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THE 2010 BUDGET The Finance Minister, Mr. Tharman Shanmugaratnam, announced the financial year 2010 Budget in Parliament on 22 February 2010. Highlights of the tax and other changes are summarised below: 1Supporting Enterprise Investments in Innovation and Productivity 1.1 Corporate Tax Rate Cut 250% tax deduction for the first S$300,000 of qualifying expenditure incurred in Singapore per YA and 150% and/or 100% deduction for the balance expenditure will be given to the following investments from the YA 2011 to YA 2015:
• Research & Development ("R&D"); • Registration of intellectual property;
• Acquisition of intellectual property;
• Design activities;
• Automation through technology or software; and
• Training of employees.
1.2 Phasing out of Research and Development Tax Allowance and Research ("RDA") and Development Incentive for Start-up Enterprises Schemes ("RISE") RDA and RISE tax incentives will be phased out. The unutilised RDA granted for YA 2009 and YA 2010, may be utilised against incremental R&D expenses. Alternatively, they can claim the 250% tax deduction for the 1st S$300,000 under the above 1.1 tax incentives.
1.3 Raising Foreign Worker Levies Work Permit holder levy will be raised from S$10 to S$30 wef 1 July 2010 and further raise to about S$100 in the years 2011 and 2012. S-Pass holder levy for the first and second tiers will be S$100 and S$120 in July 2010 and will be further adjusted to S$150 and S$250 by July 2012.
1.4 New Merger and Acquisition ("M&A") Allowances A 5% M&A Allowances will be granted to qualifying M&As executed from 1 April 2010 to 31 March 2015, subject to a cap of S$5 million per YA, to be written down equally over 5 years. Remission on stamp duty on the transfer of unlisted shares for qualifying M&A deals is capped at S$200,000.
1.5 Phasing out of Industrial Building Allowance ("IBA") The IBA was phased out after 22 February 2010.
1.6 Land Intensification Allowance ("LIA") The user of the building or structure belonging to Pharmaceuticals, Petrochemicals, Petroleum, Specialties, Other Chemicals, Semiconductor-Wafer fabrication, Aerospace, Marine and Offshore Engineering and Solar Cell Manufacturing sectors qualify for the LIA Allowance. Wef 1 July 2010, qualifying business will be granted an IA of 25% and an AA of 5% on the qualifying capital expenditures, to be written down over 15 years.
2Growing Globally Competitive companies 2.1 Tax deduction for angel investors A minimum of S$100,000 investment in a start-up is required by the approved angel investors to enjoy a tax deduction of 50% of the investment, in the 2nd year. The investment is capped at S$500,000. The incentive is valid from 1 March 2010 to 31 March 2015.
2.2 Extension of Development and Expansion Incentive ("DEI") to International Legal Services DEI incentives will be extended to international legal practices which are registered in Singapore. Approved law practices will enjoy a 10% concessionary tax rate on incremental income from qualifying international legal services for 5 years. The incentive is valid from 1 April 2010 to 31 March 2015.
2.3 Enhancements to Financial Sector Incentive ("FSI") Wef 1 January 2011, the Qualifying Based Income will be removed and the FSI award will be changed from 10% to 12%.
2.4 Review of existing tax incentives for futures members of Singapore Exchange ("SGX") and members of Singapore Commodity Exchange Limited ("SICOM") The above 2 existing incentives would be discontinued. From 1 January 2011 onwards, new applicants will have to apply for the FSI scheme.
2.5 Extension of and enhancement to listed real estate investment trusts ("REIT") concessions • The existing income tax, stamp duty and GST concessions for listed REITs will be renewed for the period from 18 February 2010 to 31 March 2015; • The FSIE income tax concession for listed REITs will be subjected to a sunset clause of 31 March 2015, with the qualifying foreign-sourced income remitted on or before 31 March 2015; and
• The Unlisted REITs can be listed within six months instead of one month, to qualify for the stamp duty remissions.
2.6 Removal of Approved Start-up Fund Manager Scheme The above scheme was allowed to lapse after its expiry on 17 February 2010. Funds approved on or before 17 February 2010 will continue to be allowed the 12 months grace period from the date of set up of the fund.
2.7 Review of tax concession for offshore insurance business Wef 1 April 2010, the following changes to the tax incentive will be introduced:
• The incentive will be subjected to a sunset clause of 5 years till 31 March 2015;
• The incentive will be awarded to an approved recipient for a period of 10 years; and
• New headcount requirement will be imposed for incentive recipients (except for captive insurers).
2.8 Extension of Maritime Finance Incentive ("MFI") The expiry date of the MFI will be extended from 28 February 2011 to 31 March 2016.
2.9 Incentive for ship brokers and Forward Freight Agreement ("FFA") traders Companies solely carrying out ship broking and/or FFA trading in Singapore are granted a concessionary tax rate of 10%, subject to conditions.
2.10 Inclusion of ship management fees under Section 13A of Income Tax Act ("ITA") and Approved International Shipping Enterprise ("AIS") scheme Ship management fees derived on or after 22 February 2010 from the rendering of ship management services to related qualifying Special Purpose vehicles, ("SPV") will be treated as qualifying income to be exempted from tax under Section 13A of the ITA and the AIS scheme, subject to conditions.
2.11 Expanding GST zero-rating for marine industry Wef 1 July 2010, the GST zero-rating for marine industries includes:
• Pleasure and recreational ships;
• All goods (including stores and merchandises) supplied for use on board or installation on a qualifying ship;
• Transport of goods or passengers via a ship to or from international waters; and
• Stores supplied to and merchandises for sale on board a qualifying aircraft.
2.12 Extension of qualifying listed Registered Business Trusts ("RBT") concession The GST remission for listed RBT in the sectors of infrastructure, ship leasing and aircraft leasing, will be renewed for the period from 18 February 2010 to 31 March 2015.
2.13 Renewal and enhancement of Investment Allowance ("IA") scheme for the maintenance repair and overhaul ("MRO") industry For the MRO industry, IA scheme for aircraft rotables will be renewed for another 5 years from 1 April 2010 to 31 March 2015, with the "non-swapping condition" removed.
2.14 Deferring import GST Wef 1 October 2010, approved GST-registered business is allowed to defer import GST that is payable on their goods for one month and to declare the amount in their corresponding GST Return.
2.15 Simplifying GST accounting rules Wef 1 January 2011, businesses can account for GST at the earlier of when a tax invoice is issued or when payment is received.
3 Other Tax Measures 3.1 Reduce withholding tax rate for non-resident entertainers The withholding tax rate will be reduced to 10% from 22 February 2010 to 31 March 2015.
3.2 Duty-free allowance for additional one litre of wine Wef 1 April 2010, travellers can enjoy duty-free allowance on two litres of wine and one litre of beer, or two litres of beer and one little of wine.
3.3 Enhanced Transport Technology Innovation Development Scheme ("TIDES") Green vehicles brought to Singapore for the purpose of test-bedding can enjoy waiver of ARF, COE, and custom duties for an initial period of six years. The quota of such electric vehicles is 1,300.
3.4 Extension of Green Vehicle rebate ("GVR") to imported used green vehicles Wef 1 July 2010, GVR scheme is extended to include imported used green vehicles.
3.5 Shift to Progressive Property Tax Regime Wef 1 January 2011, the following progressive property tax regime, for owner-occupied residential properties, will be used:
• 0% for the first S$6,000 of AV; • 4% for the next S$59,000 of AV; and • 6% for the balance of AV in excess of S$65,000. 3.6 Increase in parent relief Wef YA 2010, the changes to parent relief are as follows:
(a) Parent relief • S$7,000 (increase of S$2,000) if the taxpayer lives with the dependant; and • S$4,500 (increase of $1,000) if the taxpayer does not live with the dependant. (a) Handicapped parent relief • S$11,000 (increase of S$3,000) if the taxpayer lives with the handicapped dependant; and • S$8,000 (increase of S$1,500) if the taxpayer does not live with the handicapped dependant. 3.7 Spouse relief Wef YA 2010, the spouse relief will be given to female resident taxpayers who support their husbands.
3.8 Waive income threshold condition for handicapped-dependant-related reliefs and increase income threshold condition for all other dependant-related reliefs Wef YA 2010, the income threshold of S$2,000 will be increased to S$4,000 for tax-resident individual who wishes to claim the dependent-related reliefs while the income threshold condition for the handicapped-dependent-related reliefs is removed. However, the income threshold condition for the CPF Cash Top-up relief for top-up to the CPF accounts of spouse or siblings will be effective only wef YA2011.
3.9 Increase in course fees relief Course fees relief will be increased from S$3,500 to S$5,500 wef YA 2011.
3.10 Enhancement of tax deduction on donations Tax deduction of 250% will be extended for another year for donations made from 1 January 2010 to 31 December 2010.
3.11 Top up to CPF Medisave Account, Medifund and ElderCare fund and to Post-Secondary Education Accounts A one-off top-up ranging from S$200 to S$500 is given to the older Singaporeans aged 50 and above. A further top-up ranging from S$200 to S$500 is also given to support families with children age 7 to 20 years old.
The above summary was prepared for your quick reference and should you require more details on the above, please contacts us.
22 February 2010
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This publication serves as a source of information to the French-speaking corporations and individuals who may wish to conduct business in Singapore. In it, the book tells you about the Government, the geographical & economic conditions, the rules & regulations of doing business and the initial common contacts. To obtain a copy of the publication, please contact us: Email : info@rohanmah.com |
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Together with our former associate, Mazars, RMP has undertaken a joint project with Klein-Goddard Associés and Crédit Agricole Indosuez to publish a French book entitled: S'implanter à Singapour (Doing Business in Singapore).
Copyright @ since 1999 Rohan · Mah & Partners. All Rights Reserved.