Everything you need to know about our Company
2015 budget speech
Significant highlights of 2015 Singapore Budget Speech
A. CORPORATE & BUSINESS TAX
Corporate Income Tax (CIT) rebate
For YA2013 to YA2015, companies are entitled to a 30% CIT rebate, capped to $30,000 for each YA. This CIT rebate is now extended to YA2016 and 2017 subject to a reduced cap of $20,000 for each YA.
The PIC Bonus will lapse in YA2015.
However, the PIC scheme, with enhanced allowances/deductions and cash payout claims, will continue till YA2018.
Tax deductions will be increased from 250% to 300% for any qualifying donations made during the period from 1 Jan 2015 to 31 December 2015 to an approved Institution of Public Character in Singapore. The 250% tax deduction on qualifying donations will also be available from 2016 to 2018.
International Growth Scheme (IGS)
To encourage Singapore companies towards internationalisation of their businesses, the IGS will tax qualifying companies at a 10% concessionary rate on their incremental income from qualifying activities. The tax holiday is 5 years and will be administered by IE Singapore.
Double Tax Deduction (DTD) for Internationalisation Scheme
Currently, DTD at 200% of qualifying international marketing expenses are claimable by Singapore companies up to S$100,000 per year without the need to seek prior approval from IE Singapore.
To encourage Singapore companies to open up their overseas market, the DTD will be extended to cover qualifying manpower expenses incurred from 1 July 2015 to 31 March 2020, capped at $1 million per approved company for each fiscal year. An application has to be made to IE Singapore to claim the DTD.
Merger and Acquisitions (M & A) Scheme
The M & A scheme, administered by IE Singapore, will be expanded to 2020 along with the following changes:
• The M &A tax allowance claimable by a qualifying Singapore company is currently based on 5% of the cost of acquisition, up to a maximum of $5 million, for all qualifying share acquisitions. This M& A allowance is now increased from 5% to 25%.
• The cap on the cost of acquisition is also increased from $5 million to $20 million.
• The shareholding eligibility tiers are eased to a lower threshold whereby the acquiring company must acquire at least 20% (previously 50%) of the ordinary shares of the target company if the acquirer’s original ownership is less than 20% or more than 50% (previously 75%) of the target company if the original shareholding was 50% or less.
• Stamp duty relief will be accorded on the transfer of unlisted shares, to a maximum $20 million of the acquisition value. This will give a maximum stamp duty relief of $40,000 per financial year.
Approved Foreign Loan (AFL) Incentive
Currently, withholding tax exemption or reduced tax rate is available under the AFL scheme to payment of loan interest to a non-resident. The quantum of the loan must be at least S$200,000 and its purpose is for the borrower to invest in productive equipment for carrying on substantive activities in Singapore.
The proposed change is to increase the minimum loan quantum to $20 million with effect from 24 Feb 2015 although the Minister for Trade and Industry has the discretion to approve a lower loan quantum. A review date of 31 December 2023 will be legislated for this scheme.
Approved Royalties Incentive (ARI)
Similarly, the ARI accords withholding tax exemption or reduced tax rate for payment of royalties to non-resident by Singapore companies using advanced technology and know-how for substantive activities in Singapore. The Budget introduced a review date of 31 December 2023 to be legislated for this incentive.
Offshore leasing – Section 43I of the Income Tax Act
Currently, a 10% concessionary tax rate of tax is applicable on income accruing in or derived in Singapore from the offshore leasing of plant and machinery. This will be withdrawn with effect 1 Jan 2016.
Operational headquarters – Section 43E of the Income Tax Act
The Operational Headquarters (OHQ) incentive offers a concessionary tax rate for qualifying OHQ which derives qualifying income from the provision of management, technical or other supporting services to their approved network companies or offices. This incentive will be withdrawn with effect from 1 October 2015.
Royalties – Section 10(16) of the Income Tax Act
Currently, a person receiving royalties and other payments from approved intellectual property or innovation will have to pay tax on the lower of:
• the net royalties or other payments remaining after other deductions, if any; or
• an amount equal to 10% of the gross amount of royalties or other payments,
This concessionary tax treatment will be withdrawn from YA2017.
Maritime Sector Incentive (MSI)
The MSI is enhanced in the Budget to include:
• Automatic withholding tax exemption to cover payment under finance lease hire purchase arrangement and loan used to finance equity injection in wholly owned Special Purpose Vehicles (SPVs) or wholly owned inter-company loans to SPVs.
• Broadening the definition of qualifying ship management activities under the various MSI sectors.
• Qualifying profits remitted from approved foreign branches of MSI-Approved International Shipping companies will now enjoy tax exemption
Further announcements will be made by MPA by May 2015.
Development and Expansion Incentive (DEI)
The DEI to incentivise international legal practice to set up services in Singapore was introduced in 2010 and will expire in March 2015. It has now been extended by 5 years to March 2020.
Tax exemption for non-tax resident mediators
Non-tax resident mediators deriving income from mediation work carried out in Singapore from 1 April 2015 to 31 March 2020 will be exempted from tax.
Real estate investment trusts (REITs)
Currently, listed REITs enjoy tax transparency if the trustee distributes at least 90% of its taxable income to unit holders in the same year in which the income is derived. Listed REITs are also taxed at a lower tax rate of 10% for the non-resident, non-individual investors as well as tax exemption on qualifying income. These tax concessions are extended to 31 March 2020.
Stamp duty remission, applicable on the transfer of certain REIT properties, will now lapse on 31 March 2015.
Investment Allowance for Energy Efficiency (IA-EE) scheme
Currently, IA energy efficiency and the IA green data schemes are run separately by different national agencies and are scheduled to expire on 31 March 2015. Both will now be combined into a single “Investment Allowance – Energy Efficiency” (IA-EE) scheme.
The new scheme will be extended to 31 March 2021 and will now be administered solely by the EDB.
Goods and Services Tax (GST) pre-registration input tax claim
The rules for claiming pre-registration input tax claims by registered GST businesses are now simplified with effect from 1 July 2015. A newly GST-registered business may fully claim its pre-registration GST input on the following goods and services that are acquired within the six months before its effective date of GST registration:
a) Goods held by the business at the point of GST registration; and
b) Property rental, utilities and services, which are not directly attributable to any supply made by the business before GST registration.
A GST registered business is not required to apportion the pre-registration GST on these goods and services even if they have been used to make supplies straddling GST registration or if these goods have been partially consumed before GST registration, if the goods or services are used for the making of taxable supplies.
IRAS will release more details by June 2015.
B. PERSONAL TAXATION
Changes to personal tax rates for resident top earners
The personal tax rate table will be revised with effect from YA2017 with the top marginal income tax rate increased from 20% to 22%. Those resident individuals whose annual earnings are between S$160,000 and S$320,000 will also be taxed at their increased tax bands.
Personal income tax rebate for resident individual taxpayers
Individual tax residents will enjoy a one-time tax rebate of 50% of their YA2015 tax liability, subject to a maximum cap of $1,000.
Simplification of rental expenses for tax deduction
Effective from YA 2016, individuals may choose either to deduct their actual expenses or 15% of gross rental income against their passive rental income. This will be in addition to deductible interest expenses, which can be separately claimed. IRAS will provide more details by May 2015.
C. GOVERNMENT GRANTS AND FUNDING
Wage Credit Scheme (WCS)
Under the current WCS from 2013 to 2015, the government co-funded 40% of the wage increase of Singaporean employees earning a gross monthly salary of up to $4,000. This WCS will be extended to 2017 but the co-funding will be reduced to 20% of wage increase of Singapore employees earning below $4,000 per month.
Grant and funding for various innovation and productivity schemes
Currently, small and medium sized enterprises (SMEs) may apply for financial support to defray the costs of investing in innovation and productivity solutions under a few schemes administered by SPRING.
(i) Capability Development Grant
(ii) Collaborative Industry Projects
(iii) Partnerships for Capability Transformation
To be eligible for these schemes, the SMEs must generally meet the following criteria:
• be registered and operating in Singapore,
• have at least 30% local shareholding, and
• have group annual sales turnover not more than $100 million
• have a workforce of not more than 200 employees.
A number of changes, mainly by way of simplification of application processes and increasing of funding are proposed by the Minister to strengthen these schemes.
Grant and funding for innovation & internationalisation
Currently, Singapore companies may apply for financial grants to defray the costs of expanding their businesses overseas through:
• Market Readiness Assistance;
• Global Company Partnership;
• Start-up Enterprise Development Scheme;
• Business Angel Scheme.
A number of changes, mainly by way of simplification of application processes and increasing of the grants and financings are proposed by the Minister to strengthen these schemes.
Investments in aerospace and logistics sector
Over a period of time, Changi Airport will be expanded with the addition of a fifth Terminal as well as the development of Tuas Seaport, to free up valuable land occupied by the PSA near the city centre.
D. CPF AND SOCIAL COSTS
Central Provident Fund (CPF) contributions
With effect from Jan 2016, the monthly salary ceiling for CPF contributions will be increased from $5,000 to $6,000. The CPF contribution rates for older workers aged 55 to 65 are increased by about 1%.
Foreign Maid Levy
From 1 May 2015, Foreign Domestic Worker Levy will be reduced from $120 to $60 per month for foreign maids employed by families with children aged between 12 and 16.
Foreign Worker Levy
Foreign Worker Levy for S Pass and Work Permit holders for all sectors originally proposed for 1 July 2015 will be deferred by a year. Levy for the manufacturing sector will be frozen at 1 July 2014 rates until 30 June 2017.
Temporary Employment Credit (TEC)
To help employers cope with the impact of the additional CPF contributions, the TEC has been extended to 2017. The relevant rates are summarised as follows:
2015 1% of wages up to the CPF salary ceiling of $5,000
2016 1% of wages up to the CPF salary ceiling of $6,000
2017 0.5% of wages up to the CPF salary ceiling of $6,000
*Employers of workers earning above the CPF ceiling will receive TEC that corresponds to the CPF contributions payable at the CPF salary ceiling.
Special Employment Credit (SEC)
The SEC for 2015 was enhanced for one year to help employers cope with cost increases associated with the increase in CPF contribution rates. Companies who hire Singaporeans aged above 50 years will receive SEC of up to 8.5% of an employee’s wages, and an additional SEC of up to 3% of wages for workers aged 65 and above.
SkillsFuture Credit scheme
A Skills Future credit of $500 is given to all Singaporeans aged 25 years and above, to support life-long learning and for training the Singapore's workforce to better adapt to the evolving needs of the economy.
The GST vouchers of either $150 or $300 will be given to eligible Singaporeans. Additional GT vouchers, ranging from $150 to $600, will be given to eligible Singaporeans aged 65 years and above, depending on the annual value of their homes.