Singapore Budget 2019
Executive Summary

Finance Minister Heng Swee Keat delivered the “Bicentennial Budget” for fiscal year April 2019 to March 2020 in Parliament on 18 February 2019. The theme of the budget this year is “Building a Strong, United Singapore”.In this budget, the Government has announced a series of economic and social policies to further strengthen our economy and long-term growth. The 3 key thrusts of the budget include building deep enterprise capability, providing our people with opportunities and building deeper partnerships within Singapore and across the world. Main features of the budget this year include the proposed “Merdeka Generation” package for the baby boomer generation, various financing support programs for small and medium enterprises, adjustments made to diesel tax and foreign workforce policies.
The Government has announced a tax rebate for personal income tax for the year of assessment 2019. The rebate is calculated at 50% of the tax payable, capped at S$200.
We summarize below the tax changes announced in budget 2019: 

1. Key Features

1.1 Changes to Corporate Tax
There will be no change to the tax rate for corporate tax. The corporate tax rate remains at 17% with partial tax exemption for the first S$300,000 chargeable income. With effect from the YA 2020, the partial tax exemption scheme will be modified to first S$200,000 of the chargeable income. The full tax exemption for the first S$100,000 for qualifying start-upcompanies will be replaced by 75% tax exemption.   
With the adjustment, the effective tax rate for the first S$200,000 chargeable income will be 8.28% from the YA 2020. Qualifying start-up companies will enjoy an effective tax rate of 6.37% for the first S$200,000 chargeable income for their first 3 years of assessment after incorporation. 
The corporate tax rates for the current ten years are as follows:
 

Year of Assessment

Corporate

Tax Rate (%)

2009

18

2010-2019

17


For comparison, we append below corporate tax rates for selected jurisdictions:

Jurisdiction

Corporate

Tax Rate (%)

Hong Kong

16.5

Taiwan

20

Thailand

20

South Korea

25

Indonesia

25

Malaysia

24

Vietnam

20

China

25

The Philippines

30

India

25

Japan

30.86

2.  Tax Changes for Businesses

2.1 Extending the Writing Down Allowance (“WDA”) 

Currently, writing down allowance (“WDA”) for acquisition of intellectual property rights (“IPR”) is given to qualifying taxpayers under Section 19B of the Income Tax Act. Under this scheme, taxpayers can claim an annual WDA on the cost of acquiring the IPR in 5, 10 or 15 years. The scheme will be extended to YA 2025.      

2.2 Extending the 100% Investment Allowance (“IA”) for Automation Support Package

Under current law, taxpayers incurred qualifying capital expenditure for automation project will be allowed with 100% tax deduction. The scheme will be extended for 2 more years up to 31 March 2021. 

2.3 Extending the Tax Concession for Singapore-listed REIT

Tax concessions including tax exemption on distributions received by individuals are given to Singapore-listed Real Estate Investment Trusts (“REIT”). The existing concessions will be extended to 31 December 2025.

2.4 Extending the Tax Concession for Singapore-listed REIT – Exchange Traded Funds

Tax concessions including tax exemption on distributions received by individuals, tax transparency treatment and 10% tax on non-resident non-individuals are given to Singapore-listed Real Estate Investment Trusts (“REIT”) Exchange Traded Funds. The concessions will be extended to 31 December 2025.

3. Tax Changes for Financial Sector
3.1 Refining Tax Incentives for Funds Managed by Singapore-Based Fund Managers

The current tax incentives for funds managed by Singapore-based fund managers include tax exemption on specified income derived from designated investments and withholding tax exemption on interest payment to non-resident. Some of the qualifying conditions for the scheme will be modified for ease of compliance.  
3.2 Lapse of Designated Unit Trust (“DUT”) Scheme

The current scheme provides for tax transparency treatment for specified income derived by the DUT. The scheme will lapse after 31 March 2019 without renewal.
3.3 Lapse of Approved Unit Trust (“AUT”) Scheme  

The current scheme provides for tax transparency treatment on gains from disposal of securities and tax exemption on distributions received by individual resident in Singapore. The scheme will lapse after 18 February 2019 without renewal.

4. Goods and Services Tax (GST)

4.1 Tightening of GST Import Relief for Travelers

Currently, travelers are granted with import GST relief for goods with value of up to S$150 if the traveler is outside Singapore for less than 48 hours, and up to S$600 if the traveler is outside Singapore for more than 48 hours. The relief will be adjusted from 19 February 2019 as follows:

Time Spent outside Singapore

Value of goods granted
GST relief

48 hours and above

$500
(down from the current $600)

Less than 48 hours

$100
(down from the current $150)


4.2 Extending GST Remission for Singapore-Listed REITs and RBTs

GST remission is currently granted to Singapore-listed Real Estate Investment Trusts (“REIT”) and Registered Business Trusts (“RBT”) in infrastructure business, ship leasing and aircraft leasing sectors. The scheme will be extended to 31 December 2025. 

4.3 Recovery of GST for Qualifying Funds

Under current law, concession is given to qualifying funds managed by prescribed fund managers in Singapore to claim for GST input tax incurred at a fixed recovery rate. The scheme will be extended to 31 December 2024.

5. Other Tax Changes
5.1 Lapse of Property Tax (Tourist Projects) Order 

Currently, property valuation for qualifying tourism projects will be computed based on 6% of the preceding year receipts for the first 5 years after completion. The scheme will lapse after 18 February 2019 without renewal.   
5.2 Foreign Workforce Measures
All current Dependency Ration Ceiling (“DRC”) for all sectors will remain unchanged except services sector. The DRC will be reduced from the current 40% to 38% for the services sector from 1 January 2020, and further reduced to 35% from 1 January 2021. 
5.3 Foreign Worker Levy Rates 
All foreign worker levy rates will remain unchanged for all sectors. The Foreign Worker Levy increases for Marine Shipyard and Process sectors will be deferred for another year. 
5.4 Tightening of Duty-Free for Liquor Products 
Currently, travelers are granted with import duty-free allowance of up to 3 litres for purchase of liquor products on their return to Singapore. The allowance will be reduced to 2 litres from 1 April 2019. 
5.5 Revision to Diesel Tax
The following revisions to diesel tax are introduced in the budget: 
a) With effect from 18 February 2019, the current excise duty for diesel fuel will be increased to $0.2 per litre from $0.1 per litre. The special tax will be reduced by $100 for diesel car and $850 for taxi, respectively. 
b) In order to cushion the impact of increase in diesel duty, road tax rebates will be given to operators of commercial buses for 2019 to 2021 at the rates of 100%, 75% and 50%, respectively.
c) School bus operators will also be given cash grants for 3 years from 2019 to 2021. The new cash grants will be $1,600 for 2019, $800 for 2020 and $400 for 2021. The new grants will replace the existing grants.  
d) The existing cash grants given to the operators of eligible diesel private hired and excursion buses that ferry students will be adjusted to $1,800 for 2019, $900 for 2020 and $500 for 2021.

6. Changes to Individual Income Tax

6.1 Tax Rebate for YA 2019

There will be a 50% tax rebate, capped at S$200 given to all resident individual taxpayers for the YA 2019.

6.2 Personal Income Tax Rates

The personal tax rates have been implemented from the YA 2017. No changes to personal tax rate were introduced in this budget. We append below the tax rate table for resident taxpayers:

 

Tax rate structure with effect from
Year of Assessment  (“YA”) 2017

 

 

Chargeable Income

 ($)

Tax Rate

(%)

Gross Tax Payable

($)

 

On the first

On the next

20,000

10,000

0

2

0

200

 

On the first

On the next

30,000

10,000

-

3.5

200

350

 

On the first

On the next

40,000

40.000

-

7

550

2,800

 

On the first

On the next

80,000

40,000

-

11.5

3,350

4,600

 

On the first

On the next

120,000

40,000

-

15

7,950

6,000

 

On the first

On the next

160,000

40,000

-

18

13,950

7,200

 

On the first

On the next

200,000

40,000

-

19

21,150

7,600

 

On the first

On the next

240,000

40,000

-

19.5

28,750

7,800

 

On the first

On the next

280,000

40,000

-

20

36,550

8,000

 

On the first

In excess of

320,000

320,000

-

22

44,550

 

6.3 Changes to Grandparent Caregiver Relief

Working mothers will be allowed to claim for Grandparent Caregiver Relief from the YA 2020 for taking care of handicapped, unmarried child without age limit. The other conditions remain unchanged but the child age limit of 12 years old will be removed from the YA 2020. 

6.4 Lapse of the Non-Ordinary Resident (“NOR”) Scheme

Under the NOR scheme, foreigner working in Singapore will be granted with the benefits under this scheme when they travel outside Singapore for works for more 90 days in a year. The taxable employment income will be apportioned based on the number of days present in Singapore, with conditions. The scheme will lapse after YA 2020. The last batch of qualifying taxpayers will be granted with the scheme from YA 2020 to YA 2024. 

7. Transfers to Households 
7.1 Bicentennial Bonus – GST Voucher – Cash

GST cash voucher will be given to all Singaporeans aged 21 and above in 2019 based on their assessable income in YA 2018. The details are as follows:

Assessable Income for Year of Assessment 2018 up to $28,000

Annual Value of Home as at 31 Dec 2018

Up to $13,000

More than $13,000 and up to $21,000

Aged 21 and above in 2019

$300

$150


7.2 Workforce Bicentennial Bonus

The following workforce bicentennial bonus will be given to eligible Singaporeans in 2019:

Age in 2018

10% of the Total Annual WIS Payment for Work Year 2018

Employee

Self-Employed Persons

35 to 44

Between $100 and $150

$100

45 to 54

Between $100 and $220

Between $100 and $147

55 to 59

Between $100 and $290

Between $100 and $194

60 and above

Between $100 and $300

Between $100 and $240

7.3 CPF Top-Up

A one-off CPF top-up to Special or Retirement account will be given as follows: 

Age in 2019

Combined CPF Ordinary and Special Account or Retirement Account Balance as at 31 Dec 2018

Up to $30,000

More than $30,000 and less than $60,000

50 to 54

$500

$300

55 to 64

$1,000

$600


7.4 Service and Conservancy Charges (S&CC) Rebate

Eligible HDB households will receive S&CC Rebate to offset between 1.5 to 3.5 months of S&CC charges. Details of the S&CC Rebate are as follows: 

HDB Flat Type

FY 2019 S&CC Rebate (no. of months)

April

2019

July

2019

October

2019

January

2020

Total for

FY2019

1- and 2-room

1

1

1

0.5

3.5

3- and 4-room

1

0.5

0.5

0.5

2.5

5-room

0.5

0.5

0.5

0.5

2

Executive /

Multi-Generation

0.5

0.5

0.5

-

1.5


8. Year of Assessment 2019 tax filing due dates
 
We wish to take this opportunity to remind our clients of the tax filing due dates for the Year of Assessment 2019:
 
Personal Tax filing due on 18 April 2019 (By e-filing)
Partnerships, Clubs, filing due on 15 April 2019
Associations and 
Management Corporations
Corporate Tax filing due on 30 November 2019


Mr Chng Chung Hing
Tax Director
Accredited Tax Advisor
Loke Lum Tax Advisory Pte Ltd
Compiled on 19th February 2019

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