Singapore Budget 2017 Summary
Welcome to our Singapore Budget 2017 summary.
The following is the Budget 2017 Summary were announced by Minister for Finance, Mr. Heng Swee Keat in his Budget Statement for the Financial Year 2017 which was delivered in Parliament on Monday, 20 February 2017.
Enhancing and Extending the Corporate Income Tax (“CIT”) Rebate
To help companies, the CIT rebate will be enhanced and extended:
- The CIT rebate cap will be raised from $20,000 to $25,000 for YA 2017 (with the rebate rate unchanged at 50%); and
- The CIT will be extended for another year to YA 2018, at a reduced rate of 20% of tax payable and capped at $10,000 rebate.
Extending the Withholding Tax exemption on payments made to non-resident non-individuals for structured products offered by Financial Institutions
The qualifying period for exemption from Withholding Tax on payments made to non-resident non-individuals for structured products will be extended till 31 Mar 2017. All other conditions of the scheme will remain the same.
Introducing an Intellectual Property (“IP”) Regime that encourages the exploitation of IP arising from R&D activities of the taxpayer
To encourage the use of IPs arising from taxpayer’s R&D activities, IP income will be incentivised under a new IP Regime named the IP Development Incentive (IDI). Such income will be removed from the scope of Pioneer-Services/Headquarters Incentive and the Development and Expansion Incentive-Services/Headquarters for new incentive awards approved on or after 1 Jul 2017. Existing incentive recipients will continue to have such income covered under their existing incentives awards till 30 Jun 2021. The IDI will take effect on or after 1 Jul 2017, and will be administered by EDB. EDB will release further details of the change by May 2017.
Introducing a safe harbor rule for payments under Cost Sharing Agreements (“CSAs”) for R&D projects
To ease compliance, taxpayers may opt to claim tax deduction under Section 14D for 75% of the payments made under a CSA incurred for qualifying R&D projects instead of providing the breakdown of the expenditure covered by the CSA payments.
The change will apply to CSA payments made on or after 21 Feb 2017.
IRAS will release further details of the change by May 2017.
Other tax incentives included:
- Extending the Withholding Tax (“WHT”) exemption on payments for international telecommunications submarine cable capacity under and Indefeasible Rights of Use (“IRUs”) agreement
- Refining the Finance and Treasury Centre (“FTC”) scheme
- Extending the Tax Incentive Schemes for Project and Infrastructure Finance
- Enhancing the Global Trader Programme (“GTP”)
- Extending the Tax Incentive Schemes for Project and Infrastructure Finance
- Extending and refining the Aircraft Leasing Scheme (“ALS”)
- Extending and refining the Integrated Investment Allowance (“IIA”) scheme
- Withdrawing the Tax Deduction for Computer Donation Scheme
- Withdrawing the Accelerated Depreciation Allowance for Energy Efficient Equipment and Technology (“ADA-EEET”) scheme
- Allowing the Approved Building Project (“ABP”) scheme to lapse
- Allowing the International Arbitration Tax Incentive (“IArb”) to lapse
- Allowing the accelerated Writing-Down Allowances (“WDA”) for acquisition of Intellectual Property Rights (“IPRs”) for Media and Digital Entertainment (“MDE”) content scheme to lapse
Granting a Personal Income Tax rebate for Resident Individual Taxpayers
To provide relief to individuals who pay income tax, a Personal Income Tax Rebate of 20% of tax payable will be granted to all individual tax residents for YA 2017 (i.e. for income earned in 2016). The rebate will be capped at $500 per taxpayer.
Withdrawing the GST Tourist Refund Scheme (“TRS”) for tourists departing by international cruise
Due to the very low transaction volume at the cruise terminals for tourist refunds, the GST TRS will be withdrawn for tourists who are departing by international cruise from the cruise terminals and whose purchases are made on or after 1 Jul 2017. Tourists who are departing by international cruise from the cruise terminals will have until 31 Aug 2017 to claim refunds on purchases made before 1 Jul 2017.
The eTRS facilities at the cruise terminals will be removed after 31 Aug 2017.
IRAS will release further details of the change by April 2017.
Continuation of Measures to Support Businesses
Good news for firms who will continue to receive support from several measures announced previously:
- Wage Credit Scheme to help cope with rising wages
- Special Employment Credit to help support wages of older workers until 2019
- SME Working Capital Loan scheme to co-share 50% of the default risk for loans up to $300,000 per SME until 2019
Extension of Additional Special Employment Credit
MOM will raise the re-employment age from 65 to 67 years, with effect from 01 July 2017. To support firms hiring older workers, the Government will extend the Additional Special Employment Credit (ASEC) until end-2019 to encourage employers to continue hiring older workers.
With the ASEC of up to 3% for eligible older workers, and Special Employment Credit, employers will receive support of up to 11% of wages for eligible workers.
120,000 workers and 55,000 employers will benefit from the ASEC extension, which will cost about $160 million.
Strengthening Enterprises’ Capabilities through Digitalisation
Digital technology has unique potential to transform businesses, large and small, across the economy. To strengthen enterprises, especially SMEs, help will be given to adopt digital solutions:
*New* SMEs Go Digital Programme will help SMEs build digital capabilities. IMDA will work with SPRING and other sector lead agencies in this effort. SMEs can get:
- Step-by-step advice on technologies to use
- Advice on off-the-shelf technology solutions pre-approved for funding support, or connect to ICT vendors and consultants
- Advice and funding support if they are ready to pilot emerging ICT solutions
Capabilities in data and cybersecurity will be strengthened. The Cyber Security Agency of Singapore will work with professional bodies to train cybersecurity professionals.
Strengthening Enterprises’ Capabilities through Innovation
To strengthen firms, we will support their broader efforts in innovation and technology by helping them better tap on R&D resources:
- To help firms innovate and compete, A*STAR will work with them to conduct operation and technology road-mapping
- SPRING’s IP Intermediary matches companies with IP that meets their needs.
- A*STAR’s Headstart Programme allows SMEs to co-develop IP to enjoy royalty-free and exclusive licenses for 18 months. In response to industry feedback, this will be extended to 36 months.
- NEW Tech Access Initiative will provide companies access to A*STAR’s advanced equipment, user training and expert advice.
Strengthening Enterprises’ Capabilities through Scaling Up Globally
In 2016, IE Singapore supported 37,000 internationalisation cases, a 9% increase over 2015. To further help our firms scale up globally and support their growth, we will:
- Continue to develop a smart financing ecosystem with up to $600 million in government capital committed for a new International Partnership Fund
- Enhance IE Singapore’s Internationalisation Finance Scheme to bridge gaps in financial markets for project finance in the region by catalysing private finance and sharing risks with financial institutions
Deferment of Foreign Worker Levy Hikes and Acceleration of Infrastructure Projects
In view of continued weakness, increases in foreign worker levy will be deferred by one more year in the Marine and Process sectors.
To support the construction sector, $700 million worth of public sector infrastructure projects will be brought forward to start in FY2017 and FY2018.
Strengthening Support for Workers in Transition
The Government will help workers adapt to structural shifts in the economy, especially those who seek to move to a different sector or industry.
Singapore Ministry of Manpower launched the “Adapt and Grow” initiative last year. We will strengthen the support this year:
- Increased wage and training support provided under the Career Support Programme, Professional Conversion Programme (PCP) and Work Trial Programme
- New “Attach and Train” initiative – industry partners send participants for training and work attachments, increasing their chances of finding jobs in sectors
WORKERS AND JOB SEEKERS
Global Innovation Alliance
- Innovators Academy – enable students to build connections and capabilities through overseas internships
- Innovation Launchpads – create opportunities for entrepreneurs and business owners in Singapore-based companies to connect with mentors, investors and service providers in overseas markets
- Welcome Centres – link up innovative foreign companies with Singapore partners to co-innovate and expand in the region
Enhance “Adapt and Grow” Initiative
Help jobseekers with employment by increasing wage and training support for:
- Career Support Programme
- Professional Conversion Programme
- Work Trial Programme
Introduce “Attach and Train” initiative for industry partners to send participants for training and work attachments to improve prospects of employment
SkillsFuture Leadership Development Initiative
- Support companies in expanding leadership development programmes
- Develop 800 potential leaders over three years
Increase Accessibility of Training
- Through short, modular courses and e-learning
Better Job Matching
- Enhance National Jobs Bank
- Work with private placement firms to deliver better job matching services to professionals
Vehicular Emissions Scheme – to reduce harmful emissions
- Extend Carbon Emissions-based Vehicle Scheme (CEVS) until 31 December 2017
- Replace with new Vehicular Emissions Scheme starting from 1 January 2018, for two years
Early Turnover Scheme – to encourage people to switch to cleaner vehicles
- Extend scheme for Euro II and III commercial diesel vehicles that turn over to Euro VI vehicles until 31 July 2019
- Enhance COE bonus period for Light Goods Vehicles
Water Price Changes – to encourage water conservation and sustain water supply.
Starting from 1 July 2017,
- Increase price of water by 30% in two phases, by 1 July 2018
- Impose a 10% Water Conservation Tax on NEWater tariff
- HDB households will receive help to manage the increase
Carbon Tax – to reduce carbon emissions
- Applied upstream, for example, on power stations and other large direct emitters
- To be implemented from 2019,with the price level and exact implementation schedule decided after consultations
Restructuring of Diesel Taxes – to reduce diesel consumption by shifting towards usage based taxes
- $0.10 per litre volume-based duty on automotive diesel, industrial diesel and diesel
- component in biodiesel
- Permanently reduce Special Tax on diesel cars and taxis by $100 and $850 respectively
- 100% road tax rebate for one year and partial road tax rebate for two years for commercial diesel vehicles
- Additional cash rebates for diesel buses ferrying school children
Permanent Increase in GST Voucher – U-Save for Eligible Households
Households can expect more help in managing their utility bills. To help offset the increases in water rates, eligible HDB households will receive another $40 to $120 of GST Voucher – U-Save Rebate, permanently.
Taking into account these higher U-Save rebates, 75% of all HDB households will see an average increase of less than $12 in their monthly water expenses. 1- and 2-room HDB households will on average have no increase in their water expenses.
One-Off GST Voucher – Cash Special Payment for Eligible Recipients
To help lower-income households with expenses, the Government will provide a one-off GST Voucher – Cash Special Payment of up to $200 for 2017, to more than 1.3 million eligible Singaporeans.
Extension of S&CC Rebates for Eligible HDB Households for FY2017
There is help for Service and Conservancy Charges (S&CC) for 880K eligible HDB households. They will receive an additional 0.5 months of S&CC rebates for FY2017.
Top-Ups to GST Voucher Fund, Medifund and ComCare Fund
To ensure continued support to eligible individuals and households, the Government will top up: $1.5b to the GST Voucher Fund, $500m to the Medifund and $200m to the ComCare Fund.
Higher CPF Housing Grants for First-Time Applicants
Good news for those looking to buy their first HDB flat. First-time applicants buying resale flats will enjoy a higher CPF Housing Grant of up to $50,000.
More provisions of Infantcare for Young Families
Over the past 5 years, the Government has increased the number of childcare places for young children by more than 40%, to about 140,000 places. Working parents of young children can look forward to more support in infant care as the Government will further increase the capacity of centre-based infant care to over 8,000 places by 2020.
Enhancements of Bursaries for Students in Post-Secondary Education Institutions (PSEI)
Post-Secondary Bursaries will increase by up to $400 for undergraduate students, by up to $350 for polytechnic students, and by up to $200 for ITE students. The income thresholds to qualify for bursaries will also be enhanced to benefit more Singaporean students. PSEI bursaries will increased from about $100m to $150m per year.
Community Mental Health
Additional $160 million over next five years
- Resource Voluntary Welfare Organisations (VWOs) to set up more community-based teams
- Improve delivery of care within community
- Increase the number of Dementia Friendly Communities
- Integrate persons with mental health issues at the workplace and society
Enabling Masterplan 3
Stronger support for Persons with Disabilities
- Extend training programmes to Special Education students with moderate intellectual and multiple disabilities to prepare them for employment
- Set up a Disability Caregiver Support Centre to provide caregiver training and peer support
Cultural Matching Fund
- Top up $150 million to continue 1:1 matching for donations to cultural institutions
Community Sports and Sports Excellence
- Over $50 million set aside for community sports — expand Sports-In-Precinct Programme, and scale up SportCares to empower disadvantaged youths
- Additional $100 million for high performance sports — $50 million in direct grants over five years to support our aspiring athletes and up to another $50 million for 1:1 matching of sports donations
VWOs-Charities Capability Fund
Additional funding of up to $100 million to develop VWOs’ and charities’ capabilities over next five years
Grants to Self-Help Groups
Another $6 million grant to Self-Help Groups over next two years
OTHER TAX MEASURES
Base Erosion and Profit Shifting Project
- Ensure companies are taxed where substantive economic activities are performed
- In consultation with businesses, Singapore will refine schemes and implement the relevant tax standards
Tiered Additional Registration Fees (ARF) for Motorcycles
Motorcycles with an OMV above $5,000 will pay more ARF. The ARF rate will remain at 15% for the majority of motorcycle buyers based on current registration trends.The contribution of motorcycle COE quota to open category COE quota will cease. This will stabilise the supply of motorcycle COEs.
- Investment in critical infrastructure to deepen global connectivity e.g. new Changi Airport Terminal 5, Kuala Lumpur-Singapore High Speed Rail and Tuas Terminal
- Investment in shared infrastructure for economic clusters to allow industry players to network, pool resources and share knowledge
- Investment in sports and arts facilities to enhance sports and arts programmes