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Singapore Consults On Tax Amendment Bill

by Mary Swire, Lowtax.net, Hong Kong
29 June, 2015

Singapore's Ministry of Finance is conducting a public consultation until July 24, 2015, on the draft Income Tax (Amendment) Bill 2015, which mainly relates to corporate and personal income tax changes announced in the 2015 Budget Statement.

The key changes include a provision to extend and enhance the merger and acquisition (M&A) scheme, to provide greater support to small- and medium-sized enterprises, and allow more flexibility for Singapore companies to grow locally or offshore via strategic acquisitions.

Under the scheme, an M&A allowance is granted to a company that acquires the ordinary shares of another company. The scheme is to be extended for five years until March 31, 2020 the M&A allowance rate will be increased from 5 percent to 25 percent, and the acquisition cost cap will be lowered from SGD100m (USD74.1m) to SGD20m. The maximum amount of the M&A allowance will remain unchanged at SGD5m.

A new tax incentive, the International Growth Scheme, is to be introduced to provide more targeted support for internationalization activities undertaken by larger Singapore companies via a concessionary corporate tax rate of 10 percent for a period not exceeding five years on their qualifying incremental income from approved qualifying activities, in excess of a base income.

The 200 percent double tax deduction for the internationalization scheme for companies will also be extended to cover qualifying manpower expenses incurred for Singaporeans posted to new overseas entities.

With regard to the personal income tax, the system will be made more progressive by increasing the marginal tax rates for resident individual taxpayers with chargeable income exceeding SGD160,000, and introducing a new 22 percent tax rate with effect from the 2017 year of assessment.

In addition, the 250 percent tax deduction for qualifying charitable donations will be extended for three years from January 1, 2016, to December 31, 2018. The tax deduction rate will be further enhanced to 300 percent for qualifying donations made in 2015 as part of the SG50 jubilee celebration.

The personal income tax rate for individual non-residents will also be aligned with the new top marginal tax rate for individual tax residents of 22 percent.

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