Singapore Budget 2018 Summary
Welcome to our Singapore Budget 2018 summary.
The following is the Budget 2018 Summary announced by Minister for Finance, Mr. Heng Swee Keat in his Budget Statement for the Financial Year 2018 which was delivered in Parliament on Monday, 19 February 2018.
Enhancing and extending the Corporate Income Tax (“CIT”) Rebate
To help companies, the CIT rebate will be enhanced and extended:
- For YA2018, the CIT rebate will be enhanced to 40% of tax payable, with enhanced cap at $15,000
- The CIT rebate will be extended for another year to YA2019, at a rate of 20% of tax payable, capped at $10,000
Adjustment to the Start-Up Tax Exemption (“SUTE”) scheme
The tax exemption under the SUTE scheme will be adjusted to:
- 75% exemption on the first $100,000 of normal chargeable income; and
- 50% exemption on the next $100,000 of normal chargeable income.
All other conditions of the scheme remain unchanged.
This change will take effect on or after YA2020 for all qualifying companies under the scheme. For example, if a qualifying company’s first YA is 2019, the current SUTE parameters will apply in YA2019 while the new parameters will apply in YAs 2020 and 2021.
Adjustment to the Partial Tax Exemption (“PTE”) scheme
The tax exemption under the PTE scheme will be adjusted to:
- 75% exemption on the first $10,000 of normal chargeable income; and
- 50% exemption on the next $190,000 of normal chargeable income.
All other conditions of the scheme remain unchanged.
This change will take effect on or after YA2020 for all companies (excluding those that qualify for the SUTE scheme) and bodies of persons.
Enhancing the tax deduction for qualifying expenditure on qualifying research and development (“R&D”) projects performed in Singapore
To support businesses to build their own innovations, the tax deduction for staff costs and consumables incurred on qualifying R&D projects performed in Singapore will increase from 150% to 250%. All other conditions of the scheme remain unchanged. This change will take effect from YA2019 to YA2025.
Enhancing the tax deduction for costs on protecting intellectual property (“IP”)
To encourage businesses, in particular smaller ones, to register and protect their IPs,
- a) the scheme will be extended till YA2025; and
- b) the tax deduction will be enhanced to 200% for the first $100,000 of qualifying IP registration costs incurred for each YA. This change will take effect from YA2019 to YA2025.
Enhancing the tax deduction for costs on IP in-licensing
To support businesses to buy and use new solutions, the tax deduction will be enhanced from 100% to 200% for the first $100,000 of qualifying IP in-licensing costs incurred for each YA.
Qualifying IP in-licensing costs include payments made by a qualifying person to publicly funded research performers or other businesses, but exclude related party licensing payments, or payments for IP where any allowance was previously made to that person.
This change will take effect from YA2019 to YA2025.
Enhancing the Double Tax Deduction for Internationalisation (“DTDi”) scheme
To further encourage internationalisation, the $100,000 expenditure cap for claims without prior approval from IE Singapore or STB will be raised to $150,000 per YA. Businesses can continue to apply to IE Singapore or STB on qualifying expenses exceeding $150,000, or on expenses incurred on other qualifying activities.
All other conditions of the scheme remain the same. This change will apply to qualifying expenses incurred on or after YA2019.
IE and STB will release further details of the change by April 2018.
Goods and Services Tax
Introduce GST on imported services
GST will be introduced on imported services on or after 1 January 2020.
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. The majority of businesses make taxable supplies and thus would not be affected by this reverse charge mechanism. The reverse charge mechanism requires the local business customer to account for GST to IRAS on the services it imports. The local business customer can in turn claim the GST accounted for as its input tax, subject to the GST input tax recovery rules.
The taxation of B2C imported services will take effect through an Overseas Vendor Registration (OVR) mode. This requires overseas suppliers and electronic marketplace operators which make significant supplies of digital services to local consumers to register with IRAS for GST.
IRAS will release further details by end-February 2018.
GST rate hike
A 2% rate hike from 7% to 9% is planned to be introduced sometime between 2021 and 2025, depending on Singapore’s economy, government spending and revenue from other taxes.
Raise Buyer’s Stamp Duty on the Value of Residential Property in Excess of $1 Million
To improve the progressivity of our stamp duty regime, the top marginal Buyer’s Stamp Duty rate will be raised from 3% to 4%, and applied on the value of residential property in excess of $1 million. The revised rates will apply to all residential properties acquired on or after 20 February 2018.
|Rates||Tiers (Residential Properties)|
|1%||First $180,000 (No change)|
|2%||Next $180,000 (No change)|
|3%||Next $640,000 (Revised)|
|4% (New)||Amount exceeding $1,000,000 (New)|
The Buyer’s Stamp Duty rates for non-residential properties remain unchanged.
Other tax incentives included:
- Extend the tax incentive scheme for Approved Special Purpose Vehicle (“ASPV”) engaged in asset securitisation transactions (“ASPV Scheme”)
- Introduce a tax framework for Singapore Variable Capital Companies (“S-VACCs”)
- Enhance the Enhanced-Tier Fund Scheme under Section 13X of the ITA
- Extend the tax transparency treatment for Singapore-listed Real Estate Investment Trusts (“S-REITs”) to Singapore-listed Real Estate Investment Trusts Exchange-Traded Funds (“REITs ETFs”)
- Extend and enhance the Financial Sector Incentive (“FSI”) scheme
- Extend the tax deduction for banks (including merchant banks) and qualifying finance companies for impairment and loss allowances made in respect of non-credit-impaired financial instruments
- Rationalise the Withholding Tax (“WHT”) exemptions for the financial sector
- Extend the Qualifying Debt Securities (“QDS”) incentive scheme and allow the Qualifying Debt Securities Plus (“QDS+”) incentive scheme to lapse
- Extend the tax exemption on income derived by primary dealers from trading in Singapore Government Securities (“SGS”)
- Extend the Insurance Business Development – Insurance Broking Business (“IBD-IBB”) scheme and allow the Insurance Business Development – Specialised Insurance Broking Business (“IBD-SIBB”) scheme to lapse
- Extend the Investment Allowance (“IA”) scheme to include qualifying investment in submarine cable systems landing in Singapore
- Introduce a review date for the Withholding Tax (“WHT”) exemption on container lease payments made to non-resident lessors.
For Individuals and businesses
Extending the 250% Tax Deduction for Qualifying Donations
To continue to encourage Singaporeans to give back to community, the 250% tax deduction for qualifying donations will be extended for donations made on or before 31 December 2021. All other conditions of the scheme remain the same.
OTHER TAX MEASURES
10% increase in tobacco excise duty across all tobacco products from 19 Feb 2018
Carbon tax of $5 per tonne of greenhouse gas emissions in the first instance, from 2019 to 2023 on facilities producing 25,000 tonnes or more of greenhouse gas emissions a year, to encourage reduction of emissions
Extension of the Wage Credit Scheme (WCS)
The WCS will be extended for three more years from 2018 to 2020. Government co-funding of qualifying wage increases will be 20% in 2018, 15% in 2019 and 10% in 2020. Wage increases given in 2017, 2018 and 2019 which are sustained in subsequent years of the scheme, will also be supported.
Productivity Solutions Grant
Up to 70% funding support for the adoption of pre-scoped, off-the-shelf solutions to improve productivity
Enterprise Development Grant
Up to 70% funding support for firms to build a range of capabilities including innovation, talent development and internationalisation
Open Innovation Platform
Virtual crowd-sourcing platform where companies can list challenges and be matched with ICT firms and research institutes to co-develop solutions
Aviation Transformation Programme (ATP) and Maritime Transformation Programme (MTP)
For companies to develop, test, and use advanced automation and digital technologies to improve operations and enhance traffic management in our airports and seaports
National Research Foundation – Temasek IP commercialisation vehicle
New investment venture to support commercialisation of publicly-funded intellectual property developed in Singapore
National Robotics Programme (NRP)
Expanding the NRP to encourage greater use of robotics, especially in construction
Asean Leadership Programme
Help Singapore business leaders better understand, build networks in, and plan business expansions to Southeast Asian markets
Tech Skills Accelerator (TeSA)
Scale up to develop more ICT professionals in new sectors, and in emerging digital skills such as data analytics and artificial intelligence
Capability Transfer Programme
Support skills transfer from foreign specialists to Singaporeans
Funding support for collaborations and partnerships between firms of all sizes, e.g. knowledge transfer, capability building, co-innovation and accessing overseas opportunities
Asean Innovation Network
Strengthen linkages between innovation ecosystems in the region, and spark new collaborations and solutions
New office to connect infrastructure demand in Asia to infrastructure financing, services and expertise
Deferment of Foreign Worker Levy Hikes
In view of continued weakness, increases in foreign worker levy will be deferred by one more year in the Marine and Process sectors.
Up to $300 cash payment to all adult Singapore citizens to share the fruits of Singapore’s development
GST Voucher – U-Save for Eligible Households
Additional $20 per year from 2019 to 2021 for eligible HDB households to cover expected average increase in electricity and gas expenses
Service and Conservancy Charges (S&CC) Rebates
Eligible HDB households will receive 1.5 to 3.5 months of rebate on their S&CC
Enhanced Proximity Housing Grant (PHG)
The Government will enhance the PHG for families buying a resale flat to live with their parents or children to $30,000. (Those buying a resale flat to live near their parents or children will continue to receive a PHG of $20,000.)
Singles who buy a resale flat to live with their parents will receive an enhanced PHG of $15,000. Those who buy a resale flat to live near their parents will receive a PHG of $10,000.
To give applicants more choices when choosing a resale flat to live near their loved ones, including flats in nearby towns, we will revise the criteria for the PHG to “within 4km”. (Currently, it is defined as living in the same town or within 2km).
Foreign Domestic Worker (FDW) Levy
Levies will be increased for foreign domestic workers that are employed without levy concession from 1 April 2019. Concessionary FDW Levy of $60 remains.
Higher Annual Edusave Contributions
- Increase from $200 to $230 for primary school students;
- Increase from $240 to $290 for secondary school students
MOE Financial Assistance
- Increase annual bursary quantum for pre-university students under MOE Financial Assistance Scheme (FAS) from $750 to $900
- Cover more meals for secondary school students under School Meals Programme
- Update income eligibility criteria for MOE FAS, Edusave Merit Bursary, and Independent School Bursary to benefit more students
Review of ElderShield
Subsidise premiums for lower- and middle-income Singaporeans to ensure that the enhanced scheme remains affordable for them
Community Networks for Seniors (CNS)
Expand nationwide by 2020 to strengthen support for our seniors and enable them to age confidently in the community
Integrated Health and Social Support for Seniors
- Consolidate social- and health-related services for seniors under MOH
- Agency for Integrated Care (AIC) will be the central implementation agency to coordinate such services for seniors
- Pioneer Generation Office renamed as Silver Generation Office and merged with AIC
Seniors’ Mobility and Enabling Fund
Top-up of $100 million to provide subsidies for assistive devices and selected consumables
Social Service Offices (SSOs)
Strengthen the role and capabilities of SSOs in coordinating the efforts of government agencies, VWOs and community partners to provide more holistic support to those in need
- Build Changi Airport Terminal 5 (Changi T5), Tuas Port and the KL-Singapore High Speed Rail over the next decade
- Redevelop Jurong Lake District, Punggol Digital District and Woodlands North Coast over the next 10 years
- 6 more general and community hospitals, 4 new polyclinics, and more nursing homes and eldercare centres around the island within the next 5 years