On 12 November 2018, the Income Tax (Amendment) Act 2018 was gazetted and published in the electronic gazette.
These legislative amendments is to effect changes announced in Budget 2018: changes arising from the periodic review of the income tax system and changes to strengthen law enforcement.
The enhancement and extension of the Corporate Income Tax (CIT) rebate
The CIT rebate is to ease business costs and support restructuring by the companies. Changes to the CIT rebate are as follows:
YA 2018 – Companies will be enhanced to 40% of tax payable, subject to a cap of $15,000 (increased from the previous announced rebate of 20% of tax payable)
YA 2019 – Companies will be extended to YA 2019, at a rate of 20% of tax payable, caped at $10,000
Adjustments to the Start-Up Tax Exemption Scheme (SUTE) and the Partial Tax Exemption Scheme (PTE) from YA 2020
The SUTE was first introduced in YA 2005 to support entrepreneurship and help local enterprises to grow. The tax exemption under the scheme will be revised.
YA 2019 and before
- Full exemption on the first $100,000 of normal chargeable income (income that are subject to tax at the prevailing rate); and
- A further 50% exemption on the next $200,000 of normal chargeable income.
From YA 2020
- 75% exemption on the first $100,000 of normal chargeable income; and
- A further 50% exemption on the next $100,000 of normal chargeable income.
The enhancement of the Double Tax Deduction for Internationalisation (“DTDi”) scheme.
DTDi is to support activities across key stages of a company’s overseas growth journey, including market presence, market promotion, market exploration and market preparation.
Since 1 April 2012 (to 31 March 2020), businesses may claim automatic double tax deduction on qualifying expenses incurred under Section 14B and 14K up to $100,000 per YA.
From YA 2019 to 31 March 2020, this specified expenditure cap for Automatic DTDi is raised from $100,000 to $150,000.
The enhancement and expansion of IRAS’s powers to investigate serious tax crimes
To deal with fraud syndicates and recalcitrant taxpayers more effectively:
- The tax enforcement officers are given more powers to investigate serious tax crimes, or where the suspect attempts to destroy evidence, the (a) powers to enter premises forcibly, (b) power to arrest without warrant and (c) power to conduct body searches, with proper safeguards.
- Align penalties for persons who obstruct investigations under the ITA and GST Act.
- Expand IRAS’s powers to gather all information that is relevant to its investigations from a person.
Source: IRAS, 14 November 2018