Summary of Responses – Public Consultation on Draft Income Tax (Amendment) Bill 2013

On September 17, 2013 By taxsgIn Corporate Tax, Latest Tax News

16 September 2013

In the course of two public consultations held recently on the draft Income Tax (Amendment) Bill 2013, the Ministry of Finance (MOF) received 82 suggestions. The first exercise pertained to tax changes mentioned during Budget 2013, along with other non-Budget related proposals, while the second exercise concerned the exchange of information (EOI) regime.

The MOF agreed to 26 propositions and these will be incorporated into the revised Income Tax (Amendment) Bill 2013.

Brief overview of the key submissions accepted by the MOF

PIC Bonus: sections 37IA(1)(b) and 37IA(3)(c) will be amended to clarify that the taxpayer is not required to be carrying on the trade, business or profession for all three years of assessment, in order to be eligible for the PIC bonus.
Anti-tipping off orders by IRAS: When IRAS request for information that has confidentiality conditions imposed (i.e. information holder is not allowed to tip-off the taxpayer), exceptions will be granted so that the information holder can seek legal advice. MOF will also provide immunity against any possible breach of duty resulting from the obligation of confidentiality.
Foreign Account Tax Compliance Act (FATCA): section 105K will be amended to explain that the objective of the forthcoming Singapore-US Inter Government Agreement is to enable local financial institutions to comply with FATCA.
Deductions for hotel refurbishment expenditure: MOF will review section 14M which allows taxpayers to deduct qualifying hotel refurbishment expenditure incurred on approved restoration projects. The scheme expired on 1 July 2003.
Alignment of definitions under section 26 of the Income Tax Act with the Insurance Act: the definition of “offshore life business” in the Income Tax Act will be simplified, to be consistent with the Insurance Act.

Source: Ministry of Finance

Local Tax Compliance sets new records

On September 2, 2013 By taxsgIn General News

2 September 2013

More taxpayers, both individual and corporate, filed and paid their 2012 taxes within the stipulated deadlines. This was highlighted in IRAS’ Annual Report for Financial Year 2012/13. 90% of GST-registered businesses also filed their returns promptly. Additionally, tax arrears dropped to a record low of 0.79% of the total net tax assessed. Commissioner of Inland Revenue Dr Tan Kim Siew attributed this to continuing efforts by the tax authority to encourage voluntary compliance.

Other improvements in the tax scene include:

Extending the Auto-Inclusion Scheme for employment income to 36,000 employers in 2013’s tax-filing season, up from 27,000 employers in 2012. A total of 1.13 million taxpayers enjoyed the No-Filing Service in 2013, compared to 963,000 in 2012.
Streamlining the tax reporting process for small companies with the simplified Form C-S. 63% of the small companies halved the average time taken to file their 2012 tax returns.
Enabling more small and medium enterprises to benefit from the Productivity and Innovation Credit (PIC) scheme. In 2012, 44,000 companies gained from the PIC scheme, up from 36,400 companies in 2011.
Providing one-stop access to official tax statistics thus allowing interested parties to retrieve data, study trends and conduct meaningful analyses.

Source: Inland Revenue Authority of Singapore

IRAS replies to media comments calling for targeted assistance on SMEs in relation to the PIC scheme

On March 15, 2013 By taxsgIn General News

11 March 2013

The IRAS has issued a statement in response to articles published by both Lianhe Zaobao and TODAY on 27 February 2013 commenting that that many SMEs are not sufficiently informed or equipped with the right personnel or expertise to apply for the Productivity and Innovation Credit (PIC) scheme.

In its statement issued on 4 March 2013 the IRAS assured that it has, since the introduction of the PIC scheme in 2010, been conducting outreach programmes to raise awareness and help businesses understand how they can tap on the PIC to raise their productivity. These steps include the providing of PIC advice to businesses in one-to-one and group settings and working with industry associations such as Association of Small and Medium Enterprises (ASME) and Singapore Manufacturing Federation (SMF) to reach out to more businesses.

The IRAS also explained that it seeks regular feedback through various trade and business associations to determine how the PIC scheme can be enhanced, and has taken appropriate action where feasible, for instance, the PIC cash payout rate was increased in Budget 2012 from 30% to 60% of businesses’ PIC expenditures following feedback received.

The IRAS’s full replies and more information about the PIC scheme are available on the IRAS website.

Source: This article was extracted from the Inland Revenue Authority of Singapore (IRAS) website.

IRAS issues a second edition of its e-Tax Guide to the PIC scheme

On August 21, 2012August 22, 2012 By taxsgIn Corporate Tax, Deductions, Latest Tax News

20 August 2012

IRAS has recently updated the e-Tax Guide to the Productivity and Innovation Credit scheme (“PIC”). The PIC which was first introduced in Budget 2010, and enhanced in Budgets 2011 and 2012.

PIC grants businesses which invest in specified productivity and innovation activities enhanced deductions and/ or allowances on up to $400,000 of qualifying expenditure incurred for each activity. These are in addition to the deductions and/ or allowances allowable under current tax rules. PIC is available for Year of Assessment (YA) 2011 to YA 2015.

In lieu of a deduction, businesses may opt to convert qualifying expenditure of up to $100,000 for each YA into cash. The conversion rate is 30% (for YA 2011 and YA 2012) or 60% (for YA 2013 to YA 2015).

Businesses may also opt to defer tax payment based on qualifying expenditure incurred for YA 2012 to YA 2015. Up to $100,000 per YA may be deferred to the following year.

The amendments reflect changes to PIC since the first edition of the guide was published on 15 July 2011. The major changes relate to:

1. Cash conversion option

The extension of the cash conversion option from YA 2013 to YA 2015
The increase in cash conversion rate from 30% to 60% from YA 2013, and
Cash conversion option may be exercised on quarterly basis instead of an annual basis with effect from YA2013.

2. PIC Automation Equipment (Annex A)

PIC benefits granted to equipment that are either prescribed under the Income Tax (PIC Automation Equipment) Rules 2012 or approved by the Minister or the Comptroller of Income Tax as a PIC automation equipment on a case-by-case basis
Cash conversion option extended to PIC automation equipment acquired on hire purchase with repayment schedules straddling two or more basis period. The new treatment only applies to equipment acquired on hire purchased agreements signed during or after the basis period relating to YA 2012, and
PIC extended to include payments for cloud computing services.

3. Research and Development (R&D) (Annex D)

Expansion of scope of sections 14D and 14DA of the Income Tax Act to include payments for R&D cost-sharing agreements with effect from YA 2012 which may qualify for PIC subject to conditions, and
R&D definition revised to remove the multiple sales conditions for software development.

4. Training (Annex E)

Expansion of PIC from YA 2012 to include training expenditure on prescribed classes of individuals, and in-house training programmes that are not certified, subject to a cap of $10,000 for each YA.

Source: This article was extracted from the Inland Revenue Authority of Singapore (IRAS) website. Visit www.iras.gov.sg for more information.

PIC scheme attracts one in three small companies in Singapore

On August 15, 2012August 17, 2012 By taxsgIn General News

15 August 2012

In response to a recent Parliamentary sitting on 13 August 2012, the Ministry of Finance provided an update on the Productivity and Innovation Credit (PIC) scheme, introduced in Budget 2010 and enhanced in Budget 2011.

To date, the Ministry of Finance said that one in three active and small companies with turnover of $10 million or less have used the PIC scheme in the first year of claim, ie the Year of Assessment (YA) 2011. Overall, 33,000 companies have claimed PIC benefits in YA 2011, whereby 5% of these companies opted for cash payouts.

A further update is expected to be provided at the end of the year on the take-up for the PIC after companies file their tax returns for YA 2012.