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Recent changes and developments in Singaporean tax law

Singapore

The Government of Singapore have recently updated various tax laws affecting national corporate taxpayers. Taxand Singapore highlights the key developments.

Corporate income tax (CIT) rebate from YA 2013 to  YA 2015

Companies will receive a 30% CIT rebate capped at SGD 30,000 per YA

Productivity and innovation credit (PIC) bonus from YA 2013 to YA 2015

To encourage business to undertake improvement in productivity and innovation, eligible businesses that spend a minimum of SGD 5,000 in qualifying PIC investments in a YA will receive a dollar-for-dollar matching cash bonus.

The PIC bonus is capped at SGD 15,000 for the 3 year period (YA 2013 to YA 2015) and is given in addition to the existing PIC benefits of:

  • 400% PIC tax deductions up to SGD 400,000 in expenditure for each PIC qualifying activity

  • Cash payout at 60% on up to SGD 100,00 of the qualifying expenditure

Liberalising the scope of PIC automation equipment

With effect from YA 2013 more equipment will qualify for PIC benefits through the following changes:

  • Liberalised conditions for approving equipment that is not on the prescribed list

  • The term "automation equipment" is changed to "IT and automation equipment" to reflect the fact that PIC already supports IT-related software besides automation equipment

  • The prescribed equipment list has been expanded and will be updated regularly to take into account feedback from businesses

Enhancing the productivity and innovation credit (PIC) scheme to include intellectual property (IP) in-licensing

To help businesses that license IP rights instead of acquiring the IP for innovation or productivity improvements, the PIC scheme will be enhanced to allow IP in-licensing costs incurred from YA 2013 to YA 2015 to qualify for PIC benefits.

The current PIC qualifying activity of "acquisition of intellectual property" will also be renamed to "acquisition and in-licensing of intellectual property" to reflect the change.

Rationalising the start-up tax exemption (SUTE) scheme

SUTE will no longer be available to the following types of companies incorporated from 26 February 2013:

  • Property developer

  • Investment holding company

Property developers and investment holding companies will still be able to enjoy the partial tax exemption generally available to all companies.

All existing conditions of the SUTE remian unchanged.

Allowing the deduction scheme for upfront land premium to expire

As the deduction scheme has been assessed to be no longer relevant, it will be allowed to expire for leases granted on or after 28 February 2013. 

Extending and refining the qualifying debt securities (QDS) and qualifying debt securities plus incentive schemes

To further promote Singapore's debt market, the QDS scheme will be extended for 5 years to 31 December 2018. 

For debt securities issued during the period of 1 January 2014 to 31 December 2018, the requirement that the QDS be substantially arranged in Singapore will be rationalised to ease compliance for issuers.

The QDS plus scheme will also be extended for 5 years to 31 December 2018 and refined to allow debt securities with stanard early termination clauses to qualify, subject to conditions. 

The other existing conditions of the schemes remain unchanged. 

 

 

 


Your Taxand contact for further queries is:
Kwong Wing Leon
T. +65 6238 3018
E. leonkwongwing@khattarwong.com

Also published in Thomson Reuters' Taxnet Pro, 7 November 2013

Taxand's Take

All Singapore based corporate taxpayers should investigate these tax developments further in order to discover which updates could be applicable, and advantageous, to their specific situation. 

Taxand's Take Author