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THE FINANCIAL YEAR 2019 BUDGET

The Minister for Finance, Mr. Heng Swee Keat, announced the 2019 Budget in Parliament on 18 February 2019. Highlights of the tax and other changes are as follows:

1Individual Income Tax Changes

  • Personal income tax rebate of 50%, subject to a cap of S$200 per tax payer, for the Year of Assessment 2019.
  • With effect from YA 2020, the Government will allow the working mothers to claim Grandparent Caregiver Relief in respect of a handicapped and unmarried dependent child.
  • The Not Ordinarily Resident ("NOR") scheme will lapse after YA 2020. Individuals who have been accorded the NOR status will continue to be granted NOR tax concessions until their NOR status expirer, if they continue to meet the conditions of the concessions.  

2Corporate/Business Tax Changes

  • The Writing Down Allowance ("WDA") under section 19B of the Singapore Income Tax Act (ITA) for capital expenditure incurred in respect of qualifying IPRs will be extended to YA 2025.
  • The 100% Investment Allowance support approved by Enterprise Singapore under the Automation Support Package will be extended for another 2 years.
  • Existing tax concessions for S-REITs will be extended till 31 December 2025.
  • Existing tax treatment granted to REITs ETFs will be extended till 31 December 2025.
  • Tax concessions relating to Funds Managed by Singapore-based Fund Managers ("Qualifying Funds") will be extended till 31 December 2024.
  • The Designated Unit Trust ("DUTs") scheme will lapse after 31 March 2019. However, existing DUTs will continue to receive the tax deferral benefits under the DUT scheme, on and after 1 April 2019, if they continue to meet all the conditions.
  • The Approved Unit Trust ("AUTs") scheme will lapse after 31 March 2019. However, existing AUTs will continue to receive the tax concession under the AUT scheme for the period of five years from YA 2020 to YA 2024 to allow sufficient time to transit to alternative tax incentive schemes, where relevant.

3Goods and Services Tax ("GST")

  • GST remission for S-REITs and Singapore-listed Registered Business Trusts ("RBTs") in the infrastructure business, ship leasing and aircraft leasing sectors will be extended till 31 December 2025.
  • GST for Qualifying Funds that are managed by prescribed fund managers in Singapore will be extended till 31 December 2024.
  • With effect from 19 February 2019, GST relief for goods purchased overseas for those travellers who spend less than 48 hours outside Singapore will be reduced from S$150 to S$100. For those travellers who spend 48 hours or more outside Singapore will have to start paying the GST on the goods purchased for more than S$500, instead of the previous S$600.

4Others Changes

  • With effect from 18 February 2019, the excise duty on diesel fuel will be increased from $0.1 to $0.2 per litre. The current lump sum special tax on diesel cars and taxis depending on compliance with emission standard will be permanently reduced by $100 and $850 respectively.
  • Enterprise Singapore will launch a Scale-up SG programme in partnership with the private and public sector to work with aspiring, high-growth local firms to identify and build new capabilities, to innovate, grow and internationalise.
  • A two-year pilot Innovation Agents Programme will be launched to enable SMEs to obtain advice on innovation opportunities from experienced industry professionals who have both technology expertise and business experience.
  • The Government will set aside an additional $100 million for the SME Co-Investment Fund III (CIF 3). Qualifying investee companies must have their key management functions and headquarter activities based in Singapore, and have revenues of up to $500 million to continue to support firms in their efforts to scale up and internationalized.
  • Existing financing schemes offered by Enterprise Singapore will be streamlined into a single Enterprise Financing Scheme that will cover trade, working capital, fixed assets, venture debt, mergers and acquisitions, and project financing.
  • SME Working Capital Loans scheme that help address Singapore SME’s near-term cash flow concerns and growth financing needs through unsecured working capital loans, while encouraging business growth and restructuring activities is being extended for another two years till 31 March 2021.
  • Infocomm Media Development Authority ("IMDA") will expand the SMEs Go Digital Programme by:
    • Developing IDPs for more sectors starting with Accountancy, Sea Transport and Construction. More sectors will be announced later in the year.
    • Extending support to wider range of digital solutions that can be readily adopted by SMEs, including more advanced digital solutions such as artificial intelligence (AI) infused solutions and cybersecurity solutions.

      SMEs can apply for funding under PSG to adopt these pre-approved solutions.
  • The Automation Support Package (ASP) will be extended for another two years, up to 31 March 2021. The support package comprises the following:
    • Grant – to defray automation costs, funding support of up to 50% of qualifying costs for the roll-out or scaling up of automation projects capped at $1 million, will be provided through Enterprise Singapore’s Enterprise Development Grant (EDG).
    • Tax – Investment Allowance (IA) of 100% will be provided on the amount of approved capital allowance for plant and machinery. The approved capital expenditure is capped at $10 million per project.
    • Loan – Companies that require equipment financing can be referred to Participating Financial Institutions through the enhanced Local Enterprise Financing Scheme.
  • The workforce quota for services sector would be reduced as follows:
    • Service sector Dependency Ration Ceiling (“DRC”) will be reduced in two steps, from 40% to 38% on 1 January 2020, and to 35% on 1 January 2021.
    • Service sector S Pass Sub-DRC will also be reduced in two steps, from 15% to 13% on 1 January 2020, and to 10% on 1 January 2021.
  • Foreign Worker Levy ("FWL") rates will remain unchanged for all sectors. The earlier-announced FWL increases for the Marine Shipyard and Process sectors will be deferred for another year.
  • Property Tax (Tourist Projects) Order will lapse after 18 February 2019.

 

The above summary was prepared for your quick reference and should you require more details on the above, please contact us.

18 February 2019





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