On 19 February 2018, the Finance Minister presented the Budget for 2018 to the Parliament. Some of its most significant corporate tax measures are summarized below:
- For Year of Assessment (YA) 2018, the CIT rebate will be enhanced to 40% of tax payable, with enhanced cap at $15,000;
- The CIT rebate has been extended for another year to YA 2019, but will revert to 20% of tax payable with a cap of SGD 10,000;
- The deduction of licensing payments for the commercial use of intellectual property (IP) will be increased to 200% from YA 2019, capped at SGD 100,000 of licensing payments per year (introduced due to the expiration of Productivity and Innovation Credit (PIC) scheme, which reverted the deduction of licensing payments to 100% from YA 2019);
- The tax deduction of IP registration fees will be increased from 100% to 200% from YA 2019, capped at SGD 100,000;
- The tax deduction for qualifying expenses incurred on R&D done in Singapore will be increased from 150% to 250% from YA 2019;
- The amount of expenses that can qualify for the Double Tax Deduction for Internationalization without prior approval will be increased from SGD 100,000 to SGD 150,000 per year from YA 2019;
- The Start-up Tax Exemption and the Partial Tax Exemption schemes will be amended from YA 2020 so that the tax exemptions under both schemes will be limited to the first SGD 200,000 of chargeable income and for the start-up scheme, a 75% exemption on the first SGD 100,000 of chargeable income will be provided instead of 100%;
- A carbon tax will be introduced at a rate of SGD 5 per metric ton of greenhouse gas emissions on facilities in all sectors producing more than 25,000 tons per year from 2019 to 2023 (first payable in 2020), with the intent to increase the rate to SGD 10 to 15 per ton by 2030;
- The government plans to increase the GST rate from 7% to 9% in a progressive manner during the period from 2021 to 2025, with the exact timing dependent on the state of the economy, expenditure growth, and how buoyant Singapore’s existing taxes are;
- GST will be introduced on imported services effective from 1 January 2020, with a reverse charge mechanism for B2B services and an Overseas Vendor Registration (OVR) mode for B2C services; and
- The tobacco excise duty will be increased by 10% for all products effective from 19 February 2018.