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2. The draft Income Tax (Amendment) (No. 3) Bill 2016 incorporates 49 proposed legislative amendments to the Income Tax Act, including:
(a) Budget 2016 changes. These are the 18 tax changes announced by Minister for Finance, Mr Heng Swee Keat, in the 2016 Budget Statement. The key Budget tax changes include:
i) Enhance the Corporate Income Tax (“CIT”) rebate from 30% to 50% of corporate tax payable for Years of Assessment (“YAs”) 2016 and 2017, with a cap of $20,000 rebate per YA, to help SMEs especially.
ii) Enhance the Merger & Acquisition (“M&A”) scheme by granting the M&A allowance for the first $40 million (up from $20 million currently) of the consideration paid for qualifying M&As deals per YA till 31 March 2020. This is to support more M&As.
iii) Extend the Double Tax Deduction for Internationalisation scheme for four years till 31 March 2020 to support businesses in their internationalisation efforts.
iv) Extend the upfront certainty of non-taxation of companies’ gains from disposal of equity investments till 31 May 2022 to provide certainty to companies for their corporate restructuring.
v) Pilot the Business and Institute of a Public Character (“IPC”) Partnership Scheme (“BIPS”) from 1 July 2016 to 31 December 2018. Businesses that send their employees to volunteer and provide services to IPCs, including secondments, will receive a 250% tax deduction on associated cost incurred, subject to caps.
vi) Cap total personal income tax relief, at $80,000 per YA, with effect from YA 2018, to maintain a progressive personal income tax system.
(b) Amendment to implement Country-by-Country Reporting
The Bill also includes an amendment to enable implementation of Country-by-Country Reporting (“CbCR”) with effect from enterprises’ financial years commencing on or after 1 January 2017. Singapore-headquartered multinational enterprises with global revenues exceeding S$1,125 million (equivalent to €750 million) will have to submit to IRAS an annual country-by-country (“CbC”) report containing the income, taxes paid, and other indicators of level of economic activities in every tax jurisdiction where they operate. This CbC report is to be submitted within 12 months from the last day of their financial year. IRAS will exchange the CbC reports with jurisdictions with which Singapore has entered into bilateral agreements for automatic exchange of CbC reports, having established that the jurisdictions meet the following conditions:• First, these jurisdictions have a strong rule of law and can ensure the confidentiality of the information exchanged and prevent its unauthorised use.
• Second, there must be reciprocity in terms of the information exchanged.
(c) Non-Budget 2016 changes. There are 30 other proposed changes to tax policies and administration which have been identified from periodic reviews of the income tax system. The changes include:
i) Delink the income tax relief for CPF cash top-ups from the top-up limit from 1 January 2016. The CPF cash top-up limit to the Retirement Account has been raised from the Full Retirement Sum (“FRS”) to the Enhanced Retirement Sum (“ERS”), which is 1.5 times of the FRS, from 1 January 2016. To keep tax benefits focused on supporting basic retirement needs, the limit on tax relief for such top-ups will be maintained at the FRS.
ii) Grant double tax deduction for costs attributable to issuance of retail bonds for five years with effect from 19 May 2016, to encourage the issuance of retail bonds, and broaden the range of investment options available to retail investors.
3. The summary table provides a brief description of the tax changes and explains the amendments to the Income Tax Act. Please refer to the draft Income Tax (Amendment) (No. 3) Bill 2016 and its accompanying Explanatory Statement for details.
GUIDELINES
4. We would appreciate your support and participation to ensure that the consultation exercise is productive and focused. Respondents are requested to observe these guidelines:
a. Please identify yourself as well as the organisation you represent (if any) so that we may follow up with you to clarify your comments, if necessary.
b. Be clear and concise in your comments.
c. Focus your comments on how the legislative amendments can be better written to make them clearer and to make compliance easier, or on how the non-Budget tax policy changes can be improved.
d. Use the prescribed template provided to organise your feedback.
e. As far as possible, please explain your points with illustrations, examples, data or alternative formulations of the amendments.
5. This draft legislation is released only for the purpose of consultation and should therefore not be used for individual or business decisions as it does not represent the final legislation.
6. All comments received during the consultation exercise will be reviewed thoroughly and if accepted, will be incorporated in the Bill for introduction in Parliament.
PERIOD OF CONSULTATION
7. The draft Income Tax (Amendment) (No. 3) Bill 2016 is available for public consultation from 8 July to 29 July 2016. We regret that comments received after 29 July 2016 will not be considered, as they will not be in time for incorporation in the Bill.
FEEDBACK CHANNEL
8. We encourage all interested parties to submit your comments via our online submission form. The online submission form is the easiest and quickest way for your comments to reach us. You can also send us your comments, using the prescribed template, through:
a. email to pc_itabill@mof.gov.sg; or
b. fax to 6337 4134; or
c. post to:
Ministry of Finance
100 High Street, #10-01
The Treasury
Singapore 179434
Attention: Tax Policy Directorate
SUMMARY OF RESPONSE
9. We will publish a summary of the main comments received on the Ministry of Finance’s website, together with our responses, by the end of August 2016. The identity of respondents will not be disclosed in the summary.
DOCUMENTS TO DOWNLOAD
10. For reference, please click here to download the relevant documents for this public consultation exercise.
Documents to Download
Income Tax (Amendment No. 3) Bill 2016
Summary Table
Prescribed Template for Submission of Comments ( word)( pdf)
Other useful references:
• You may obtain a copy of the Income Tax Act here.
• For more details on the tax changes, you may refer to the circulars on IRAS’ website
