Tax Incentives in Singapore

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Leading through uncertainty Singapore Budget Commentary 2013

Foreword
Greetings from your tax team at Deloitte. The Minister for Finance presented the 2013 Budget Statement on 25 February 2013 and we are pleased to provide our commentary on the tax and certain other changes proposed therein. Overall, Budget 2013 offers various tax measures and sets out the strategies to achieve quality growth and build an inclusive society for Singapore. The tax measures are further explored in our commentary. It should be noted that the commentary is our interpretation of the changes proposed in the Budget Statement. As the proposals are yet to be enacted, and the legislation to enact the proposals is yet to be published, our comments in this commentary should not be considered definitive and should, therefore, be used only as a guide. If you need any clarification or advice, please contact your usual tax advisors at Deloitte. We hope you will find this commentary useful.

Contents
Summary
Proposed business tax changes Proposed personal tax changes Others 1 2 2

Business tax
Corporate income tax rebate Productivity and Innovation Credit (PIC) Scheme Enhancements to Financial Sector Incentive (FSI) Scheme Extending and redefining Qualifying Debt Securities (QDS) and QDS+ Incentive Schemes Extending the tax exemption on income derived by primary dealers from trading in Singapore Government Securities (SGS) Extending the Approved Special Purpose Vehicle Scheme (ASPV Scheme) Enhancement of Specialised Insurance Tax Incentive Scheme Extending the maximum tenure of the Maritime Sector Incentive – Approved International Shipping Enterprise (MSI-AIS) Award Rationalising the Start-Up Tax Exemption (SUTE) Scheme Expiration of the deduction scheme for upfront land premium Expiration of the further tax deduction scheme for expenses incurred in relocation or recruitment of overseas talent Expiration of Offshore Insurance Business Scheme for Islamic Insurance and Reinsurance Expiration of the Tax Incentive Scheme for Family-Owned Investment Holding Companies Withdrawal of Overseas Enterprise Incentive (OEI) Scheme Withdrawal of the Approved Cyber Trader (ACT) Scheme Enhancement of tax incentives for insurance and reinsurance brokers 15 15 16 16 16 17 13 14 15 12 12 13 3 4 8 9

Personal tax
Personal tax rates / Personal tax rebate Rationalising the taxation of accommodation benefits Phasing out the Equity Remuneration Incentive Scheme (ERIS) Changes to CPF contribution rates for lower-income workers 18 18 19 21

Others
Increase in excise taxes for tobacco products Progressive property tax rates for residential properties Removal of property tax refund concession for vacant properties Road tax rebate Reducing concessionary foreign domestic worker levy New tiered Additional Registration Fee structure for vehicles Wage Credit Scheme (WCS) Renewal of COE for Commercial Vehicles 22 23 24 25 25 26 26 27

Appendices
A B C D E F Singapore corporate tax rates for the YAs 1959 to 2013 Comparison of current corporate tax rates in selected countries Comparative personal effective tax rates Rates of income tax for resident individuals for YA 2013 Personal reliefs for YA 2013 Comparative standard VAT / GST rates – 2013 28 29 30 31 32 39

Common abbreviations
CA COE CPF CIT EDB EEIA GST IRAS HDB IE Singapore IPR ITA JTC MAS MPA MoF PIC PE R&D SME SPR YA : Capital Allowance : Certificate of Entitlement : Central Provident Fund : Comptroller of Income Tax : Economic Development Board : Economic Expansion Incentives (Relief from Income Tax) Act : Goods & Services Tax : Inland Revenue Authority of Singapore : Housing & Development Board : International Enterprise Singapore : Intellectual Property Right : Income Tax Act : Jurong Town Corporation : Monetary Authority of Singapore : Maritime Port Authority of Singapore : Ministry of Finance : Productivity and Innovation Credit : Permanent Establishment : Research and Development : Small and Medium...
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