Prof. Sum Yee LoongSchool of Accountancy

SMU

Corporate Tax

Corporate Tax Rate

▪ Remains @ 17%

Corporate Tax Comparisons

Ireland

0

10

20

30

Ireland HongKong

SingaporeTaiwan

UK US Japan Malaysia ChinaIndonesia

AustraliaIndia

Philippines

12.5

16.5 1719

21

23.4 2425

30

YA 2018

(previously)

▪ Tax Rebate 20%

▪ Cap $10k

YA 2018

Increased to:

▪ Tax Rebate 40%

▪ Cap $15k

C.I. $

Rate*%

300,000 5.0

373,088 6.0

500,000 8.8

1,000,000 12.9

* After partial exemption of $152,500 & 40% rebate

YA 2018

Introduced in 2010 Budget and enhanced in 2011, 2012, 2013, 2014 & 2015

▪ 400% of up to $400k of qualifying expenditures on:

•R&D•Acquisition & Licensing of IP•Registration of IP•Investments in design•Investments in automation•Training for employees

PIC

PIC

Cash Payout

▪ Up to $40k

(on $100k PIC expenditure)

▪ Effective conversion rate: 10%

▪ YA 2018

(Pre-1 Aug 2016: $60k / 15%)

Effective Tax Rate

1st $10k %

Tax rate 17.00

75% PTE (12.75)

4.25

40% Rebate (1.7)

Effective Tax Rate 2.55%

Effective Tax Rate

Next $290k %

Tax Rate 17.00

50% PTE (8.5)

8.5

40% Rebate (3.4)

Effective Tax Rate 5.1%

Effective Tax Rate

$300,001 - $373,088 %

Tax Rate 17

40% Rebate (6.8)

Effective Tax Rate 10.2%

Effective Tax Rate

Excess over $373,088

Tax Rate 17%

NO

$

Profit 1,000,000

PIC (400,000)

C.I. 600,000

PTE (152,500)

447,500

Tax @ 17%Rebate

76,075(15,000)

Cash conversion -

61,075

Cash Conversion

YES

$

1,000,000

-

1,000,000

(152,500)

847,500

144,075(15,000)

(40,000)

89,075

$28,000

YA 2018

PIC

Reconciliation

Tax deduction 68,000

($400k @ 17%)

Cash payout (40,000)

28,000

NO

$

Profit 500,000

PIC (400,000)

C.I. 100,000

PTE (52,500)

47,500

Tax @ 17%Rebate

8,075(3,230)

Cash conversion -

4,845

Cash Conversion

YES

$

500,000

-

500,000

(152,500)

347,500

59,075(15,000)

(40,000)

4,075

($770)

YA 2018

PIC

Reconciliation

Tax deduction:

$126,912 @ 17% 21,575

$ 73,088 @ 10.2% 7,455

$200,000 @ 5.1% 10,200

$400,000 39,230

Cash payout (40,000)

(770)

YA 2019

▪ Tax Rebate 20%

▪ Cap $10k

C.I. $

Rate*%

300,000 6.7

446,618 8.9

500,000 9.8

1,000,000 13.4

* After partial exemption of $152,500 & 20% rebate

YA 2019

Partial Tax Exemption (PTE)

1st $10,000 75%

exempt

Next $290,000 50%

exempt

PTE Reduced:

1st $10,000 75% exempt

Next $190,000 50% exempt

(wef YA 2020)

$

C.I. 300,000

Partial Exemption:-

$10,000 @ 75% 7,500

$190,000 @ 50% 95,000 (102,500)

Net C.I. 197,500

Effective Tax Rate (ETR) from

YA 2020

C.I. ETR

$ %

100,000 8.08

200,000 8.29

500,000 13.52

1,000,000 15.23

SG vs Hong Kong

Headline Corporate Rate

Singapore 17%

Hong Kong 16.5%

1st HK$2m @ 8.25%

SG vs Hong Kong

Conversion: S$1 : HK$5.85

C.IETR

SG HK

S$ % %

100,000 8.08 8.25

200,000 8.29 8.25

500,000 13.52 10.86

1,000,000 15.25 13.68

2,000,000 16.13 15.09

Start-Up Tax Exemption (SUTE)

(New Companies)

1st $100,000 100% Exempt

SUTE

Exemption Reduced to 75%

(wef: YA 2020)

New Companies:-

(wef: YA 2020)

1st $100,000 75% exempt

Next $100,000 50% exempt

SUTE

1st 3 years

1st YA: YA 2018

1st $100k 100% exempt

Next $200k 50% exempt

2nd YA: YA 2019

1st $100k 100% exempt

Next $200k 50% exempt

3rd YA: YA 2020

1st $100k 75% exempt

Next $100k 50% exempt

Conditions

▪ New co. inc. in Singapore

▪ Tax resident in Singapore

▪ 20 indv sh/h, or

▪ Indv sh/h holding at least

10% shares

New Company

$

C.I. 300,000

Partial Exemption:-

$100,000 @ 75% 75,000

$100,000 @ 50% 50,000 (125,000)

Net C.I. 175,000

Effective Tax Rate (ETR) for

New Companies

C.I. ETR

$ %

100,000 4.25

200,000 6.38

500,000 12.75

1,000,000 14.88

Existing Co vs New Co

Tax Difference

(Current SUTE)

C.ITax

Existing New Diff

$300,000 $25,075 $17,000 $8,075

Exisiting Co vs New Co

Tax Difference

(Proposed SUTE)

C.ITax

Existing New Diff

$200,000 $16,575 $12,750 $3,825

PIC

PIC to lapse after YA 2018

R & D

Staff Costs & Consumables

- Current: 150%

- Proposed: 250%

(YA 2019 – YA 2025)

IP Registration Costs

- Current: 100%

- Proposed: 200%

(on 1st $100,000)

(YA 2019 – YA 2015)

Licensing of IP

- Current: 100%

- Proposed: 200%

(on 1st $100,000)

(YA 2019 – YA 2015)

Internationalisation Scheme

S14B, S14K Double Deduction:

- Current: $100,000

- Proposed: $150,000

(wef:YA 2019)

W/h tax for Container Leasing

- Currently exempt

(till 31 Dec 2022)

Exemption to be reviewed

Investment Allowance (IA)

IA to extend to submarine cable

system

(20 Feb 2018 – 31 Dec 2023)

Tax Transparency for S-REIT ETF

- Tax transparency of S-REIT

- Extended to S-REIT ETF

(From 1 July 2018)

Singapore Variable Capital

Companies (S-VACCs)

S-VACCs

Tax Exemption under:

- S13CA

- S13R

- S13X

S-VACCs

Concessionary 10% tax for

Approved Fund Managers of

Incentivised S-VACCs

Financial Sector Incentives

(FSI)

FSI extended to 31 Dec 2023

Qualifying Debt Security

(QDS)

- Tax Exemption for indv.

- 10% for Corporates

(Extended to 31 Dec 2023)

Approved Special Purpose

Vehicle (ASPV) Scheme

- Tax Exemption for asset

securitisation transactions

- 76% GST recovery

- w/h tax exemption for NR

(Extended to 31 Dec 2023)

Singapore Government

Securities (SGS)

- Tax Exemption for primary

dealers from SGS trading

(Extended to 31 Dec 2023)

Enhanced Tier Fund Scheme

Current: Tax exemption for

companies, trusts & LPs

Proposed: Tax exemption extended to

all forms of fund vehicles

Ins. Business Dev. – Ins. Broking

Business (IBD – IBB) Scheme

- 10% tax on commission and

fees from insurance broking

and advisory services

(Extended to 31 Dec 2023)

Impairment Loss for Banks and

Finance Companies

S14I - deduction for impairment

losses on non-credit impaired

loans and debt securities

(Extended to YA 2024, YA 2025 for

non-Dec FYE)

Donations to IPCs

- 250% deduction

(Extended to 31 Dec 2021)

Business and IPC Partnership

Scheme (BIPS)

- 250% deduction for wages

and incidentals

- Cap $250,000 per Co. p.a.

- Cap $50,000 per IPC

(Extended to 31 Dec 2012)

Personal Tax

YA 2018

▪ No change in tax rates

▪ No change in personal reliefs

Tax Rate

0

20

40

60

80

100

120

140

160

180

200

220

240

260

280

300

320

340

C.I. Tax

$320,000 $44,550

0

3.5

7

11.5

15

18

19.5

2

19

20

YA 2018 %

$ ‘000

Top Marginal Tax Rate for Individuals

Ireland

17%

22%

28%30%

37%40%

45%48%

57%

0

10

20

30

40

50

60

Hong Kong Singapore Malaysia Indonesia USA Switzerland AustraliaChina

GermanyUK

IrelandPortugal

Sweden

Comparative personal effective tax rates

Year of Assessment 2018

Employee married with 2 children

Gross annual remuneration of $200k

8.2% 8.8%

18.6%

21.5% 22.4%24.5%

31.2% 31.8%

0%

5%

10%

15%

20%

25%

30%

35%

Hong Kong Singapore USA Malaysia Japan China India UK

YA 2018

Salary

Bonus

72,000

28,000

100,000

P.A.

EIR 1,000

CPF 20,000 (21,000)

C.I. 79,000

Tax thereon:

1st $40k 550

$39,000 @ 7% 2,730

Tax Payable 3,280

Personal Tax

C.I YA 2018

$500k $84,150

$1 mil $194,150

Others

GST

GST – Import of Services

- B2B

- Reverse Charge

- Exempt and partially exempt

businesses

▪ From 1 Jan 2020

GST – Import of Services

- B2C

- Overseas Vendors to register

- Global revenue > S$1m

- SG revenue >S$100k

▪ From 1 Jan 2020

GST – Importation of Goods

Currently:

Exempt if value not

exceeding $400

GST

- Increase from 7% to 9%

- Between 2021 and 2025

Stamp Duty

Buyer’s Stamp Duty

Value > $1m - 4%

Buyer’s Stamp Duty

1st $180,000 - 1%

Next $180,000 - 2%

$360,001 - $1m - 3%

Over $1m - 4%

Wage Credit Scheme (WCS)

Extended 3 years to 2020

Wage Credit Scheme (WCS)

Co-funding of Qualifying

Wage increase:

2018 - 20%

2019 - 15%

2020 - 10%

Carbon Tax

- $5 per ton CO2e

- From 2019 - 2023

END