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Singapore To Table Legislation For 2019 Budget Changes

by Mary Swire, Lowtax.net, Hong Kong
02 September, 2019

Singapore has finalized amendments to the draft Income Tax (Amendment) Bill 2019, following a public consultation that ended in July 2019.

The draft Bill proposes legislative amendments to effect tax changes announced in Budget 2019 (summarized below) and changes arising from the periodic review of the income tax system.

A new document from the Ministry of Finance said feedback to the consultation was on technical tax changes – namely on:

  • Increasing the prescribed deemed expense ratio, and increasing or removing the revenue threshold, for self-employed commission agents;
  • Providing clarity on the revocation of tax incentive awards when an incentive recipient fails to meet the conditions of a tax incentive;
  • Clarifying that the amendment of definition of qualifying debt securities under Section 13(16) of Income Tax Act will allow alternative set of qualifying conditions for insurance-linked securities; and
  • Clarifying the amendment relating to the lapsing of the Approved Unit Trust scheme.

The Ministry's specific responses are set out in "Annex A: MOF's response to key feedback on the draft Income Tax (Amendment) Bill 2019."

Of the 46 suggestions received, 28 suggestions were accepted and incorporated into the draft text of the Bill. The MOF said the other suggestions were not accepted, as they were inconsistent with the policy objectives of the proposed legislative changes or with legislative drafting conventions.

The proposed legislative changes will be incorporated into the Income Tax (Amendment) Bill 2019 to be presented to Parliament in the last quarter of 2019.

Singapore's 2019 Budget

The Budget included few significant tax announcements except confirmation that Singapore's carbon tax would be levied starting January 1, 2019, and the goods and services tax will be hiked in the medium term.

The Budget included announcements that donations to Institutions of a Public Character (IPCs) will qualify for a 250 percent tax deduction. Businesses will also enjoy a 250 percent tax deduction on qualifying expenditure when their employees volunteer or provide services to IPCs under the Business and IPC Partnership Scheme.

The Budget announces a 50 percent Personal Income Tax Rebate, subject to a cap of SGD200, for the Year of Assessment 2019, to provide relief to low- and middle-income taxpayers in particular.

Further, the Budget announces a doubling of excise duty on diesel from SGD0.10 to SGD0.20. To cushion the impact on companies, the Budget included a 100 percent road tax rebate for one year, and a partial rebate for two years, for commercial diesel vehicles.

On GST reform, the Budget document confirms that GST will be raised by two percent, from nine percent, on a date to be determined some time between 2021 and 2025.

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