The Income Tax (Amendment) Bill 2017 (the Bill) was first introduced in Parliament on 11 September 2017. It was read for the second time and passed in Parliament on 2 October 2017, and Gazetted (electronic edition) on 26 October 2017.
The Income Tax (Amendment) Act 2017 incorporates 34 legislative amendments to the principal Act.
(a) Budget 2017 changes.
These are the 8 tax changes announced by Minister for Finance, Mr Heng Swee Keat, in the 2017 Budget Statement. The key Budget tax changes include:
- Enhance and extend the Corporate Income Tax (CIT) rebate for the Year of Assessment (YA) 2017 and YA 2018 to help companies cope with the economic uncertainty and continue restructuring. For YA 2017, the CIT rebate cap has been raised from $20,000 to $25,000. The CIT rebate will be extended to YA 2018, but at a reduced rate of 20% of tax payable, capped at $10,000;
- Personal Income Tax rebate for YA 2017. Every individual tax resident will receive a 20% rebate capped at $500, and
- Liberalise tax deduction for payments under Cost Sharing Agreements (CSAs) for R&D projects. Under Section 14D of the ITA for the 75% safe harbor rule which was announced in Budget 2017 will be enhanced. Taxpayers will be able to claim tax deduction for the full CSA payments without having to provide a breakdown of the expenditure covered by the CSA payments.
(b) Amendment to introduce Mandatory Transfer Pricing Documentation Requirement.
The Bill includes an amendment to strengthen the transfer pricing regime and introduce a mandatory transfer pricing documentation (TPD) requirement. To limit compliance burden for smaller businesses, the mandatory TPD requirement will only apply to businesses with turnover exceeding $10m and significant related party transactions. The majority of companies will not be affected, as this change will only be relevant to fewer than 5% of all companies, many of which have already been maintaining TPD.
(c) Other amendments. There are 25 remaining changes to tax policies and administration. The changes include:
- Amendments relating to third-party voluntary contributions to the Medisave accounts of private sector employees and self-employed persons (SEPs). With effect from 1 January 2018, the maximum amount that an employer can contribute to an employee’s Medisave account (that is not treated as income of the employee) under the Additional Medisave Contribution Scheme will be raised from $1,500 to $2,730 per year. There will be an increase in the tax deduction allowable to the employer for these contributions from $1,500 to $2,730 per year. In addition, the maximum tax exemption that an SEP can receive on contributions to his Medisave account by an eligible company he works with will be increased from $1,500 to $2,730 per year. The maximum tax deduction allowable to an eligible company for its contributions to the SEP’s Medisave account will also be increased from $1,500 to $2,730 per year. All other conditions for granting tax benefits in respect of such voluntary contributions remain unchanged, and
- Enable the Minister for Finance to implement Singapore’s obligations under the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (known as the “Multilateral Instrument”), which Singapore has signed on 7 June 2017.
- A specific tax treatment for foreign companies re-domiciled into Singapore under the new Part XA of the Companies Act (Transfer of registration).
- Prescribes the tax treatment of certain items arising from the adoption of Financial Reporting Standard 109 – Financial Instruments (FRS 109) and Financial Reporting Standard 115 – Revenue from Contracts with Customers (FRS 115).
Source: MOF, 26 October 2107