On 12 November 2018, Singapore enacted the Income Tax (Amendment) Act 2018. The Act(amended) implements the changes in income tax announced in the 2018 budget statement and changes in the taxes resulting from the regular review of income tax system. Under the Act (amended), the significant changes are summarized below:
- Enhancing the corporate income tax rebate for the Year of Assessment (“YA”) 2018 by raising the rebate percentage from 20% to 40% of tax payable, and the rebate cap from S$10,000 to S$15,000.
- Adjusting the Start-Up Tax Exemption Scheme and Partial Tax Exemption Scheme from YA 2020. Among other things, the tax exemption under both schemes has been reduced from the first S$300,000 to S$200,000 of chargeable income.
- Raising the expenditure cap for the Double Tax Deduction for Internationalization claims, without prior approval from Enterprise Singapore or the Singapore Tourism Board from S$100,000 to S$150,000 per YA from YA 2019.
- Qualifying intellectual property (IP) income is incentivized under the IP Development Incentive (IDI), effective from 1 July 2018 to 31 December 2023.The re-domiciliation tax framework is expanded to include a re-domiciled company that carried on a trade or business in Singapore before the date of re-domiciliation (known as its registration date). The amendment is retroactively effective from 26 October 2017.
- The existing legislation, which enables the Comptroller of Income Tax (the Comptroller) to obtain a country-by-country report (CbC Report) under the BEPS Action 13 (Transfer Pricing Documentation and Country by Country Reporting) 2015 Final Report under the OECD BEPS Project, has been amended to allow the Comptroller to set out in regulations the conditions for invoking “local filing” by a domestic constituent entity that would otherwise not be required to file a CbC Report with its revenue authority
- Enhancing the investigative powers of the Inland Revenue Authority of Singapore (“IRAS”) by providing authorised IRAS officers with the power of forced entry, power to arrest without warrant, and power to carry out body search.
