On 8 June 2017, the Prime Minister and Minister of Finance and Economic Development delivered the Budget speech for 2017-18 to the parliament with little change to economic policy. Key points of the budget are summarised below:
Reduced corporate tax rate on profits from the export of goods: Profits from exports of goods will be taxed at the lower rate of 3%, instead of 15%.
Tax Holidays: An 8-year income tax holiday has been introduced for new companies engaged in the manufacturing of pharmaceutical products, medical devices and high tech products; and for companies engaged in the exploitation and use of deep ocean water for providing air conditioning installations, facilities and services.
Tax Incentives: A tax incentive has been introduced for research and development in the form of an accelerated capital allowance of 50% that will apply to capital expenditure incurred on research and development.
A 200% tax deduction is available for:
- Qualifying expenditures on research and development if the expenditure relates to the current business of the taxpayer, applicable for 5 income years from 2017/2018 to 2021/2022;
- Expenses incurred in relation to deep ocean water air conditioning for a period of 5 consecutive years; and
- Expenditure on the acquisition and setting up of water desalination plants.
Transfer of non-incurred tax losses: As in the case of the transfer of losses in takeovers or mergers, unrelieved income tax losses brought forward are to be made available to compensate future taxable income where there is a change in the shareholding of a manufacturing company of more than 50%, provided that conditions relating to the public interest, such as securing employment, are met.