SUMMARY TABLE ON PROPOSED NON-BUDGET CHANGES TO THE INCOME TAX ACT (“ITA”)
s/n.
Legislative Change
1
Introduce additional measures to curb
abuses of the Productivity and
Innovation Credit (“PIC”) Scheme
2
Clarify that penalties are imposed on
the excess amount of PIC cash payout/
PIC Bonus obtained by taxpayers
Brief Description of Legislative Change
Amendment to
Income Tax Act
[Clause in Income
Tax (Amendment)
Bill]
New anti-abuse measures will be introduced to address Sections 37I, 37ID
abusive arrangements where one of the main purpose is to and 37IE
receive PIC benefits:
(a) For PIC cash payouts pertaining to IT and
automation equipment, the equipment must be “in [Clauses 40 and 42]
use”1. This will take effect from YA 2016; and
(b) To strengthen the Comptroller’s power to deny PIC
benefits arising from arrangements which involve
artificial, contrived or fraudulent steps, or are not
carried out for bona fide commercial reasons, or
where transactions are overvalued and not based on
open market value. This will take effect from the
gazette date of the Income Tax (Amendment) Bill.
(c) Penalties will be imposed on intermediaries who
promote or facilitate claims for PIC benefits for such
abusive arrangements. This will take effect from the
gazette date of the Income Tax (Amendment) Bill.
To make clear that where the taxpayer wrongfully obtains Sections 37J, 95, 96
a higher amount of PIC cash payout and/or PIC Bonus and 96A
than what he was entitled to, the penalty imposed is
computed based on the excess amount of PIC cash payout/ [Clauses 43, 58, 59
For cash-strapped SMEs who need the cash payout up-front to pay for the equipment, IRAS may waive the requirement for the equipment to be “in use” on a
case-by-case basis, subject to conditions.
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3
4
5
6
Legislative Change
Remove the requirement to withhold
tax for certain payments made to
branches in Singapore
Introduce a sunset clause for tax
exemption schemes for section 13G
foreign trust, section 13O foreign
account of philanthropic purpose trust,
and section 13Q locally administered
trust
Extend and enhance section 13Y tax
exemption scheme for sovereign fund
Refine section 43N to allow a primary
dealer to opt out of the tax exemption
Brief Description of Legislative Change
Amendment to
Income Tax Act
[Clause in Income
Tax (Amendment)
Bill]
Bonus wrongfully obtained, rather than the full amount of and 60]
cash payout/ Bonus obtained.
To remove the requirement to withhold tax on payments Sections 45C, 45D,
made to permanent establishments that are Singapore 45G and 45H
branches of foreign companies, for the following
payments:
[Clauses 51, 52, 54
(a) Distributions made by unit trusts (section 45C);
and 56]
(b) Gains from real property transaction (section 45D);
(c) Distributions from any real estate investment trust
(section 45G); and
(d) Commission or other payments of licensed
international market agent (section 45H).
This will take effect for payments made or liable to be
made on or after 1 January 2015.
To provide for a review date of 31 March 2019 for the Sections 13G, 13O
schemes to ensure that the relevance of the schemes is and 13Q
periodically reviewed.
[Clauses 11, 12 and
13]
To enhance and extend the scheme for five years till 31 Section 13Y
March 2019.
[Clause 17]
To allow primary dealers to opt out of the tax exemption Section 43N
by way of a written notification to the Inland Revenue
2
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7
Legislative Change
Grant tax deduction for expenses
incurred to comply with statutory and
regulatory requirement
Brief Description of Legislative Change
Amendment to
Income Tax Act
[Clause in Income
Tax (Amendment)
Bill]
Authority of Singapore (“IRAS”). The election to opt out [Clause 48]
of the tax exemption is irrevocable.
Recognising that businesses incur costs to comply with Section 14X and 15
laws and regulations, including those of other jurisdictions
(hereafter referred as “statutory and regulatory expenses”), [Clause 27 and 28]
a specific tax deduction is given for qualifying statutory
and regulatory expenses with effect from YA 2014.
Allowing a tax deduction for such expenses is aligned
with our policy of promoting voluntary compliance with
statutory and regulatory requirements. The amendment to
the ITA will also provide certainty on the deductibility of
such expenses, some of which have been allowed
deduction by way of administrative concession or tax
remission currently.
Qualifying statutory and regulatory expenses are noncapital expenditure incurred for the purpose of the
business 2 from which the taxpayer’s income, which is
subject to tax in Singapore, is acquired, and are incurred
by him for the purposes specified in the new Section 14X.
Please refer to Annex A for examples of qualifying
For the purposes of section 14X, the word “business” in relation to a company, has its ordinary dictionary meaning, which is any activity or enterprise for which
a company is established to carry out as set out in its constituent documents. As such, it is not limited to an active trade or business, and would include the
business from which passive income is acquired.
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3
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9
Legislative Change
Refine the Designated Unit Trust
(“DUT”) Scheme
Allow foreign-sourced income
exemption (“FSIE”) to apply for the
life of the properties acquired by Real
Estate Investment Trusts (“REITs”) on
or before 31 March 2015
10
Clarify the basis of computing
accommodation benefits provided by
employers to their employees
11
Allow the Minister to make regulations
Brief Description of Legislative Change
statutory and regulatory expenses.
To deem the undistributed DUT income as income taxable
in the hands of specified investors on a specified date,
when a unit trust ceases its DUT tax status or fails to meet
any DUT condition. This is an additional change to the
changes to the DUT scheme announced in Budget 2014,
and will be effected from 1 June 2015.
Amendment to
Income Tax Act
[Clause in Income
Tax (Amendment)
Bill]
Sections 10 and 35
[Clauses 3 and 34]
Miscellaneous
amendments
[Clause 70]
To align with the foreign-source income tax exemption Section 13
granted under section 13(12) for companies and qualifying
offshore infrastructure projects/ assets, the existing tax [Clause 8]
exemption granted on specified foreign-sourced income
derived by REITs (or their wholly-owned subsidiaries)
from properties acquired on or before 31 March 2015,
will be modified such that the exemption will apply
regardless of when the income is received in Singapore,
subject to conditions. This will provide tax certainty for
REITs.
To clarify that where the Annual Value (“AV”) of a Section 10
property is not available on the e-Valuation List for the
purpose of ascertaining the value of the accommodation [Clause 3]
benefits provided by employer for tax purpose, the AV
may be ascertained in the same manner as it is determined
under the Propery Tax Act.
To allow the Minister for Finance to make regulations to Section 10
4
s/n.
Legislative Change
Brief Description of Legislative Change
to provide for the taxable value of
furniture & fittings provided by
employers to their employees
prescribe the formulae for determining the taxable value
of furniture & fittings provided by employers to their [Clause 3]
employees.
12
Extend the section 45GA reduced
withholding tax rate of 10% on income
derived by non-resident public
entertainers
To extend the concessionary 10% withholding tax rate Section
40A
and
applicable to income derived by non-resident public 45GA
entertainers for 5 years from 31 March 2015 till 31 March
2020.
[Clauses 47 and 55]
13
Amend section 37(18B) to provide for
remission of financial penalty by the
Comptroller of Income Tax
To provide the Comptroller powers to remit wholly or in
part the financial penalties imposed on registered grantmakers for contravening the regulations made under
section 37(18A). This is aligned with provisions under the
Charities Act where the Commissioner of Charities is
empowered to remit financial penalties imposed on
Institutions of a Public Character .
To allow Singapore to ratify the Convention, the ITA is
amended to provide for the prescription of multilateral
exchange of information arrangements, and spontaneous
exchange of information (“EOI”), which is an obligation
stipulated in the Convention. In line with this, the ITA will
also be amended to allow Singapore to engage in
spontaneous EOI in respect of all its EOI arrangements
besides the Convention, such as DTAs / TIEAs.
To allow SRS members, who qualify for the “50% tax
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15
Enable the ratification of the
Convention on Mutual Administrative
Assistance in Tax Matters
(“Convention”)
Allow SRS members who qualify for
Amendment to
Income Tax Act
[Clause in Income
Tax (Amendment)
Bill]
Section 37
[Clause 36]
Sections 6, 105A and
105BA
[Clauses 2, 61 and 62]
Sections 10L, 45EA
5
s/n.
Legislative Change
the 50% tax concession to withdraw
their SRS investments without
liquidation of such investments
16
17
Replace the reference to the term
"foreign law firm" in section 13V with
“foreign law practice”
Amend the definition of "qualifying
investment" in section 37K(12) to
exclude all stock option and share
award schemes.
Brief Description of Legislative Change
Amendment to
Income Tax Act
[Clause in Income
Tax (Amendment)
Bill]
concession” 3 to make SRS withdrawals in the form of and 89
investments, Currently SRS members can only make
withdrawals in the form of cash, which necessitates the [Clauses 5, 53 and 57]
liquidation of SRS investments. To allow these members
to make withdrawals in the form of investments, the ITA
will be amended to tax the value of the SRS investments
withdrawn and provide the Minister the power to make
regulations to provide for the method of valuing the SRS
investments withdrawn.
These amendments will take effect on 1 January 2015.
To replace the reference to “foreign law firm” in the ITA
with “foreign law practice”. When section 13V was
enacted, the term “foreign law firm” was included in
subsection 15.
The term “foreign law firm” was
subsequently deleted from the Legal Profession Act. This
is a consequential amendment.
To amend the definition of “qualifying investment”,
under the Angel Investor Tax Deduction (“AITD”)
scheme such that it is similar to that in section 97U(1)(c)
of the Economic Expansion Incentive (Relief from Income
Tax) Act. The Angel Investor Tax Deduction (“AITD”)
Section 13V
[Clause 15]
Section 37K
[Clause 44]
Such SRS members include those who make a withdrawal from their SRS account after reaching age 62. Under the “50% tax concession”, only 50% of the
amount withdrawn is subject to tax.
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20
Legislative Change
Amend section 37C(15) and (19),
concerning the references to “the date
of commencement of the Economic
Expansion Incentives (Relief from
Income Tax) (Amendment) Act
"2004”.
Delete sections 10I, J, K & M and
amend section 36B(1)(d)
Amend section 12(7) and relevant ITA
provisions to provide that royalty does
not include payment for copyrighted
article
Brief Description of Legislative Change
scheme was introduced to encourage approved investors
to invest in qualifying start-ups by providing a tax
deduction on their qualifying investment.
To make technical amendments to section 37C by
removing the references to “the date of commencement of
the Economic Expansion Incentives (Relief from Income
Tax) (Amendment) Act 2004” and substituting them with
“28 April 2004”, being the date of commencement of the
Economic Expansion Incentives (Relief from Income Tax)
(Amendment) Act 2004.
To repeal sections rendered irrelevant with the
implementation of the one-tier corporate tax system
(where dividends paid by Singapore companies are taxexempt). With the move to the one-tier corporate tax
system with effect from 1 January 2008, sections 10I, 10J,
10K and 10M are no longer relevant and will be repealed.
Consequently, section 36B(1)(d) which reference to
sections 10I, 10J, 10K and 10M will also be deleted.
To amend Section 12(7) to specify that a payment borne
by a person resident in Singapore or a Singapore
permanent establishment for a right to use software,
information or digitised goods will not be treated as
having been derived from Singapore, provided that the
payer does not acquire a right to commercially exploit the
copyright of that software, information or digitised goods.
This is in line with the international practice in respect of
Amendment to
Income Tax Act
[Clause in Income
Tax (Amendment)
Bill]
Section 37C
[Clause 37]
Sections 10I, 10J,
10K, 10M and 36B
[Clauses 4 and 35]
Section 12
[Clause 7]
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21
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23
Legislative Change
Clarify that a reference in each of the
specified provisions4 to a period
between two dates, is inclusive of both
the dates.
Clarify that the 50% related party rule5
for the purpose of the Qualifying Debt
Securities (“QDS”) incentive is
determined based on the amount of
debt securities issued and outstanding
Apply section 37B for Lloyd's Scottish
Limited Partnership (“SLP”) and
Limited Liability Partnership (“LLP”)
members
Brief Description of Legislative Change
Amendment to
Income Tax Act
[Clause in Income
Tax (Amendment)
Bill]
the characterization of such payments.
To clarify that a reference in each of the specified Miscellaneous
provisions to a period between two dates, is inclusive of Amendments
both the dates for consistency.
[Clause 70]
To align with the policy intent and current practice, Sections 13 and 43N
sections 13 and 43N are amended to clarify that the 50%
related party rule is applied to QDS that are issued and [Clauses 8 and 48]
outstanding. Currently, sections 13 and 43N are worded
such that the 50% related party rule is applied to QDS that
are issued (which could include those that are no longer
outstanding, e.g. QDS that have been repurchased or
redeemed by the issuer).
To allow SLP and LLP members of Lloyd’s syndicates to Section 26A
apply the section 37B 6 rules with effect from YA 2015.
Their losses carried forward from earlier YAs will also be [Clause 33]
subject to the section 37B rules with effect from YA 2015.
4
10(20A)(f)(i), (ii) and (h), 13(1)(a)(i), (ii), (aa)(i), (aa)(ii), (ab), (b)(i), (ii), (ba), (bc)(i)(A), bd(i), (ja), (o)(i), (u), (ua) (zc), (2), (2C)(a), (b), (2D)(a), (b), (8)(ii)
and (16), 13S(2), (3)(a) and (b), 13U(2), 14A(1)(a) and 14N(9), 19A(9A), 37K(4)(d) and (12), 39(2)(f) and (13), 43(3B), 43D(1)(c), 43N(1)(aa)(i), (ii), (ab), (ac),
(b), (c), (2)(a), (2)(b)(i), (ii), (c), (d) and (3)(b), 43W(4) and (4A), 43Y(4), 43Z(4), 43ZA(3), (4)(a) and (b), 43ZB(4) and (4A), 43ZC(4), 43 ZD(4), 43ZE(2),
43ZF(2), 45A(2A), (9)(a) and (b), 45A(2)(a), (b), (2A), (2B)(a) and (b) and 45G(2).
5
The debt securities will not qualify for the QDS scheme if 50% or more of the debt securities are beneficially held or funded, directly or indirectly, by related
parties of the issuer.
6
Section 37B provides for an adjustment factor which companies that are taxed at a different rate (i.e. concessionary tax rate) will apply to the loss amount
before they are allowed to offset the loss that is computed at one tax rate (e.g. 10% concessionary tax rate) against income taxed at another rate (e.g. 17% normal
tax rate).
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s/n.
Legislative Change
24
Preserve confidentiality of EOI court
proceedings
25
Facilitate Singapore-based financial
institutions’ reporting of data under the
Singapore-US Foreign Account Tax
Compliance Act (“FATCA”) intergovernment agreement (“IGA”)
26
Amend sections 105M and 105P to
specify that non-compliance with
certain regulations under section 105P
will constitute an offence.
27
Include a new section 105MA to allow
the Comptroller to address measures
taken to circumvent FATCA reporting
requirements
Brief Description of Legislative Change
Amendment to
Income Tax Act
[Clause in Income
Tax (Amendment)
Bill]
This ensures that Singapore can adhere to its Sections 105I and
confidentiality obligations under its EOI arrangements by 105Q
controlling the confidentiality of the proceedings and
documents used in any court proceedings relating to EOI. [Clauses 63 and 68]
To allow Singapore-based FIs to submit data directly to Section 105L
the International Data Exchange Service (“IDES”),
sections 105L(1) and 105M will be amended to allow FIs [Clauses 64]
to submit the data to “any other person which may be
authorised by the Comptroller”. Under the data
submission approach for FATCA, Singapore-based
financial institutions (“FIs”) will transmit data to the
Comptroller via the IDES.
The Comptroller will
subsequently authorise the onward transmission of such
data held at the IDES to the US Internal Revenue Service.
To give IRAS the power to ensure the compliance of Sections 105M and
financial institutions with Section 105P regulations, which 105P
amongst others, include the requirement for financial
institutions to conduct specific due diligence to identify [Clauses 65 and 67]
reportable accounts under the FATCA IGA.
To give the Comptroller the power to give directions to Section 105MA
ensure that any arrangements designed to circumvent the
reporting obligations under the FATCA IGA may be [Clause 66]
disregarded.
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Annex A
Examples of qualifying statutory and regulatory expenses under Section 14X
Purpose for which expense was
incurred
(a) for the purpose of compliance by
the taxpayer with any written law
of Singapore or another country
Examples
(Non-exhaustive)

Expenses incurred to comply with:
(a) the Income Tax Act, such as preparation of
income tax computation, replying to
queries raised by Comptroller of Income
Tax, lodging objection to Notices of
Assessment.
(b) the Companies Act, such as audit fees.

Expenses incurred to rectify non-compliance
with such requirement.
(b) for the purpose of compliance by

the taxpayer with any code,
standard, rule, requirement or other
document issued by the
Government or a public authority
established by or under any public
Act, or by the government or a

public authority of another country,
or by a securities exchange

Expenses incurred to comply with nonstatutory codes and directives issued by the
Monetary Authority of Singapore, Accounting
Standards Council and their foreign
equivalents.
Annual listing fees and other expenses to
comply with the Singapore Exchange Listing
Manual7
Expenses incurred to rectify non- compliance
with such requirement.
(c) to study the impact of any proposed 
law referred to in (a) that has yet to
be enacted or proposed document
referred to in (b) that has yet to be
issued
Expenses incurred to study the impact of
implementing proposed statutory requirements
that has yet to be enacted, such as when the
Foreign Account Tax Compliance Act
(FATCA) was first proposed by the US
government.
(d) to prevent or detect any non- 
compliance with any law referred
to in (a) or document referred to in
(b)
Expenses incurred to enhance internal controls
for prevention and detection of noncompliance with statutory requirements under
IRAS’ Assisted Compliance Assurance
7
Capital expenses such as expenses incurred for the purposes of the initial listing and additional listing of
shares remain non-deductible (refer to paragraph 2.4).
10
Purpose for which expense was
incurred
(e) to voluntarily comply with a 
requirement of any law referred to
in (a) or document referred to in
(b), even though the taxpayer is
exempt from complying with the
requirement
Examples
(Non-exhaustive)
program for Goods and Services Tax (GST
ACAP8).
Audit fees incurred by a company that is
eligible for audit exemption under the
Companies Act.
For more details on GST ACAP, please refer to IRAS’ website under GST > For GST-registered
businesses > GST Initiatives to Facilitate Voluntary Compliance > Assisted Compliance Assurance
Program (ACAP)
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