Singapore: Budget for 2017 released

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The government of Singapore released Budget 2017 on 20 February 2017, for the financial year 1 April 2017 to 31 March 2018.

The Budget bill raised the existing corporate income tax (CIT) rebate cap from SGD 20,000 to SGD 25,000 for the assessment year 2017, but the rebate rate remains unchanged at 50% of tax payable. This CIT rebate will be extended for another year to YA 2018 but there will be a reduced rate of 20% of tax payable with a cap of SGD 10,000.

According to the Budget 2017, for the purpose of encouraging the use of IPs arising from research and development (R&D) activities, IP income will provide incentive under the new base erosion and profit shifting (BEPS)-compliant IP regime called the IP Development Incentive (IDI). However, existing incentive receivers will keep on having such income covered under their existing incentive awards until 30 June 2021.

The IP Development Incentive regime will become effective on or after 1 July 2017 and the Economic Development Board of Singapore will administer the regime.

According to the released Budget, taxpayers will be able to choose to claim a tax deduction for 75% of the payments made under a Cost sharing arrangements acquired through qualifying R&D projects instead of the existing general deduction rules and the new rule will apply to CSA payments made on or after 21 February 2017. Further details will be released by May 2017.

The period withholding tax exemption on payments made to non-resident non-individuals for structured products offered by Financial Institutions will be extended until 31 March 2021. Also, the automatic WHT exemption regime will be extended to qualifying payments made on qualifying loans entered into on or before 31 December 2022.  Further, the existing Integrated Investment Allowance system will be extended until 31 December 2022.

According to the Budget, the existing set of tax incentives for project and infrastructure finance providing: (a) tax exemption of qualifying income from qualifying project debt securities, (b) tax exemption of qualifying income from qualifying infrastructure projects or assets received by approved entities listed on the Singapore Exchange; and (c) concessionary tax rate of 10% on qualifying income derived by an approved infrastructure trustee manager or fund management company, will be extended to 31 December 2022.

 

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