Revisions have been made to the budgeting statement for financial year 2017 in several areas including tax. If you plan on starting a company in Singapore, it would be recommended to take the time to keep up to date on the changes before proceeding. To help keep all business owners informed, here are some tax changes that everyone should be aware of:
CIT (Corporate Income Tax) Rebate
All corporations, including non-resident companies that are not subject to final withholding taxes and companies who are receiving income taxed with concessionary tax rates, are eligible for the Corporate Income Tax rebate. Under this rebate, all companies can receive better aid in handling business costs.
Initially planned for the rebate cap to be at $20 000, the recent change has increased the rebate cap to $25 000 instead. The corporate income tax rebate will also be extended to year of assessment 2018. As of the current moment, the rebate percentage will remain at 50% of corporate tax payable but for YA 2018, it will be reduced to 20% corporate tax payable with a cap of $10 000.
Cost Sharing Agreement (Research and Development)
Amendments have been made to introduce a safe harbour rule that covers payments under Research and Development activities in Cost Sharing Agreements. Business taxpayers can choose to claim tax deductions for up to 75% of payments that have been made under a cost sharing agreement, which is incurred by qualifying research and development projects.
The PIC scheme will involve additional 250% qualifying research and development expenditure for qualifying consumables (excluding directors’ fees) from years of assessment 2011 to 2018. If eligible businesses have their singapore company formation completed after 1 August 2016, then the cash payout rate will be set at 40% of their incurred qualifying expenditure to YA 2018.
Global Trader Programme (GTP) Enhancement
As of 2017, the Global Trader Programme will also be enhanced to encourage the growth of trading activities within Singapore. Requirements for transactions carried out with qualified counterparties are now removed. Instead, global trading companies are granted concessionary tax rates if their physical trading income is stemmed from the transactions where commodity is purchased for consumption purposes or fuel supplying to aircrafts and vessels operated within Singapore. Concessionary tax rates can also be granted to global trading companies for storage or activities within Singapore that add value to commodities.
Integrated Investment Allowance (IIA) Scheme Enhancement
It has been announced that the Integrated Investment Allowance scheme will be extended until 31 December 2022. Qualifying productive equipment can now be used primarily with the purpose of manufacturing products for the qualifying corporation that is under the approved project.
For more information on budget 2017 changes, details can be found in the official Singapore budget website. Now that business owners are aware of what is being changed as well as what is to come, it would be easier to consider if starting a company in Singapore is a lucrative step at the moment in time before progressing ahead.