SUMMARY TABLE ON CHANGES AS ANNOUNCED AT
BUDGET 2012 STATEMENT
s/n.
1
Legislative
Change
Brief Description of Legislative Change
Amendment
to Income Tax
Act
[Clause in
Income Tax
(Amendment)
Bill]
Provision of oneoff SME cash
grant
A one-off SME cash grant will be given to Section 92C
help companies offset the high costs which [Clause 47]
may persist with the business slowdown. The
non-taxable cash grant will be given for the
year of assessment (“YA”) 2012, based on 5%
of the company’s revenue from its principal
activities for YA 2012, subject to a cap of
$5,000.
To be eligible for the cash grant, the company
must have made CPF contributions for at least
one employee (who must not be a shareholder
of the company) in the relevant period.
2
Enhancement to
the Productivity
and Innovation
Credit (“PIC”)
Scheme
In response to industry feedback, and to Sections
provide more support for businesses to invest 14D, 14DA,
in innovation and productivity, the PIC 14R, 19B, 19C
scheme will be enhanced.
and 37I
[Clauses 14,
(a) Cash Payout
15, 19, 22, 23
The changes are as follows:
and 32]
(i) The cash payout rate will be increased
from 30% to 60% for up to $100,000
of qualifying expenditure, from YA Miscellaneous
2013.
amendments
(ii) The cash payout option will be Sections 14E,
extended from YA 2013 to YA 2015. 19, 19A, 20
The cap on the quantum of qualifying and 37L
expenditure that can be converted into [Clause 51]
cash cannot be combined across the 3
YAs.
(iii) Businesses may opt for the cash payout
any time after the end of each financial
quarter, but no later than the due date
1
s/n.
Legislative
Change
Brief Description of Legislative Change
Amendment
to Income Tax
Act
[Clause in
Income Tax
(Amendment)
Bill]
for the filing of its income tax return
for the relevant YA.
(b) Training
(i) External certification of qualifying inhouse training courses will not be
required for PIC claims of up to
$10,000 per YA.
(ii) PIC claims will be allowed on training
expenditures incurred for Qualifying
Persons. A list of qualifying persons
will be prescribed in the subsidiary
legislation. Qualifying persons are
insurance agents, financial advisers,
remisiers, real estate agents and taxi
hirers. The list will be updated where
necessary.
(c) R&D Expenditure
Expenditure incurred on R&D cost-sharing
agreements may qualify as R&D expenditure.
The qualifying expenditure will be at 60% of
the shared costs, similar to outsourced R&D.
(d)Investments in Automation Equipment&
Intellectual Property Rights (“IPRs”)
The cash payout will be extended to cover
qualifying automation equipment and IPRs
acquired on hire purchase or by instalments
with repayment schedule straddling two or
more financial years.
Changes (b), (c) and (d) will take effect from
YA 2012.
3
Provision of
certainty of nontaxation of
companies’ gains
Gains derived from the disposal of ordinary Section 13Z
shares by a qualifying divesting company will [Clause 11]
not be taxed, if the qualifying divesting
company had held at least 20% of the ordinary
2
s/n.
Legislative
Change
Brief Description of Legislative Change
on disposal of
equity investments
shares in the investee company for a
continuous period of at least 24 months prior
to the disposal of the shares. This certainty of
non-taxation measure is applicable to
disposals of ordinary shares made during the
period from 1 June 2012 to 31 May 2017
(both dates inclusive).
Amendment
to Income Tax
Act
[Clause in
Income Tax
(Amendment)
Bill]
For share disposals in other scenarios, the tax
treatment of the gains/ losses arising from
share disposals will continue to be determined
based on the facts and circumstances of the
case.
4
Enhancement to
the Earned Income
Relief (“EIR”)
To encourage elderly workers to stay Section 39
employed and to provide more support to [Clause 35]
handicapped workers, the amount of EIR and
Handicapped EIR will be increased.
The table below shows the revised amount of
EIR and Handicapped EIR.
Age Group
EIR
Below 55
55 to 59
60 and
Above
$1,000
$6,000
$8,000
Handicapped
EIR
$4,000
$10,000
$12,000
This change will take effect from YA 2013.
5
Enhancement to
Renovation and
Refurbishment
Deduction
To help businesses that need to renew and
refresh their premises regularly to remain
competitive, the section 14Q deduction
scheme for qualifying renovation and
refurbishment costs will be made a permanent
feature of the tax regime. The existing
expenditure cap (which applies for every
three-year period) will be doubled to
$300,000.
Any unabsorbed section 14Q
Sections
14Q and 37C
[Clauses 18
and 31]
3
s/n.
Legislative
Change
Brief Description of Legislative Change
Amendment
to Income Tax
Act
[Clause in
Income Tax
(Amendment)
Bill]
deduction will be allowed for transfer under
the Group Relief system. These changes will
take effect from YA 2013.
6
Enhancement to
the Mergers and
Acquisition
(“M&A”) Scheme
To further support companies carrying out Section 37L
M&A, the scheme will be enhanced as [Clause 33]
follows:
(a) Transaction costs incurred on qualifying
M&A
A 200% tax allowance will be granted on the
transaction costs incurred on qualifying M&A,
subject to an expenditure cap of $100,000 per
YA. The tax allowance on the transaction cost
is to be written down in one year.
(b) Qualifying M&A
(i) Acquisition through subsidiaries
The acquiring company may acquire shares of
the target company through multiple tiers,
instead of just one tier, of wholly-owned
subsidiaries.
(ii) Target company
The relevant conditions that the target
company has to satisfy may be satisfied by
any of the multiple tiers of wholly-owned
subsidiaries of the target company, instead of
just one-tier of wholly-owned subsidiaries.
(c) Extension of scheme
The scheme is extended to complement
existing Headquarter (HQ) incentive schemes
so as to facilitate growth of HQ functions in
Singapore. The condition that the acquiring
company must be held by an ultimate holding
company incorporated in, and a tax resident
of, Singapore may be waived by the tax
incentive administering agency (such as
4
s/n.
Legislative
Change
Brief Description of Legislative Change
Amendment
to Income Tax
Act
[Clause in
Income Tax
(Amendment)
Bill]
Economic Development Board), subject to
conditions.
These changes will take effect for qualifying
M&A completed during the period of 17
February 2012 to 31 March 2015.
7
Enhancement to
the Double Tax
Deduction for
Internationalisation
Scheme
To encourage our SMEs to venture abroad,
and to reduce administrative burden on
businesses, businesses will be able to claim
tax deduction of up to 200% on qualifying
expenditure, without the need for approval
from International Enterprise Singapore or
Singapore Tourism Board. The amount of
expenditure claimable is up to $100,000 per
YA, incurred on the following four activities:
(i) Overseas
business
development
trips/missions;
(ii) Overseas investment study trips/missions;
(iii)Participation in overseas trade fairs; and
(iv) Participation in approved local trade fairs.
Sections
14B and 14K
[Clauses 13
and 17]
International
Enterprise
Singapore
or
Singapore Tourism Board will continue to
approve claims, on a case-by-case basis, made
by businesses that require larger funding
support in excess of $100,000, or on
qualifying expenditure incurred on other
qualifying activities.
These changes will take effect for qualifying
expenditure incurred on or after 1 April 2012.
8
Simplification of
capital allowance
claims
To further ease the claiming of capital Section 19A
allowances, the full cost of each asset that [Clauses 21]
may be written down in one year will be
increased to no more than $5,000, with effect
from YA2013.
9
Exemption of
To bring Singapore’s tax regime on par with Sections
5
s/n.
Legislative
Change
Brief Description of Legislative Change
Amendment
to Income Tax
Act
[Clause in
Income Tax
(Amendment)
Bill]
vessel disposal
gains derived by
qualifying ship
operators and ship
lessors from tax
other maritime nations and provide certainty
to the maritime sector, qualifying ship
operators and ship lessors under the Maritime
Sector Incentive (“MSI”) awards will be
granted tax exemption automatically, without
the need to opt for the exemption, on gains
from the disposal of vessels.
13A, 13F and
13S
[Clauses 4, 5
and 9 ]
The gains from the disposal of vessels under
construction and new building contracts will
also be exempt from tax. For ship lessors
under the MSI-Maritime Leasing (Ship)
award, the tax exemption also applies to gains
from the disposal of foreign vessels.
The tax exemption does not apply to gains
derived (a)
from the carrying on of a business of
trading in ships or constructing ships for
sale; or
(b)
under a finance lease which is treated as a
sale for income tax purpose.
These changes will take effect from the
commencement of MSI on 1 June 2011.
10
Exemption and
waiver of the
obligation to
withhold tax on
charter fees
payments
To enhance Singapore’s competitiveness as an
International Maritime Centre and reduce
business costs for ship charterers, bareboat,
voyage and time charter payments made to
non-residents
(excluding
permanent
establishments in Singapore) for the use of
ships will be exempted from tax. Payers
making charter payments to the permanent
establishment in Singapore of a non-resident
are also not required to withhold tax.
Sections
13 and 45A
[Clauses 3 and
42]
This change will take effect for all payments
6
s/n.
Legislative
Change
Brief Description of Legislative Change
Amendment
to Income Tax
Act
[Clause in
Income Tax
(Amendment)
Bill]
liable to be made on or after 17 February
2012.
11
Enhancement to
the Maritime
Sector Incentive –
Maritime Leasing
(Container) Award
To promote the growth of container leasing in Section 43ZA
Singapore, the following enhancements will [Clauses 40]
be made to the MSI-Maritime Leasing
(Container) award:
(i) Income derived from the leasing of
intermodal equipment (e.g. trailers) which
is incidental to the leasing of qualifying
containers
will
also
enjoy
the
concessionary tax rate of 5% or 10% from
YA 2013; and
(ii) The qualifying containers will refer to
containers that adhere to the standards
defined by the ISO, IICL or any other
equivalent organisation from YA 2013.
12
Extension and
Enhancement of
the Aircraft
Leasing Scheme
(“ALS”)
To continue the promotion of aircraft leasing Sections
activities in Singapore, the ALS will be 19, 43Y, 43Z
extended to 31 March 2017.
[Clauses 20, 38
and 39]
Previously, an ALS recipient had to apply to
IRAS within one month from the date of
acquisition or transfer of its aircraft, if it
wished to extend the number of years of
working life of the aircraft for the purpose of
capital allowance claim. To ease compliance,
the application process is removed and ALS
recipients may make an irrevocable election
for the extension of number of years of
working life, at the time of their tax filing for
the YA relating to the basis period in which
the aircraft was acquired/ transferred. The
change is effective from 1 March 2012.
13
Enhancement to
To enhance the withholding tax regime, Section 45I
the withholding tax banks, finance companies and approved [Clause 44]
exemption regime entities will not need to withhold tax on
7
s/n.
Legislative
Change
Brief Description of Legislative Change
for banks
interest and other Section 12(6) payments
(“qualifying payments”) made to PEs in
Singapore. The PEs in Singapore will be
assessed on the payments in their annual
income tax returns, unless the payments are
specifically exempt from tax.
Amendment
to Income Tax
Act
[Clause in
Income Tax
(Amendment)
Bill]
This change will take effect for:
(i) qualifying payments liable to be made
from 17 February 2012 to 31 March 2021
(for contracts already in force before 17
February 2012); and
(ii)
14
Enhancement to
Real Estate
Investment Trusts
(“REITs”)
qualifying payments arising from contracts
entered into during the period from 17
February 2012 to 31 March 2021.
To enhance our tax regime for REITs, a REIT Section 43
that makes distributions to unit holders in the [Clause 37]
form of units can continue to enjoy tax
transparency. This is subject to the following
conditions:
(i) Before the distribution, the trustee of the
REIT grants the unit holders the option to
receive the distributions either in cash or
units in that REIT; and
(ii) On the date of distribution, the trustee of
the REIT must have sufficient cash to
make the entire distribution fully in cash
had no option been given to those unit
holders to receive the distribution in units
in that REIT.
Unit holders that elect to receive distributions
in units will be taxed in the same manner as if
they had received the distribution in cash. This
change will take effect for distributions made
on or after 1 April 2012.
8
s/n.
Legislative
Change
Brief Description of Legislative Change
Amendment
to Income Tax
Act
[Clause in
Income Tax
(Amendment)
Bill]
15
Enhancement to
the definition of
research and
development
(“R&D”)
Recognising the commercial reality that some Section 2
of the computer software development work [Clauses 2]
will not be put up for sale for commercial and
proprietary reasons, the multiple-sales
requirement for software development to
qualify as R&D will be removed.
16
Extension of the
filing and payment
deadline for
withholding tax
To give payers more time to comply with the
withholding tax obligations, payers will be
allowed one additional month to file and pay
the tax.
Sections
45 and 45D
[Clauses 41
and 43]
This change will take effect for payments
liable to be made to non-residents on or after 1
July 2012.
9