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THE FINANCIAL YEAR 2018 BUDGET

The Minister for Finance, Mr. Heng Swee Keat, announced the 2018 Budget in Parliament on 19 February 2018. Highlights of the tax and other changes are as follows:

1Corporate Tax Changes

1.1Corporate Income Tax rebate (YA 2018 and YA 2019)
A 40% CIT rebate will be provided subject to a cap of $15,000 for YA 2018. For YA 2019, a 20% CIT rebate will be provided subject to a cap of $10,000.

1.2Extension of the Wage Credit Scheme ("WCS")
The Wage Credit Scheme, which co-funds wage increases for Singaporean employees up to a gross monthly wage of S$4,000, will be extended for three more years to provide 20% co-funding for 2018, 15% for 2019 and 10% for 2020.

1.3Encouraging Innovation and Harnessing Research Capabilities

  • Tax deduction on licensing payments
    Tax deduction on licensing payments for commercial use of intellectual property (IP) will be raised to 200% capped at $100,000 of licensing payment per year.

  • Tax deduction for IP registration fees
    Tax deduction for IP registration fees will be raised to 200% to help firms protect their intangible assets. This will be capped at $100,000 of IP registration fees per year.

  • Tax deduction for qualifying expenses incurred on R&D
    Tax deduction for qualifying expenses incurred on R&D done in Singapore will be raised from 150% to 250%.

1.4Enhancing the Double Tax Deduction for Internationalisation (“DTDi”) scheme
From YA 2019, the amount of expenses that can qualify for the DTDi without prior approval will be raised from $100,000 to $150,000 per year of assessment.

1.5Corporate Tax Exemptions
Corporate tax exemptions under the Start-Up Tax Exemption Scheme and the Partial Tax Exemption Scheme would be restricted to the first $200,000 of chargeable income from YA 2020. In addition, for start-ups from YA 2020, 75% (instead of 100%) of the first $100,000 of chargeable income would be exempted from corporate tax for the first three years of assessment.

1.6Tax Deduction for Donations

  • Tax deduction for qualifying donations
    The 2.5 times tax deduction for qualifying donations will be extended for another 3 years until 31 December 2021.

  • Business and IPC Partnership Scheme (BIPS)
    Businesses that support their staff to volunteer and provide services to Institutions of a Public Character (“IPCs”) will receive a 250% tax deduction on associated costs incurred. BIPS will also be extended for three more years until 31 December 2021.

2Individual Income Tax Changes

Budget 2018 did not make any changes to personal income taxes.


3Goods and Services Tax ("GST")

The Government plans to raise the GST by two percentage points, from 7% to 9%, sometime in the period from 2021 to 2025. The exact timing will depend on the state of the economy, how much the national expenditures grow, and how buoyant the existing taxes are.

With effect from 1 January 2020, importation of services will also be subject to GST. This will include services such as consultancy and marketing purchased from overseas suppliers, and the downloading of apps and music.


4Others

4.1Carbon Tax
A carbon tax would be introduced from 2019 on all facilities producing 25,000 tonnes or more of greenhouse gas emissions in a year. It will be levied on the total emissions of each of these facilities and will be levied at $5 per tonne of greenhouse gas emissions from 2019 to 2013. The rate will increase to between $10 to $15 per tonne of emissions by 2030.

4.2Buyer's Stamp Duty ("BSD")
With effect of 20 February 2018, the top marginal BSD rate for acquisition of residential properties will increase from 3% to 4%.

4.3Foreign Domestic Worker ("FDW") Levy
Families that employ foreign domestic worker to help care for young children, the elderly or family members with disabilities continue to enjoy a monthly concession FDW levy of $60. For employers who do not qualify for the levy concession or employ multiple FDWs, the monthly levy will be raised from $256 to $300 and $450 respectively for the first and second FDW employed without levy concession.

4.4Enhanced Proximity Housing Grant ("PHG")
To strengthen support for family members to live with or near each other, the PHG has been enhanced as follows:

  1. Those buying a resale flat near their parents or children will continue to receive a PHG of $20,000.

  2. Singles who buy a resale flat to live with their parents will receive an enhanced PHG of $15,000.

  3. Singles who buy a resale flat to live near their parents will receive a PHG of $10,000.

The criterion for determining what is “near” has also been revised to simply “within 4 km”.

4.5Extension of Service and Conservancy Charges Rebate
The Service and Conservancy Charges (S&CC) rebate will be extended for another year.

4.6Increased support for Education

  • Increased annual Edusave contributions
    With effect from 1 January 2019, the annual Edusave contributions provided by the Government will be increased from $200 to $230 for each primary school student and $240 to $290 for each secondary school student.

  • Updated income eligibility criteria
    The income eligibility criteria for the Edusave Merit Bursary and the Independent School Bursary will be updated to benefit more students from lower- to middle-income families.

  • Increased support for students from lower-income families
    The MOE Financial Assistance Scheme will be enhanced by raising the annual bursary quantum for pre-university students from $750 to $900 and updating the income eligibility criteria.



The above summary was prepared for your quick reference and should you require more details on the above, please contact us.

19 February 2018





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