The 2022 Singapore budget statement was delivered by the Minister of Finance, Mr Lawrence Wong on 18 February 2022, with the theme of charting a new way forward together. Enhancements were made with a view to building a fairer and more resilient tax system.
These included adjustments targeted to recirculate wealth into the economy through measures such as the increase of the top marginal personal income tax rate, property taxes for higher value properties and tax on luxury cars. The increase in Goods and Services Tax will be staggered over two years and several tax schemes were extended, rationalised, or enhanced.
Apart from the above, the introduction of a Minimum Effective Tax Rate will be studied in response to the global minimum effective tax rate under the Pillar 2 Global Anti-Base Erosion rules of the BEPS 2.0 project.
The highlights of the budget are summarized below:
Goods and Services Tax (GST)
Increase in GST rate
The GST rate has been 7% since 1 July 2007 and will be increased in two steps:
a) From 7% to 8% with effect from 1 January 2023; and
b) From 8% to 9% with effect from 1 January 2024.
The Assurance Package for GST is intended to cushion the impact of the planned increase. Household Support Package will also somewhat mitigate this increase.
Update the GST treatment
With effect from 1 January 2023 the basis for determining whether zero-rating applies to a supply of travel arranging services will be updated, to be based on the place where the customer (i.e. the contractual customer) and direct beneficiary of the service belong:
a) If the customer of the service belongs in Singapore, the travel arranging service will be standard-rated; or
b) If the customer of the service belongs outside Singapore and the direct beneficiary either belongs outside
Singapore or is GST-registered in Singapore, the travel arranging service will be zero-rated.
The change ensures that the GST rules reflect the place of consumption of travel arranging services. IRAS will
provide further details on the changes by 31 July 2022.
Corporate Tax
Introduction of a new regime
In response to the global minimum effective tax rate introduced under Pillar 2 Global Anti-Base Erosion (“GloBE”) rules of the BEPS 2.0 project, the Ministry of Finance (MOF) will study the introduction of the Minimum Effective Tax Rate (“METR”) Regime to top up affected multinational enterprise (“MNE”) group’s effective tax rate in Singapore to 15%.
The METR will apply to MNE groups operating in Singapore that have annual revenues of at least €750 million, as reflected in the consolidated financial statements of the ultimate parent entity.
Extension of time
| Broad-based withholding tax (“WHT”) exemption for container lease payments made to non-tax-resident lessors under operating lease (“OL”) agreements |
Extended from 31 Dec 2022 to 31 Dec 2027 Container lease payments made to non-tax-resident lessors under OL agreements entered into on or before 31 December 2027 will be exempted from WHT |
| Broad-based WHT exemption for ship and container lease payments under finance lease (“FL”) agreements for Maritime Sector Incentive (“MSI”) recipients |
Extended from 31 Dec 2023 to 31 Dec 2028 Ship and container lease payments made by specified MSI recipients to non-tax-resident lessors under FL agreements entered into on or before 31 December 2028 will be exempted from WHT. |
| Aircraft Leasing Scheme (“ALS”) | Extended from 31 Dec 2022 to 31 Dec 2027 |
| Approved Royalties Incentive (“ARI”) |
Extended from 31 Dec 2023 to 31 Dec 2028 The ARI will also be simplified to cover classes of royalty agreements based on an activity-set-based approach. EDB will provide further details of the changes by 30 |
| Approved Foreign Loan | Extended from 31 Dec 2023 to 31 Dec 2028 |
Extension of Time and Rationalised
| WHT exemption for the financial sector |
WHT exemption for the following payments are scheduled to lapse after 31 December 2022 but will be extended till 31 December 2026: a) Payments made under cross currency swap transactions by Singapore swap counterparties to issuers of Singapore dollar debt securities; Payments made under interest rate or currency swap transactions by financial institutions. will be allowed to lapse after 31 December 2022. Such payments can be covered under the existing WHT exemption for payments on over-the-counter financial derivatives. MAS will provide any consequential details by 31 May 2022. |
| Tax Incentives for Project and Infrastructure Finance |
The package of tax incentive schemes for Project and Infrastructure Finance will be extended from 31 December 2022 till 31 December 2025: a) Exemption of qualifying income from qualifying project debt securities (“QPDS”); Concessionary tax rate of 10% on qualifying income derived by an approved Infrastructure Trustee- Manager/Fund Management Company from managing qualifying SGX-listed Business Trusts/Infrastructure funds in relation to qualifying infrastructure projects/assets (“ITMFM scheme”) will be allowed to lapse after 31 December 2022. Existing ITMFM scheme recipients will continue to enjoy the tax benefits for the remaining tenure of their existing awards. MAS will provide any consequential details by 31 May 2022. |
Extension of Scope
| Tax Framework for Facilitating Corporate Amalgamations under section 34C of the ITA to Licensed Insurer |
The tax framework for facilitating corporate amalgamations will be extended to cover amalgamation of Singapore-incorporated companies involving a scheme of transfer The extension of the framework is subject to conditions, which include the following: a) The amalgamated company takes over all property, rights, privileges, liabilities, and obligations, etc. of the amalgamating company on the date of amalgamation; and |
Enhancement of Schemes
| Tax Incentive Scheme for Funds Managed by Singapore-based Fund Manager (“Qualifying Funds”) |
The conditions imposed on the investments in physical Investment Precious Metals (“IPMs”) under the DI list will be refined as follows. These refinements will be effective on and after 19 February 2022: a) The incidental condition will be removed, i.e. investments in physical IPMs need not be incidental to the trading of derivative IPMs; and MAS will provide further details of the changes by 31 May 2022. |
Schemes allowed to lapse
| The IIA scheme | The IIA scheme will be allowed to lapse after 31 December 2022. |
Personal Tax
Current top marginal personal income tax rate is 22% levied on income in excess of S$320,000. With effect from YA2024 resident individual taxpayers with chargeable income in excess of:
a) in excess of S$500,000 up to S$1 million will be taxed at 23%
b) in excess of S$1 million will be taxed at 24%.
Property Tax
The change in tax rates for owner-occupied and non-owner– occupied residential property rates will be phased in over two years:
Owner-occupied residential properties
| Annual Value (S$) | Property Tax Rate for Owner-occupied Residential Properties | |
| Effective 1 Jan 2023 | Effective 1 Jan 2024 | |
| First $8,000 | 0% | 0% |
| Next $22,000 | 4% | 4% |
| Next $10,000 | 5% | 6% |
| Next $15,000 | 7% | 10% |
| Next $15,000 | 10% | 14% |
| Next $15,000 | 14% | 20% |
| Next $15,000 | 18% | 26% |
| Above $100,000 | 23% | 32% |
Non-owner-occupied residential properties
| Annual Value (S$) | Property Tax Rate for Non-owner-occupied Residential Properties | |
| Effective 1 Jan 2023 | Effective 1 Jan 2024 | |
| First $30,000 | 1% | 12% |
| Next $15,000 | 16% | 20% |
| Next $15,000 | 21% | 28% |
| Next $60,000 | 27% | 36% |
This publication serves as a broad guide and is not to be relied upon to cover specific circumstances. Persons should not act upon the information contained therein without obtaining specific professional advice.