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BUDGET 2018

 

BUDGET 2018 TAX CHANGES

 

Corporate Income Tax

Corporate income tax rebate

Current

20% of tax payable for Year of Assessment (YA) 2018, subject to a cap of $10,000

New

40% of tax payable for YA 2018, subject to a cap of $15,000

20% of tax payable for YA 2019, subject to a cap of $10,000

 

Adjustment to the Start-Up Tax Exemption scheme

Current

100% exemption on the first $100,000 of normal chargeable income (CI); and

50% exemption on the next $200,000 of normal CI

New (effective YA2020)

75% exemption on the first $100,000 of normal CI; and

50% exemption on the next $100,000 of normal CI

 

Adjustment to the Partial Tax Exemption scheme

Current

75% exemption on the first $10,000 of normal CI; and

50% exemption on the next $290,000 of normal CI

New (effective YA 2020)

75% exemption on the first $10,000 of normal CI; and

50% exemption on the next $190,000 of normal CI

 

Enhanced tax deduction for qualifying R&D projects performed in Singapore

Current

150% tax deduction for staff costs and consumables incurred.

New

250% tax deduction, effective for YA 2019 to YA 2025

 

Enhanced tax deduction for qualifying costs incurred to protect Intellectual Property (IP)

Current

100% tax deduction

New

200% tax deduction for the first $100,000 of qualifying IP registration costs for each YA, effective YA 2019 to YA 2025

 

Enhanced tax deduction for qualifying costs on IP in-licensing

Current

100% tax deduction

New

200% tax deduction for the first $100,000 of qualifying IP in-licensing costs for each YA (excluding related party payments or payments for IP which was allowed allowances previously), effective YA 2019 to YA 2025

 

Enhanced double tax deduction for Internationalisation scheme

Current

No prior approval from IE Singapore required for the first $100,000 of qualifying costs incurred on qualifying activities

New

Expenditure cap increased to $150,000, effective YA 2019

 

Goods and Services Tax (GST)

• GST rate to increase from current 7% to 9% sometime in the period between 2021 and 2025.

• Introduce GST on imported services with effect from 1 January 2020

o B2B imported services will be taxed via a reverse charge mechanism. Only businesses that (i) make exempt supplies, or (ii) do not make any taxable supplies need to apply reverse charge. Majority of businesses that make taxable supplies would not be affected by this. The reverse charge mechanism requires the local business customer to account for GST to IRAS on the services it imports and in turn claim the GST accounted for as its input tax, subject to GST input recovery rules.

o B2C imported services will require the overseas suppliers and electronic marketplace operators which make significant supplies of digital services to local customers (global turnover exceeds $1 million per year and annual sales to Singapore buyers exceed $100,000 per year) to register with IRAS for GST through an Overseas Vendor Registration mode.

 

Stamp Duty

• Buyer's stamp duty to increase on the value of residential property in excess of $1 million. The change will apply to all residential properties acquired on or after 20 February 2018.

Current

Value                                   Stamp duty rate

First $180,000                      1%

Next $180,000                      2%

Amount exceeding $360,000  3%

New

Value                                     Stamp duty rate

First $180,000                        1%

Next$180,000                         2%

Next $640,000                        3%

Amount exceeding $1 million    4%

 

Other Changes

• Extend the 250% tax deduction for qualifying donations to 31 December 2021 (due to lapse on 31 December 2018).

• The wage credit scheme will be extended for another 3 years from 2018 to 2020.

• New carbon tax with effect from 2019. 

 

 

 

 


 

 

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