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Singapore Announces New Tax Benefits for 2008 and 2009
February
16, 2008 - Singapore - Finance Minister Tharman
Shanmugaratnam during his 2008-2009 budget speech today unveiled new
personal and
corporate tax
reliefs designed to help both the working class as well as corporate
business community. The government anticipates the new tax relief
measures will help to attract more foreign investment, share wealth
with the community, and promote further growth of the country.
According to the Finance Minister, a favorable global environment
helped Singapore economy grow by 7.7% and bring unemployment down to
1.6% in 2007. Furthermore, Singapore achieved a budget surplus of $6.4
billion in Financial Year 2007. The largest boost in revenue
collection came from exceptionally upbeat property market. Finance
Minister’s new budget speech provided a range of tax reliefs for both
individuals as well as corporate businesses.
Business Tax Reliefs
After reducing the corporate
tax rates
last year to 18% from the earlier 20%, there were no new
tax cut
surprises in this year’s budget. However, a number of new Singapore
2008 and 2009 tax incentives and relief measures were announced by the
Singapore Finance Minister in the areas of innovation through R&D,
liberalization of
tax exemption
for SMEs, allowance for cost of fixtures & fittings, tax credits on
foreign sourced income, including certain sector specific tax
incentives.
The existing restriction on tax-exemption scheme for new startups (all
shareholders must be individuals) has been liberalized. According to
the new policy, tax exemption is allowed as long as there is at least
one individual shareholder that holds at least 10% of the shares. The
rest of the shareholding can be owned by corporate entities.
To help SMEs with infrastructure setup costs, businesses will be
allowed to write down the cost of fixtures and fittings over a period
of three years up to a maximum of $150,000.
All Singapore companies that earned income from countries that don’t
have double tax agreement with Singapore, will be allowed a unilateral
tax credit on their foreign-sourced income from those countries.
Licensed insurance companies will enjoy a concessionary rate of 10% on
the income they derive from offering insurance broking and advisory
services to offshore clients.
Shipping companies will enjoy a concessionary rate of 5-10% on income
from container leasing activities.
Family owned investment holding companies will now enjoy the same
scope of exemptions that individuals currently enjoy on Singapore and
foreign-sourced income.
Personal Tax Reliefs
As perhaps the biggest tax news announced during the budget speech by
Mr. Shanmugaratnam, the Estate Duty has been removed from the tax
regime effective immediately. This could give a significant boost to
making Singapore as a wealth accumulation destination for people
worldwide.
“It [Removal of Estate Duty] will benefit our whole economy and
society, not just the individuals who build up their wealth. It is not
a zero sum game.” said the Finance Minister.
Although no tax cuts were introduced in the personal income tax rates
by the Singapore government today, the government did announce a
one-time income tax rebate of 20% (capped at $2000) for all resident
taxpayers for Year of Assessment 2008.
“Our fiscal position is strong. We can therefore afford to share some
of the budget surplus with all Singaporeans,” said Mr. Shanmugaratnam.
A number of other incentives aimed at helping families in the areas of
educational and healthcare expenses were also announced during the
budget speech by Mr. Shanmugaratnam.
“We have been growing much faster than other developed countries –
faster than any other country with the same standard of living as us.
Our policies are working well, the economy is restructuring, and we
are delivering superior performance”, said Mr. Shanmugaratnam.
In announcing the tax cuts, Mr. Shanmugaratnam said, "We will consider
further profits tax relief if our economy remains robust and our
public finances stay sound."
"The budget speech of Mr. Shanmugaratnam once again demonstrates the
government's pro-business vision and its resolve to make Singapore as
the Global City of Asia. Companies like ours help global entrepreneurs
to setup a Singapore company and take advantage of the available tax
benefits and relocation programs." continued Mr. Malhotra.
Full details of the 2008-2009 Budget speech can be found at http://www.singaporebudget.gov.sg.
A summary of Singapore 2008 tax reliefs can be viewed at http://www.asiabizsetup.com/singapore-tax-cuts-2008.aspx.
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