be treated as part of the interest paid. The interest expense (inclusive of the withholding tax borne on behalf of the non-resident) is deductible if the loan is taken up to finance income-producing assets.
No Contractual Obligation to bear the WHT
IRAS has advised that if there is no contractual obligation for the payer to bear the tax on behalf of the non-resident, the withholding tax borne by the payer will not be treated as part of the interest paid. The tax deductibility of the withholding tax borne on behalf of the non-resident will then depend on the purpose of the loan.
If the loan is taken up for revenue purposes (e.g. to finance the purchase of trading stock), the withholding tax expense will be deductible in the hands of the payer as it is a revenue expense. On the other hand, if the loan is taken up to finance capital assets, the payer will not be able to claim a tax deduction on the withholding tax expense because it is a capital expenditure of the payer.
Withholding tax expense is also not a prescribed borrowing cost that is specifically deductible under the Income Tax Act.
For further information, please refer to IRAS’ website.