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 |
2.1 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.
3.1 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.
4.1 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 |
48 hours and above | $500 |
Less than 48 hours | $100 |
4.2 Extending GST Remission for Singapore-Listed REITs and RBTs
GST remission is currently granted to Singapore-listed Real Estate Investment Trusts (“REIT”) and Registered Business Trusts (“RBT”) in infrastructure business, ship leasing and aircraft leasing sectors. The scheme will be extended to 31 December 2025.
4.3 Recovery of GST for Qualifying Funds
Under current law, concession is given to qualifying funds managed by prescribed fund managers in Singapore to claim for GST input tax incurred at a fixed recovery rate. The scheme will be extended to 31 December 2024.
5.1 Lapse of Property Tax (Tourist Projects) Order
Currently, property valuation for qualifying tourism projects will be computed based on 6% of the preceding year receipts for the first 5 years after completion. The scheme will lapse after 18 February 2019 without renewal.
5.2 Foreign Workforce Measures
All current Dependency Ration Ceiling (“DRC”) for all sectors will remain unchanged except services sector. The DRC will be reduced from the current 40% to 38% for the services sector from 1 January 2020, and further reduced to 35% from 1 January 2021.
5.3 Foreign Worker Levy Rates
All foreign worker levy rates will remain unchanged for all sectors. The Foreign Worker Levy increases for Marine Shipyard and Process sectors will be deferred for another year.
5.4 Tightening of Duty-Free for Liquor Products
Currently, travelers are granted with import duty-free allowance of up to 3 litres for purchase of liquor products on their return to Singapore. The allowance will be reduced to 2 litres from 1 April 2019.
5.5 Revision to Diesel Tax
The following revisions to diesel tax are introduced in the budget:
| Tax rate structure with effect from | |||
|
| Chargeable Income ($) | 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.
7.1 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 |
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
