The government released an Exemption Order (the Order) on 10 April 2017 providing a temporarily reduction in corporate income tax rates based on incremental taxable income compared to the preceding year of assessment. The “Income Tax (Exemption) (No. 2) Order 2017” has effect for the year of assessment 2017 and year of assessment 2018.
The order applies to a qualifying person whose business has been in operation for not less than twenty four months. Also applies to a qualifying person who has chargeable income from a source consisting of a business in the basis period for a year of assessment and the year of assessment immediately preceding that year of assessment and has made up its account for a period of twelve months ending on the same date for each of those years of assessment.
The Order will not apply in certain cases including a company claiming the reinvestment allowance tax incentive, incentives under the Promotion of Investments Act 1986, or a group relief.
The reduction in the corporate income tax rates would apply as follows:
Percentage of increase in taxable income from previous YAs |
Percentage point in tax rate reduction (%) |
Tax rate on incremental taxable income (%) |
|
5% – 9.99% |
1 | 23 |
|
10% – 14.99% |
2 |
22 |
|
15% – 19.99% |
3 |
21 |
| Over 20% | 4 |
20 |
